EXHIBIT 1
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION S
("REGULATION S") PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE UNITED STATES OR TO A U.S. PERSON (AS
SUCH TERM IS DEFINED IN REGULATION S) UNLESS THE
SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS
ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
OF THE SECURITIES OFFERED HEREBY BY OR TO ANY PERSON IN
ANY JURISDICTION IN WHICH SUCH OFFER OF SOLICITATION WOULD
BE UNLAWFUL. INVESTMENT IN THESE SECURITIES INVOLVES A
HIGH DEGREE OF RISK. IN MAKING AN INVESTMENT DECISION,
INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE
COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND THE RISKS INVOLVED. THESE SECURITIES HAVE NOT
BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE
ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation S Securities Subscription Agreement
(the "Agreement" or the "Subscription Agreement") is
executed by the undersigned (the "Subscriber") in
connection with the offer and subscription by the
Subscriber for 1429 shares of Series A Preferred Stock
(the "Preferred Stock") of SPINTEK GAMING TECHNOLOGIES,
INC., a California corporation (the "Company"). The
Company is offering, in the aggregate, 1429 shares (U.S.)
of Series A Preferred Stock (the "Preferred Stock") at an
aggregate purchase price of the Preferred Stock at
$1,000,000.00 (U.S.). The purchase price represents a 30%
discount from the face amount ($1,429,000.00) of the
Preferred Stock issued (1429 shares at $1,000.00 face
value each per share. The terms of the Preferred Stock,
including the terms on which the Preferred Stock may be
converted into shares of the Company's common stock, $.002
par value per share ("Shares"), are set forth in the
Certificate of Designation attached hereto as Exhibit A.
The solicitation of this Subscription and, if accepted by
the Company, the offer and sale of the Preferred Stock,
are being made in reliance upon the provisions of
Regulation S ("Regulation S") promulgated under the United
States Securities Act of 1933, as amended (the "Act").
The Preferred Stock and the Shares issuable upon
conversion thereof are sometimes referred to herein as the
"Securities." The Subscriber wishes to subscribe for the
amount of Preferred Stock set forth in Section 15 in
accordance with the terms and conditions of this
Agreement. It is agreed as follows:
1. Offer to Subscribe; Purchase Price
The Subscriber hereby offers to purchase and
subscribe for 1429 shares of Preferred Stock at $1,000.00
per share, for an aggregate purchase price of
$1,000,000.00. The Closing shall be deemed to occur when
this Agreement has been executed by both the Subscriber
and the Company (the "Closing") and payment shall have
been made by the Subscriber, by wire transfer, as directed
in writing by the Company on the day so directed, to an
escrow agent, against the Company's delivery of
certificates representing the Preferred Stock subscribed
for under the terms of this Agreement. If the Closing
does not occur, the funds of the Subscriber shall be
returned from escrow. The payment shall be made by
delivering same day funds in United States Dollars as
designated above.
2. Representations; Access to Information; Independent
Information; Independent Investigation
The Subscriber represents and warrants to and
covenants with the Company, on its own behalf and on
behalf of each person or entity for which the Subscriber
is acting as a fiduciary, as follows:
2.1 Offshore Transaction. The Subscriber represents
and warrants to the Company that (i) neither the
Subscriber nor any of the investors on whose behalf the
Subscriber may purchase and hold Preferred Stock or Shares
(the "Investors") is a "U.S. person" as that term is
defined in Rule 902(o) of Regulation S (a copy of which
definition is attached as Exhibit B); and neither the
Subscriber nor any Investor is an entity organized or
incorporated under the laws of any foreign jurisdiction by
any "U.S person" principally for the purpose of investing
in securities not registered under the Act, unless the
Subscriber is or was organized or incorporated by "U.S.
persons" who are accredited investors (as defined in Rule
501(a) under the Act) and who are not natural persons,
estates or trusts ("Institutional Investors"), and all
owners of interests in such entity who are "U.S. persons"
are Institutional Investors, and not natural persons,
estates or trusts;(ii) the shares of Preferred Stock were
not offered to the Subscriber or to any Investor in the
United States and at the time of execution of this
Subscription Agreement and of any offer to the Subscriber
or to the Investors to purchase the Preferred Stock
hereunder, the Subscriber and each such Investor was
physically outside the United States; (iii) the Subscriber
is purchasing the Securities for its own account and not on
behalf of or for the benefit of any U.S. person and the sale
and resale of the Securities have not been prearranged with
any buyer in the United States; (iv) the Subscriber and to
the best knowledge of the Subscriber each distributor, if
any, participating in the offering of the Securities, has
agreed and the Subscriber hereby agrees that all offers and
sales of the Securities prior to the expiration of a period
commencing on the Closing of all shares of Preferred Stock
offered and ending forty (40) days thereafter (the
"Restricted Period") shall not be made to U.S. persons or
for the account or benefit of U.S. persons and shall
otherwise be made in compliance with the provisions of
Regulation S. Subscriber has not been engaged or acted as
or on behalf of a distributor or dealer (and is not an
affiliate of a distributor or dealer) with respect to this
transaction.
2.2 Independent Investigation. The Subscriber, in
offering to subscribe for the Securities hereunder, has
relied upon an independent investigation made by it for
itself and on behalf of the Investors, the Subscriber
representing and warranting that it has full power and
authority to act on behalf of the Investors, and has, prior
to the date hereof, been given access to and the opportunity
to examine all books and records of the Company, and all
material contracts and documents of the Company. The
Subscriber will keep confidential all non-public information
regarding the Company that the Subscriber receives from the
Company. In making its investment decision to purchase the
Preferred Stock, the Subscriber and each Investor are not
relying on any oral or written representations or assurances
from the Company or any other person or any representation
of the Company or any other person other than as set forth
in this Agreement, public filings of the Company or in a
document executed by a duly authorized representative of the
Company making reference to this Agreement. The Subscriber
and each Investor have such experience in business and
financial matters that they are capable of evaluating the
risk of their investment and determining the suitability of
their investment. The Subscriber and each Investor are
sophisticated investors, as defined in Rule 506(b)(2)(ii)
of Regulation D, and accredited investors as defined in
Rule 501 of Regulation D, a copy of which definition is
attached hereto as Exhibit C.
2.3 Economic Risk. The Subscriber and each Investor
understands and acknowledges that an investment in the
Preferred Stock involves a high degree of risk, including
a possible total loss of investment. The Subscriber and
each Investor represents that the Subscriber and each
Investor is able to bear the economic risk of an investment
in the Preferred Stock. In making this statement the
Subscriber hereby represents and warrants that the
Subscriber and each Investor has adequate means of providing
for the Subscriber's and each Investor's current needs and
contingencies; the Subscriber and each Investor is able to
afford to hold the Preferred Stock for an indefinite period
and the Subscriber further represents that the Subscriber
and each Investor have such knowledge and experience in
financial and business matters that the Subscriber and each
Investor are capable of evaluating the merits and risks of
the investment in the Preferred Stock to be received by the
Subscriber and each Investor. Further, the Subscriber
represents that the Subscriber and each Investor are able
to bear the economic risks of an investment in the Preferred
Stock; the Subscriber and the Investor have no present need
for liquidity in such Preferred Stock; the Subscriber and
each Investor can afford a complete loss of such investment
in the Preferred Stock; and the Subscriber and each Investor
are willing to accept such investment risks.
2.4 No Government Recommendation or Approval. The
Subscriber and each Investor understand that no United
States federal or state agency or similar agency of any
other country has passed upon or made any recommendation or
endorsement of the Company, this transaction or the
subscription of the Securities.
2.5 No Directed Selling Efforts in Regard to this
Transaction. The Subscriber has not, and to the best of the
Subscriber's knowledge, neither the Company nor any
distributor, if any, participating in the offering of the
Securities nor any person acting for the Company or any such
distributor has conducted any "directed selling efforts" as
that term is defined in Rule 902 of Regulation S. Such
activity includes, without limitation, the mailing of
printed material to investors residing in the United States,
the holding of promotional seminars in the United States,
the placement of advertisements with radio or television
stations broadcasting in the United States or in
publications with a general circulation in the United
States, which discuss the offering of the Securities.
2.6 Reliance on Representation. This Agreement is
made by the Company with the Subscriber in reliance upon
such Subscriber's representations and covenants made in this
Section 2, which by his execution of this Agreement the
Subscriber hereby confirms. If the Subscriber includes or
consists of more than one person or entity, the obligations
of the Subscriber shall be joint and several and the
representations and warranties herein contained shall be
deemed to be made by and be binding upon each such person
or entity and their respective heirs, executors,
administrators, successors and assigns.
2.7 No Registration. Subscriber understands that the
Preferred Stock and the Common Stock issuable upon
conversion of the Preferred Stock have not been registered
under the Act and are being offered and sold pursuant to an
exemption from registration contained in the Act based in
part upon the representations of Subscriber contained
herein. The Common Stock does, however, carry certain
registration rights as set forth in the Registration Rights
Agreement executed by the parties hereto (the "Registration
Rights Agreement").
2.8 No Public Solicitation. Subscriber knows of no
public solicitation or advertisement of an offer in
connection with the proposed issuance and sale of the
Preferred Stock.
2.9 Investment Intent. Subscriber and each Investor
are acquiring the Preferred Stock to be issued and sold
hereunder (and the Shares issuable upon conversion of the
Preferred Stock) for the Subscriber and each Investor's own
account (or for beneficiaries' accounts over which the
Subscriber has investment discretion but no discretionary
voting or dispositive authority). Subscriber and each other
party acquiring Preferred Stock and the Shares issuable upon
conversion of the Preferred Stock pursuant to this Agreement
are acquiring such securities for investment and not with
a view to the distribution thereof. Subscriber understands
that Subscriber and each Investor must bear the economic
risk of this investment indefinitely unless the sale of such
Preferred Stock or such Shares is registered pursuant to the
Act, or an exemption from such registration is available,
and that except as set forth in the Registration Rights
Agreement, the Company has no present intention of
registering any such sale of the Preferred Stock or such
Shares. Subscriber for itself and on behalf of each
Investor represents and warrants to the Company that it has
no present plan or intention of selling the Preferred Stock
or the Shares in the United States, has made no
predetermined arrangements to sell the Preferred Stock or
the Shares other than as provided in the Registration Rights
Agreement and that the offering by the Company of its
securities to the Subscriber, as contemplated in this
Subscription Agreement (the "Offering"), together with any
subsequent resale of the Preferred Stock or the Shares, is
not part of a plan or scheme to evade the registration
provisions of the Act. Subscriber currently has no short
position in the Shares, including any short call position
or any long put position or any contract or arrangement that
has the effect of eliminating or substantially diminishing
the risk of ownership of the Preferred Stock or the Shares,
nor has engaged in any hedging transaction with respect to
the Preferred Stock or the Shares. Subscriber covenants
that neither Subscriber, any Investor, nor any of their
respective affiliates nor any person acting on its or their
behalf has the intention of entering, or will enter during
the Restricted Period, into any put option, short position
or any hedging transaction or other similar instrument or
position with respect to the Shares or securities of the
same class as the Shares and neither Subscriber, any
Investor nor any of their respective affiliates nor any
person acting on its or their behalf will use at any time
Shares acquired pursuant to this Agreement to settle any put
option, short position or other similar instrument or
position that may have been entered into prior to the
execution of this Agreement.
2.10 No Sale in Violation of the Act. Subscriber
further covenants neither Subscriber nor any Investor will
make any sale, transfer or other disposition of the
Preferred Stock or the Shares in violation of the Act
(including Regulation S), the Securities Exchange Act of
1934, as amended (the "Exchange Act") or the rules and
regulations of the Securities and Exchange Commission (the
"Commission") promulgated thereunder.
2.11 Incorporation and Authority. Subscriber has the
full power and authority to execute, deliver and perform
this Agreement and to perform its obligations hereunder for
itself and on behalf of the Investors. This Agreement has
been duly approved by all necessary action of Subscriber,
including any necessary shareholder approval, has been
executed by persons duly authorized by Subscriber, and
constitutes a valid and legally binding obligation of
Subscriber, enforceable in accordance with its terms.
2.12 No Reliance on Tax Advice. Subscriber and each
Investor have reviewed with his, her or its own tax advisors
the foreign, federal, state and local tax consequences of
this investment, where applicable, and the transactions
contemplated by this Agreement. Subscriber and each
Investor are relying solely on such advisors and not on any
statements or representations of the Company or any of their
agents and understands that Subscriber (and not the Company)
shall be responsible for the Subscriber's or Investor's own
tax liability that may arise as a result of this investment
or the transactions contemplated by this Agreement.
2.13 Independent Legal Advice. Subscriber
acknowledges that Subscriber and each Investor have had the
opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or her own legal
counsel. Subscriber is relying solely on such counsel and
not on any statements or representations of the Company or
any of its agents for legal advice with respect to this
investment or the transactions contemplated by this
Agreement, except for the representations, warranties and
covenants set forth herein and in the opinion provided for
in Section 7.5 herein. Subscriber acknowledges that the law
firm of Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., which
is acting as escrow agent in connection with this
transaction, is not legal counsel to Subscriber and has not
provided legal advice to Subscriber.
2.14 Compliance. If Subscriber or any Investor
becomes subject to Section 13(d) of the Exchange Act,
Subscriber or such Investor will duly file the required
Schedule thereunder.
2.15 Not an Affiliate. Neither Subscriber nor any
Investor is an officer, director or "affiliate" (as that
term is defined in Rule 405 of the Act) of the Company.
2.16 No Pledges. Neither Subscriber nor any Investor
has pledged the Securities, and will not pledge the
Securities during the Restricted Period (as defined below),
as collateral in a margin account or otherwise with a U.S.
person.
2.17 No Inquiries. Subscriber has not been the
subject of a regulatory inquiry by the Commission.
2.18 Warranties of Other Parties. If Subscriber is
purchasing the Preferred Stock for the accounts of parties
other than Subscriber (as contemplated by Section 2.9
above), Subscriber has full power and authority to make the
representations, warranties and agreements made pursuant to
this Agreement on behalf of the owners of such accounts, and
agrees that each representation, warranty and agreement made
by Subscriber herein is also made by and on behalf of each
owner of each such account.
3. Resales
Subscriber acknowledges and agrees that the Securities
may and will only be resold (a) in compliance with
Regulation S; (b) pursuant to a Registration Statement under
the Act; or (c) pursuant to an exemption from registration
under the Act.
4. Legends; Subsequent Transfer of Securities
4.1 Legends. The certificate(s) representing the
Preferred Stock shall bear the legend set forth below and
any other legend, if such legend or legends are reasonably
required by the Company to comply with state, federal or
foreign law. Assuming that there are no changes in the
material facts set forth in Section 2 of this Agreement or
applicable law from the date hereof until the date of
conversion, and subject to the Company's transfer agent's
receipt of a legal opinion from legal counsel to the
Company, the certificate representing the Shares into which
the Preferred Stock are converted after the Restricted
Period shall not bear a legend.
"The shares of Series A Preferred Stock of Spintek Gaming
Technologies, Inc. (the "Issuer") represented by this
certificate have been issued pursuant to Regulation S,
promulgated under the Securities Act of 1933, as amended
(the "Act"), and have not been registered under the Act or
any applicable state securities laws. These shares may not
be offered or sold within the United States or to or for the
account of a "U.S. Person" (as that term is defined in
Regulation S) during the period commencing on the sale of
these securities and ending on the fortieth (40th) day
following completion of the Regulation S offering of the
Issuer pursuant to which these shares have been issued,
which day is ______________, 1997 (the "Restricted Period").
The shares of Preferred Stock represented by this
certificate may first be converted into common stock of the
issuer on that date which is 45 days after the date of
issuance. The Issuer will notify the transfer agent of the
date of completion of such offering and of the expiration
of such Restricted Period. Following expiration of the
Restricted Period, these shares may not be offered or sold
unless such offer or sale is registered or exempt from
registration under the Act."
4.2 Transfers. Subject to receipt of a legal opinion
from legal counsel to the Company, the Company agrees, and
shall instruct its agents, that the Securities may be
transferred to any person or entity who is not an affiliate
of the Company if such transfer occurs after the Restricted
Period and the transfer is made in compliance with the Act.
Upon election by the Subscriber to convert the Preferred
Stock into Shares, the Subscriber shall deliver to the
Company a duly completed Notice of Conversion (a "Notice of
Conversion") in the form attached to this Agreement.
5. Issuance of Further Securities
5.1 Restrictions on Additional Issuances. The
Company will not issue any debt or equity securities for
cash in public or private capital raising transactions for
a period of ninety (90) days after the Closing, without the
prior written consent of the Subscriber; provided, however,
the requirement for Subscriber's prior written consent shall
not apply to: (i) the issuance of securities pursuant to the
exercise of options or warrants issued and outstanding on
March 31, 1997; (ii) any transaction involving the Company's
arrangements, now or in the future, with commercial banks
or other lending institutions; (iii) issuances of securities
pursuant to the acquisition of another corporation by the
Company by merger, purchase of substantially all of the
assets or other reorganization whereby the Company owns more
than fifty percent (50%) of the voting power of such
corporation following such transaction; (iv) any acquisition
or disposition of a product or a license by the Company on
the condition that such issuance is approved by the Board
of Directors of the Company; or (v) the issuance of
securities upon exercise or conversion of the Company's
Preferred Stock outstanding on the date of the Closing
(collectively, the "Permitted Issuances").
5.2 Right of First Refusal. The Company hereby
grants to the Subscriber the right of first refusal to
purchase all (or any part) of New Securities (as defined in
this Section) that the Company may, from time to time,
propose to sell and issue prior to June 30, 1999. "New
Securities" shall mean any capital stock of the Company,
whether now authorized or not, and rights, options or
warrants to purchase said capital stock, and debt or equity
securities of any type whatsoever that are, or may become,
convertible into said capital stock; provided, however, that
the term "New Securities" does not include Permitted
Issuances or stock options granted to full-time employees
or directors of the Company. In the event that the Company
proposes to undertake an issuance of New Securities, it
shall give the Subscriber written notice of its intention,
describing the type of New Securities, the price and the
general terms upon which the Company proposes to issue the
same. The Subscriber shall have fifteen (15) days from the
date of receipt of any such notice to agree to purchase all
or less than all of the New Securities for the price and
upon the general terms specified in the notice by giving
written notice to the Company and stating therein the
quantity of New Securities to be purchased. If the
Subscriber fails to exercise in full the right of first
refusal within such fifteen (15) day period, the Company
shall have sixty (60) days thereafter to sell the New
Securities respecting which the Subscriber's rights were not
exercised, at a price and upon general terms no more
favorable to the purchasers thereof than specified in the
Company's notice. In the event that the Company has not
sold the New Securities within such sixty (60) day period,
the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the
Subscriber in the manner provided above. The right of first
refusal granted under this Section shall terminate upon the
earlier of: (i) June 30, 1999; or (ii) the date upon which
the Subscriber ceases to own any securities: (a) purchased
in the Offering; (b) issued with respect to or upon
conversion of securities purchased in the Offering; or (c)
purchased pursuant to the right of first refusal granted
under this Section.
6. Representations, Warranties and Covenants of Company
The Company represents and warrants to and covenants
with the Subscriber as follows:
6.1 Organization, Good Standing, and Qualification.
The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State
of California and has all requisite corporate power and
authority to carry on its business as now conducted and as
proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have
a material adverse effect on the business or properties of
the Company and its subsidiaries taken as a whole. The
Company to its knowledge is not the subject of any pending
or threatened investigation or administrative or legal
proceeding by the Internal Revenue Service, the taxing
authorities of any state or local jurisdiction, or the
Securities and Exchange Commission which have not been
disclosed in the reports referred to in Section 6.5 below.
6.2 Corporate Condition. None of the Company's
filings made pursuant to the Exchange Act, including, but
not limited to, those reports referenced in Section 6.5
below, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make
the statements made, in light of the circumstances under
which they were made, not misleading. There have been no
material adverse changes in the Company's financial
condition or business since the date of those reports which
have not been disclosed to Subscriber in writing.
6.3 Authorization. All corporate action on the part
of the Company, its officers, directors and shareholders
necessary for the authorization, execution and delivery of
this Agreement, the performance of all obligations of the
Company hereunder and the authorization, issuance (or
reservation for issuance) and delivery of the shares of
Preferred Stock being sold hereunder and the Common Stock
issuable upon conversion of the Preferred Stock have been
taken, and this Agreement constitutes a valid and legally
binding obligation of the Company, enforceable in accordance
with its terms.
6.4 Valid Issuance of Preferred Stock and Common
Stock. The Preferred Stock, when issued, sold and delivered
in accordance with the terms hereof for the consideration
expressed herein, will have been issued in compliance with
all applicable U.S. federal and state securities laws. The
Common Stock issuable upon conversion of the Preferred Stock
when issued in accordance with the terms thereof, shall be
duly and validly issued and outstanding, fully paid and
nonassessable, and based in part on the representations and
warranties of Subscriber and any transferee of the Preferred
Stock, will be issued in compliance with all applicable U.S.
federal and state securities laws.
6.5 Current Public Information. The Company
represents and warrants to the Subscriber that the Company
is a "reporting issuer" as defined in Rule 902(l) of
Regulation S and it has a class of securities registered
under Section 12(g) of the Exchange Act and has filed all
the materials required to be filed as reports pursuant to
the Exchange Act for a period of at least twelve months
preceding the date hereof (or for such shorter period as the
Company was required by law to file such material). The
Subscriber has obtained copies of the Company's Form 10-KSB
for the year ended June 31, 1966. The Company undertakes
to furnish the Subscriber with copies of such other
information as may be reasonably requested by the Subscriber
prior to consummation of this Offering.
6.6 No Directed Selling Efforts in Regard to this
Transaction. The Company has not, and to the best of the
Company's knowledge neither the Subscriber nor any
distributor, if any, participating in the offering of the
Preferred Stock nor any person acting for the Company or any
such distributor has conducted any "directed selling
efforts" as that term is defined in Rule 902 of Regulation
S. Such activity includes, without limitation, the mailing
of printed material to investors residing in the United
States, the holding of promotional seminars in the United
States, the placement of advertisements with radio or
television stations broadcasting in the United States or in
publications with a general circulation in the United
States, which discuss the offering of Shares. The Company
represents and warrants that the Offering is not part of a
plan or scheme to evade the registration provisions of the
Act.
6.7 No Conflicts. The execution and delivery of this
Agreement and the consummation of the issuance of the
Securities and the transactions contemplated by this
Agreement do not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of,
or constitute a default under, the Certificate of
Incorporation or bylaws of the Company, or any indenture,
mortgage, deed of trust or other material payment or
instrument to which the Company is a party or by which it
or any of its properties or assets are bound, or any
existing applicable decree, judgment or order of any court,
Federal or State regulatory body, administrative agency or
other governmental body having jurisdiction over the Company
or any of its properties or assets.
6.8 Issuance of Securities. The Company will issue
one or more certificates representing the Preferred Stock
in the name of Subscriber in such denominations of $10,000
or greater to be specified by the Company prior to Closing.
Upon conversion of the Preferred Stock in accordance with
their terms, the Company will issue one or more certificates
representing Shares in the name of Subscriber and in such
denominations to be specified by Subscriber prior to
conversion. Subject to the Company's transfer agent's
receipt of a legal opinion from legal counsel to the
Company, the Shares to be issued upon conversion of the
Preferred Stock shall not bear any restrictive legends. The
Company further warrants that no instructions other than
these instructions, and instructions for a "stop transfer"
until the end of the Restricted Period, have been given to
the transfer agent and also warrants that the Shares shall
otherwise be freely transferable by Subscriber on the books
and records of the Company subject to compliance with
Federal and State securities laws, the receipt of a legal
opinion from legal counsel to the Company and the terms of
the Certificate of Designation for the Preferred Stock. The
Company will notify the transfer agent of the date of
completion of the Offering and of the date of expiration of
the Restricted Period. Nothing in this section shall affect
in any way Subscriber's obligations and agreement to comply
with all applicable securities laws upon resale of the
Securities.
6.9 No Action. The Company has not taken and will
not take any action that will affect in any way the running
of the Restricted Period or the ability of Subscriber to
resell freely the Securities in accordance with applicable
securities laws and the Agreement.
6.10 Compliance with Laws. As of the date hereof, the
conduct of the business of the Company complies in all
material respects with all material statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. The Company has not received notice of
any alleged violation of any statute, law, regulations,
ordinance, rule, judgment, order or decree from any
governmental authority. The Company shall comply with all
applicable securities laws with respect to the sale of the
Securities, including but not limited to the filing of all
reports required to be filed in connection therewith with
the Securities and Exchange Commission or any stock exchange
or the NASDAQ Stock Market or any other regulatory
authority.
6.11 Litigation. Except as disclosed in the Company's
Annual Report on Form 10-KSB, there is no action, suit or
proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending or, to the knowledge
of the Company, threatened, against or affecting the
Company, or any of its properties, which could reasonably
be expected to result in any material adverse change in the
business, financial condition or results of operations of
the Company, or which could reasonably be expected to
materially and adversely affect the properties or assets of
the Company.
6.12 No U.S. Offering. The Company represents that it
has not offered the Securities to the Subscriber or any
Investor in the U.S. or to any person in the United States
or any U.S. person.
6.13 Disclosures. There is no fact known to the
Company (other than general economic conditions known to the
public generally) that has not been disclosed in writing to
the Subscriber that (a) could reasonably be expected to have
a material adverse effect on the business, financial
condition or results of operations of the Company, or which
could reasonably be expected to materially and adversely
affect the properties or assets of the Company or (b) could
reasonably be expected to materially and adversely affect
the ability of the Company to perform its obligations
pursuant to this Subscription Agreement and the issuance of
the Convertible Debentures hereunder.
6.14 Commissions. Except for a fee which is payable
by the Company to X.X. Xxxxx Enterprises, Inc., no other
person, firm or corporation will be entitled to receive any
brokerage fee, commission or other similar payment from the
Company in connection with the consummation of the
transactions contemplated hereby and the Company shall not
make any such payment to any person, firm or corporation
other than X.X. Xxxxx Enterprises, Inc.
6.15 Capitalization. The Company, as of the date of
the Closing, will have outstanding the number of shares of
Common Stock, Preferred Stock, Options and Warrants as set
forth on Exhibit D.
7.Additional Covenants of Company
7.1 Accountants. The Company shall, until at least
the second anniversary of the date of the Closing (the
"Closing Date"), maintain as its independent auditors an
accounting firm that is authorized to practice before the
SEC.
7.2 Corporate Existence and Taxes. The Company
shall, until at least the second anniversary of the Closing
Date, maintain its corporate existence in good standing, and
shall pay all its taxes when due except for taxes which the
Company disputes.
7.3 Reserved Shares and Listings. For so long as any
Preferred Stock held by the Subscriber remains outstanding:
(a)the Company will reserve from its authorized
but unissued shares of Common Stock ("Common Stock") a
sufficient number of Shares to permit the conversion in full
of the outstanding stated value (face amount) of Preferred
Stock; and
(b)the Company will maintain the listing of its
Shares on the NASDAQ Bulletin Board Market System.
7.4 Liquidated Damages for Late Conversion. As set
forth in the Certificate of Designation for the Preferred
Stock, the Company shall use all reasonable efforts to issue
and deliver, within three business days after the Subscriber
has fulfilled all conditions and submitted all necessary
documents duly executed and in proper form required for
conversion (the "Deadline"), to the Subscriber or any party
receiving the Preferred Stock by transfer from the
Subscriber (together with the Subscriber, a "Holder"), at
the address of the Holder on the books of the Company, a
certificate or certificates for the number of Shares of
Common Stock to which the Holder shall be entitled. The
Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Deadline could result in
economic loss to the Holder. As compensation to the Holder
for such loss, the Company agrees to pay liquidated damages
to the Holder for late issuance of Shares upon conversion
in accordance with the following schedule (where "No.
Business Days Late" is defined as the number of business
days beyond ten business days from the date of receipt by
the Company of a Notice of Conversion and the transfer agent
of all necessary documentation duly executed and in proper
form required for conversion, including the original
certificate representing the Preferred Stock to be
converted, all in accordance with this Agreement, the
Preferred Stock and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
1 $ 500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
>10 $5,000 + $1,000 for each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages
incurred under this Section by check upon the earlier to
occur of (i) issuance of the Shares to the Holder or (ii)
each monthly anniversary of the receipt by the Company of
such Holder's Notice of Conversion. Nothing herein shall
limit the Subscriber's right to pursue actual damages for
the Company's failure to issue and deliver shares of Common
Stock to the Subscriber in accordance with the terms of the
Certificate of Designation.
7.5 Conversion Notice. The Company agrees that, in
addition to any other remedies which may be available to the
Subscriber, including, but not limited to, remedies
available under Section 7.4 of this Agreement, in the event
the Company fails for any reason, other than an act of God,
to effect delivery to the Subscriber of certificates
representing Shares within three (3) business days following
receipt by the Company of a Notice of Conversion, the
Investor will be entitled to revoke the Notice of Conversion
by delivering a notice to such effect to the Company
whereupon the Company and the Subscriber shall each be
restored to their respective positions immediately prior to
delivery of such Notice of Conversion.
7.6 Opinion of Counsel. Subscriber shall, upon
purchase of the Convertible Debentures, receive an opinion
letter from Xxxxxxxxx Xxxxxxx & Xxxxx, Counsel to the
Company, to the effect that (i) the Company is duly
incorporated and validly existing; (ii) this Agreement and
the issuance of Preferred Stock have been duly approved by
all required corporate action, and that all such
securities, upon due issuance, shall be validly issued and
outstanding, fully paid and nonassessable; (iii) this
Agreement and the Registration Rights Agreement are valid
and binding obligations of the Company, enforceable in
accordance with their terms, except as enforceability of
any indemnification provisions may be limited by
principles of public policy, and subject to laws of
general application relating to bankruptcy, insolvency and
the relief of debtors and rules of laws governing specific
performance and other equitable remedies; and (iv) based
upon the representations and warranties of the Company and
each Subscriber in the Offering, the offer and sale of the
Preferred Stock to the Subscriber is exempt from the
registration requirements of the Securities Act; except
that with respect to the foregoing opinions counsel may
add such qualifications as are consistent with firm
practice, including an assumption that the transaction
does not constitute a plan or scheme to evade the
registration provisions of the Act.
7.7 Form 8-K Filing. The Company shall timely file
a Form 8-K in connection with the Offering, and will timely
make any and all such additional filings under the
securities laws deemed necessary by such counsel.
7.8 Registration Rights. The Company will grant the
Subscriber the registration rights covering the Shares
issuable on conversion of the Preferred Stock on
substantially the terms of the Registration Rights Agreement
attached hereto as Exhibit E on the Closing Date.
8. Conversion Right
The Company knows of no reason for disallowing the
conversion of the Preferred Stock into Shares upon
expiration of the Restricted Period and hereby covenants and
agrees to permit such conversion and not to use legal
process or take any action to prevent such conversion.
9. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, U.S.A.,
applicable to agreements made in and wholly to be performed
in that jurisdiction, except for matters arising under the
Act or the Exchange Act which matters shall be construed and
interpreted in accordance with such laws. Any action
brought to enforce, or otherwise arising out of, this
Agreement shall be heard and determined in either a federal
or state court sitting in the State of Georgia, U.S.A.
10. Entire Agreement; Amendment
This Agreement, the Preferred Stock, the Registration
Rights Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound
to any other party in any manner by any warranties,
representations or covenants except as specifically set
forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or
termination is sought.
11. Notices, Etc.
Any notice, demand or request required or permitted to
be given by either the Company or the Subscriber pursuant
to the terms of this Agreement shall be in writing and shall
be deemed given when delivered personally or by facsimile,
with a hard copy to follow by two day courier addressed to
the parties at the addresses or facsimile numbers of the
parties set forth at the end of this Agreement or such other
address or facsimile number as a party may request by
notifying the other in writing.
12. Counterparts
This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of
which together shall constitute one instrument.
13. Severability
In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable or void, this Agreement shall
continue in full force and effect without said provision;
provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement
to any party.
14.Titles and Subtitles
The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in
construing or interpreting this Agreement.
15.Amount
The undersigned Subscriber hereby subscribes for
shares of Preferred Stock with a stated value (i.e., in
the face amount) of One Million Four Hundred and Twenty
Nine Thousand Dollars ($1,429,000.00) (U.S.) and pays
herewith purchase funds in the amount of One Million
Dollars ($1,000,000.00) (U.S.). as agent for several non-
affiliated clients, none of which will upon conversion
ever own more than 4.99% of the common shares and RBB Bank
has neither voting nor disposition power for those shares.
The undersigned Subscriber acknowledges that this
subscription shall not be effective unless accepted by the
Company as indicated below.
Dated this 21st day of April, 1997.
RBB Bank Aktiengesellschaft
Name) (Please Print)
/s/ XXXXXXX XXXXXXX
(Signature) Xxxxxxx Xxxxxxx, Xxxxxxxxxx
Xxxxxxxx 00, 0000 Xxxx, Xxxxxxx
(Mailing Address)
000-00-000-0000/354
(Telephone Number)
000-00-000-0000/392
(Facsimile Number)
Austria
(Place of Execution)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE
21st DAY OF APRIL, 1997.
SPINTEK GAMING TECHNOLOGIES,
INC.
By: /s/ XXXX X. XXXXXXX
Print Name: Xxxx X. Xxxxxxx
Title: Chairman
Address: 000 Xxxxx Xxxxx,
Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert Shares of Series A
Preferred Stock)
The undersigned hereby irrevocably elects to convert
$________ U.S. in stated value (face amount) of Series A
Preferred Stock (the "Preferred Stock"), represented by
Certificate No(s). _____ into shares of common stock (the
"Common Stock") of Spintek Gaming Technologies, Inc. (the
"Company"). If shares are to be issued in the name of a
person other than undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is
delivering herewith such certificates. No fee will be
charged to the undersigned for any conversion, except for
transfer taxes, if any.
The undersigned represents that it and each person or entity
on whose behalf it holds Preferred Stock to be converted
into Common Stock (each an "Investor"): (i) is familiar
with and understands the terms, conditions and requirements
contained in Regulation S ("Regulation S") and Rule 144
promulgated under the Securities Act of 1933, as amended
(the "Act"); (ii) is not a "U.S. Person" or "distributor"
as defined in Regulation S; (iii) purchased the Convertible
Debenture or Preferred Stock for which conversion is being
elected, and is purchasing the Common Stock referenced
herein, for its own account and for the account of each
Investor and not for the account or benefit of any U.S.
Person; (iv) will comply with the transfer restrictions
contained in Section 4(1) of the Act and Rule 144
promulgated thereunder to the extent they are applicable;
(v) will make any sale, transfer or other disposition of the
Common Stock in full compliance with the Act, the Exchange
Act, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder;
and (vi) received the offer to purchase the Preferred Stock
outside the United States and, at the time the Subscription
Agreement pursuant to which the Preferred Stock was
purchased, and, upon execution of this Notice of Conversion,
is outside the United States. The undersigned has obtained
representations from each Investor with respect to
compliance with paragraphs (i) - (vi) of this Notice.
Conversion Formula:
______________________________
Date of Conversion
______________________________
Applicable Conversion Price
______________________________
Signature
______________________________
Name
Address:
______________________________
______________________________
* No shares of Common Stock will be issued until the
original Preferred Stock Certificate(s), as the case may be,
to be converted and the Notice of Conversion are received
by the Company's Attorney or Transfer Agent. The original
Preferred Stock Certificate(s) to be converted and the
Notice of Conversion must be received by the Company's
Attorney or Transfer Agent by the third business day
following the Date of Conversion, or such Notice of
Conversion shall become null and void in the discretion of
the Holder.
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION, NUMBER, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE
QUALIFICATIONS, LIMITATIONS, RESTRICTIONS,
AND OTHER DISTINGUISHING CHARACTERISTICS OF
SERIES A PREFERRED STOCK
OF
SPINTEK GAMING TECHNOLOGIES, INC.
It is hereby certified that the Certificate of Designation
originally filed on July 16, 1996, 1996 with respect to the
Series A Preferred Stock is hereby amended and restated as
follows:
1. The name of the corporation (hereinafter called
the "Corporation") is SPINTEK GAMING TECHNOLOGIES, INC.
2. The certificate of incorporation of the
Corporation authorizes the issuance of 100,000 shares of
Preferred Stock, no par value per share, and expressly vests
in the Board of Directors of the Corporation the authority
provided therein to issue any or all of said shares in one
or more series and by resolution or resolutions to establish
the designation, number, full or limited voting powers, or
the denial of voting powers, preferences and relative,
participating, optional, and other special rights and the
qualifications, limitations, restrictions, and other
distinguishing characteristics of each series to be issued.
3. The Board of Directors of the Corporation,
pursuant to the authority expressly vested in it as
aforesaid, has adopted the following resolutions creating
a Series A issue of Preferred Stock:
RESOLVED, that 15,000 of the 100,000 authorized shares
of Preferred Stock of the Corporation shall be designated
Series A Preferred Stock (the "Series A Preferred Stock")
and shall possess the rights and privileges set forth below:
A. Dividends.
(i) The holder of each issued and
outstanding share of Series A Preferred Stock shall be
entitled to receive, when and as declared by the Board of
Directors of the Corporation, out of the assets at the time
legally available for such purpose, dividends at a rate of
4% per annum, payable in cash or in stock. Such dividends
shall not be cumulative and no right to such dividends shall
accrue to holders of Series A Preferred Stock unless
declared by the Corporation's Board of Directors. No
dividends shall be declared or paid with respect to the
Corporation's Common Stock (other than a dividend payable
solely in Common Stock of the Corporation), or upon any
other class of Preferred Stock of the Corporation with a
dividend preference subordinate to the dividend preference
of the Series A Preferred Stock, unless a dividend of equal
or greater amount per share (on an as-if-converted to Common
Stock basis) is first declared and paid with respect to the
Series A Preferred Stock.
(ii) No dividends shall be paid on the
Series A Preferred Stock at such time as:
(a) such payment would violate
California law; or
(b) such payment would impair the net
capital or other financial requirements applicable to the
Corporation established by the National Association of
Securities Dealers, Inc., the Securities and Exchange
Commission, or any other state or federal securities
authority or agency, any state or federal commodities
authority or agency, or any commodities or securities
exchange.
B. Liquidation Preference
(i) In the event of any liquidation,
dissolution or winding-up of the Corporation, either
voluntary or involuntary (a "Liquidation"), the holders of
shares of the Series A Preferred Stock then issued and
outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its
shareholders, whether from capital, surplus or earnings,
before any payment shall be made to the holders of shares
of the Common Stock or upon any other series of Preferred
Stock of the Corporation with a liquidation preference
subordinate to the liquidation preference of the Series A
Preferred Stock, an amount equal to one thousand dollars
($1,000) per share. If, upon any Liquidation of the
Corporation, the assets of the Corporation available for
distribution to its shareholders shall be insufficient to
pay the holders of shares of the Series A Preferred Stock
and the holders of any other series of Preferred Stock with
a liquidation preference equal to the liquidation preference
of the Series A Preferred Stock the full amounts to which
they shall respectively be entitled, the holders of shares
of the Series A Preferred Stock and the holders of any other
series of Preferred Stock with liquidation preference equal
to the liquidation preference of the Series A Preferred
Stock shall receive all of the assets of the Corporation
available for distribution and each such holder of shares
of the Series A Preferred Stock and the holders of any other
series of Preferred Stock with a liquidation preference
equal to the liquidation preference of the Series A
Preferred Stock shall share ratably in any distribution in
accordance with the amounts due such shareholders. After
payment shall have been made to the holders of shares of the
Series A Preferred Stock of the full amount to which they
shall be entitled, as aforesaid, the holders of shares of
the Series A Preferred Stock shall be entitled to no further
distributions thereon and the holders of shares of the
Common Stock and of shares of any other series of stock of
the Corporation shall be entitled to share, according to
their respective rights and preferences, in all remaining
assets of the Corporation available for distribution to its
shareholders.
(ii) A merger or consolidation of the
Corporation with or into any other corporation, or a sale,
lease, exchange, or transfer of all or any part of the
assets of the Corporation which shall not in fact result in
the liquidation (in whole or in part) of the Corporation and
the distribution of its assets to its shareholders shall not
be deemed to be a voluntary or involuntary liquidation (in
whole or in part), dissolution, or winding-up of the
Corporation.
C. Conversion of Series A Preferred Stock.
The holders of Series A Preferred Stock
shall have the following conversion rights:
(i) Right to Convert. Each share of Series
A Preferred Stock shall be convertible, on the Conversion
Dates and at the Conversion Prices set forth below, into
fully paid and nonassessable shares of Common Stock.
(ii) Mechanics of Conversion. Each holder
of Series A Preferred Stock who desires to convert the same
into shares of Common Stock shall provide notice
("Conversion Notice") via telecopy to the Corporation. The
original Conversion Notice and the certificate or
certificates representing the Series A Preferred Stock for
which conversion is elected, shall be delivered to the
Corporation by international courier, duly endorsed. The
date upon which a Conversion Notice is properly received by
the Corporation shall be a "Notice Date."
The Corporation shall use all reasonable efforts to
issue and deliver within three (3) business days after the
Notice Date, to such holder of Series A Preferred Stock at
the address of the holder on the stock books of the
Corporation, a certificate or certificates for the number
of shares of Common Stock to which the holder shall be
entitled as aforesaid; provided that the original shares of
Series A Preferred Stock to be converted are received by the
transfer agent or the Corporation within three business days
after the Notice Date and the person or persons entitled to
receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such
date. If the original shares of Series A Preferred Stock
to be converted are not received by the transfer agent or
the Corporation within three business days after the Notice
Date, the Conversion Notice shall become null and void.
(iii) Conversion Dates. The Series A
Preferred Stock shall become convertible into shares of
Common Stock at any time commencing forty-five (45) days
after the last day on which there is an original issuance
of the Series A Preferred Stock (the "Conversion Date").
(iv) Conversion Price. Each share of Series
A Preferred Stock shall be convertible into the number of
shares of Common Stock according to the following formula:
[(.04) (N/365) (1,000)] + 1,000
Conversion Price
N = the number of days between (i) the
date of issuance of the Series A
Preferred Stock and (ii) the
applicable date of conversion for the
Series A Preferred Stock for which
conversion is being elected.
Conversion
Price = the average closing bid price of the
Corporation's Common Stock for the
five (5) trading days immediately
preceding the Notice Date.
(v) Automatic Conversion. Each share of
Series A Preferred Stock outstanding on December 31, 1999
automatically shall be converted into Common Stock on such
date at the Conversion Price then in effect, and December
31, 1999 shall be deemed to be the Notice Date with respect
to such conversion. The Company shall have no right to
force conversion of any outstanding shares of Series A
Preferred Stock prior to December 31, 1999.
(vi) Fractional Shares. No fractional share
shall be issued upon the conversion of any shares, share or
fractional share of Series A Preferred Stock. All shares
of Common Stock (including fractions thereof) issuable upon
conversion of shares (or fractions thereof) of Series A
Preferred Stock by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result
in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in
the issuance of a fraction of a share of Common Stock, the
Corporation shall, in lieu of issuing any fractional share,
pay the holder otherwise entitled to such fraction a sum in
cash equal to the closing bid price of the Corporation's
Common Stock on the Notice Date multiplied by such fraction.
(vii) Reservation of Stock Issuable Upon
Conversion. The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock,
such number of its shares of Common Stock as shall from time
to time be sufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock; and if
at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A
Preferred Stock, the Corporation will take such corporate
action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(viii) Adjustment to Conversion Price.
(a) If, prior to the conversion of all
shares of Series A Preferred Stock at a time when conversion
would be at the Conversion Price, there is a stock split,
stock dividend, or other similar event which occurs during
the five-day period utilized to compute the Conversion
Price, then the Closing Bid Price used to compute the
Conversion Price shall be appropriately adjusted to reflect,
as deemed equitable and appropriate by the Company, such
stock split, stock dividend or other similar event.
(b) If, prior to the conversion of all
shares of Series A Preferred Stock, there shall be any
merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which
shares of Common Stock of the Corporation shall be changed
into the same or a different number of shares of the same
or another class or classes of stock or securities of the
Corporation or another entity, then the holders of Series
A Preferred Stock shall thereafter have the right to
purchase and receive upon conversion of shares of Series A
Preferred Stock, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon
conversion, such shares of stock and/or securities as may
be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore
purchasable and receivable upon the conversion of shares of
Series A Preferred Stock held by such holders had such
merger, consolidation, exchange of shares, recapitalization
or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the
rights and interests of the holders of the Series A
Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for adjustment
of the Conversion Price and of the number of shares issuable
upon conversion of the Series A Preferred Stock) shall
thereafter be applicable, as nearly as may be practicable
in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Corporation shall
not effect any transaction described in this subsection
unless the resulting successor or acquiring entity (if not
the Corporation) assumes by written instrument the
obligation to deliver to the holders of the Series A
Preferred Stock such shares of stock and/or securities as,
in accordance with the foregoing provisions, the holders of
the Series A Preferred Stock may be entitled to purchase.
(c) If any adjustment under this
subsection would create a fractional share of Common Stock
or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number
of shares of Common Stock issuable upon conversion shall be
the next higher number of shares.
D. Redemption.
(i) Right to Redeem on Conversion. The
Corporation shall have the right, in its sole discretion,
upon receipt of a notice of conversion pursuant to Section
C, to redeem in whole or in part any shares of Series A
Preferred Stock submitted for conversion, immediately prior
to conversion. If the Corporation elects to redeem some,
but not all, of the shares of Series A Preferred Stock
submitted for conversion, the Company shall redeem from
among the shares of Series A Preferred Stock submitted by
the various shareholders for conversion on the applicable
date, a pro-rata amount from each shareholder so submitting
shares of Series A Preferred Stock for conversion.
(ii) Mechanics of Redemption on Conversion.
The Corporation shall effect each such redemption by giving
notice of its election to redeem, by facsimile within 1
business day following receipt of a notice of conversion
from a Holder, with a copy by 2-day courier, to the Holder
of shares of Series A Preferred Stock submitted for
conversion at the address and facsimile number of such
Holder appearing in the Corporation's register for the
Series A Preferred Stock. Such redemption notice shall
indicate whether the Corporation will redeem all or part of
the shares of Series A Preferred Stock submitted for
conversion and the applicable redemption price. The
Corporation shall not be entitled to send any notice of
redemption and begin the redemption procedure unless it has
the full amount of the redemption price, in cash, available
in a demand or other immediately available account in a bank
or similar financial institution on the date the redemption
notice is sent to shareholders.
The redemption price per shares of Series A Preferred
Stock shall be calculated in accordance with the following
formula:
Principal + Interest x Closing Bid Price
Conversion Price
For the purposes of the above formula, "Principal",
"Interest", "Closing Bid Price" and "Conversion Price" shall
have the meanings set forth in Section C.
The redemption price shall be paid to the Holder of
shares of Series A Preferred Stock redeemed within 10
business days of the delivery of the notice of such
redemption to such Holder; provided, however, that the
Corporation shall not be obligated to deliver any portion
of such redemption price unless either the certificates
evidencing the shares of Series A Preferred Stock redeemed
are delivered to the Corporation or its transfer agent as
provided in Section C, or the Holder notifies the
Corporation or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with
such certificates.
(iii) Redemption on Asset Sale. In the
event the Corporation enters into a transaction or series
of transactions to sell all or substantially all of its
assets, the Corporation shall, within seven days after the
closing of such transaction and after giving at least 15
days advance written notice of such transaction (which
notice shall specify the date that such redemption is to be
effected, which date is referred to hereinafter as the
"Effective Date of Redemption"), redeem the shares of Series
A Preferred Stock for cash. The redemption price in such
event ("Redemption Price on Asset Sale") shall be calculated
in accordance with the formula set forth in Section D(ii)
above.
Upon the close of the transaction causing redemption
under this Section D(iii), the Corporation shall deposit the
Redemption Price on Asset Sale for all outstanding shares
of Series A Preferred Stock with a bank or trust company
having aggregate capital and surplus in excess of
$50,000,000 as a trust fund for the benefit of the
respective holders of the Series A Preferred Stock
designated for redemption and not yet redeemed.
Simultaneously, the Corporation shall deposit irrevocable
instruction and authority to such bank or trust company to
publish the notice of redemption thereof (or to complete
such publication if theretofore commenced) and to pay, on
and after the date fixed for redemption or prior thereto,
the Redemption Price on Asset Sale to the holders of the
Series A Preferred Stock upon surrender of their
certificates.
(iv) Redemption on Change of Control. In
the event of a Change of Control (as hereinafter defined),
the shares of Series A Preferred Stock shall be redeemed by
the Corporation for cash at a redemption price calculated
in accordance with the formula set forth in Section D(ii)
above.
For purposes of this Section D(iv), Change of Control
shall be deemed to have occurred at such time as:
(a) any person (other than the
Corporation, any Subsidiary of the Corporation or any
employee benefit plan of the Corporation)("Person") is or
becomes the beneficial owner, directly or indirectly,
through a purchase, merger or other acquisition or
transaction or series of transactions, of shares of capital
stock of the Corporation entitling such Person to exercise
50% or more of the total voting power of all shares of
capital stock of the Corporation entitled to vote generally
in the election of directors (any shares of voting stock of
which such person or group is the beneficial owners that are
not then outstanding for purposes of calculating such
percentage); or
(b) any consolidation of the
Corporation with, or merger of the Corporation into, any
other Person, any merger of another Person into the
Corporation (other than a merger (x) which does not result
in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock or (y)
which is effected solely to change the jurisdiction of
incorporation of the Corporation and results in a
reclassification, conversion or exchange of outstanding
shares of Common Stock into solely shares of Common Stock).
(v) No Other Redemption. The Company shall
have no right to redeem the Series A Preferred Stock except
as provided in Section D hereof.
E. Voting. Except as otherwise provided by the
General Corporation Law of the State of California, the
holders of the Series A Preferred Stock shall have no voting
power whatsoever, and no holder of Series A Preferred Stock
shall vote or otherwise participate in any proceeding in
which actions shall be taken by the Corporation or the
shareholders thereof or be entitled to notification as to
any meeting of the Board of Directors or the shareholders.
F. Protective Provisions. So long as shares of
Series A Preferred Stock are outstanding, the Corporation
shall not without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series
A Preferred Stock:
(i) alter or change the rights, preferences
or privileges of the shares of Series A Preferred Stock so
as to affect adversely the Series A Preferred Stock;
(ii) create any new class or series of stock
being on a parity with or having a preference over the
Series A Preferred Stock with respect to dividends, to
payments upon Liquidation (as provided for in Section B of
this Designation) or to redemption; or
(iii) do any act or thing not authorized
or contemplated by this Designation which would result in
taxation of the holders of shares of the Series A Preferred
Stock under Section 305 of the Internal Revenue Code of
1986, as amended (or any comparable provision of the
Internal Revenue Code as hereafter from time to time
amended).
G. Status of Converted Stock. In the event any
shares of Series A Preferred Stock shall be converted as
contemplated by this Designation, the shares so converted
shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class or
series, and shall not be issuable by the Corporation as
Series A Preferred Stock.
FURTHER RESOLVED, that the statements contained in the
foregoing resolutions creating and designating the said
Series A Preferred Stock and fixing the number, powers,
preferences and relative, optional, participating, and other
special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics
thereof shall, upon the effective date of said series, be
deemed to be included in and be a part of the certificate
of incorporation of the Corporation pursuant to the
provisions of the California Corporations Code
Signed on April 21, 1997.
By: /s/ XXXX X. XXXXXXX
Its: Chairman
Attest:
/s/ XXXXXXX X. XXXXXXXXX V
Secretary
EXHIBIT B
Definition of "U.S. Person"
Pursuant to Rule 902 (c), (o) and (p) of Regulation S, the
terms "U.S. person" and "United States" are defined as
follows:
(o) U.S. Person.
1. "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation
organized or incorporated under the laws of the United States;
(iii) Any estate of which any executor
or administrator is a U.S. person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign
entity located in the United States;
(vi) Any non-discretionary account or
similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a
U.S. person;
(vii) Any discretionary account or
similar account (other than an estate or trust) held by a
dealer or other fiduciary organized incorporated, or (if an
individual) resident in the United States; and
(viii) Any partnership or corporation if:
(A) organized or incorporated under the laws of any foreign
jurisdiction; and (B) formed by a U.S. person principally
for the purpose of investing in securities not registered
under the Securities Act of 1933, as amended (the "Act")
unless it is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) of the Act)
who are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this
rule, any discretionary account or similar account (other
than an estate or trust) held for the benefit or account of
a non-U.S. person by a dealer or other professional
fiduciary organized, incorporated, or (if an individual)
resident in the United States shall not be deemed a "U.S.
person".
(3) Notwithstanding paragraph (o)(1), any estate
of which any professional fiduciary acting as executor or
administrator is a U.S. person shall not be deemed a U.S.
person if:
(i) An executor or administrator of the
estate who is not a U.S. person has sole or shared
investment discretion with respect to the assets of the
estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1), any trust
of which any professional fiduciary acting as trustee is a
U.S. person shall not be deemed a U.S. person if a trustee
who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no
beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(1), an
employee benefit plan established and administered in
accordance with the law of a country other than the United
States and customary practices and documentation of such
country shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(1), any agency
or branch of a U.S. person located outside the United States
shall not be deemed a "U.S. person" if:
(i) The agency or branch operates for valid
business reasons; and
(ii) The agency or branch is engaged in the
business of insurance or banking and is subject to
substantive insurance or banking regulation, respectively,
in the jurisdiction where located.
(7) The International Monetary Fund, the
International Bank for Reconstruction and Development, the
Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other
similar international organizations, their agencies,
affiliates and pension plans shall not be deemed "U.S.
persons".
(p) United States. "United States" means the United
States of America, its territories and possessions, any
State of the United States, and the District of Columbia.
EXHIBIT C
Definition of "Accredited Investor"
Pursuant to Rule 501 (a) of Regulation D, the term
"Accredited Investor" is defined as follows:
1. Any bank as defined in section 3(a)(2) of the Securities Act
of 1933 (the "Act"), or any savings and loan association or
other institution as defined in section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to section 15 of
the Securities Exchange Act of 1934; any insurance company
as defined in section 2(13) of the Act; any investment
company registered under the Investment Company Act of 1940
or a business development company as defined in section
2(a)(48) of that Act; Small Business Investment Company
licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of
a state or its political subdivisions for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000; employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined
in section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by
persons that are accredited investors.
2. Any private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of 1940.
3. Any organization described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total
assets in excess of $5,000,000.
4. Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any
director, executive officer, or general partner of a general
partner of that issuer.
5. Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase
exceeds $1,000,000.
6. Any natural person who had an individual income in excess
of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in
each of those years and has a reasonable expectation of
reaching the same income level in the current year.
7. Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in section
b)(2)(ii) of Rule 506.
8. Any entity in which all of the equity owners are accredited
investors.
EXHIBIT D
Outstanding Common Stock, Convertible Debentures
and Warrants
Spintek Gaming Technologies, Inc.
As of April 21,1997
-- 10,866,885 Shares of CommoN Stock
-- 6,842 Shares of Preferred Stock
-- 1,963,500 Options
-- 250,000 Warrants
[Describe Terms (Features) of Debentures, Preferred Stock,
Options and Warrants]
EXHIBIT E
Spintek Gaming Technologies, Inc.
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement")
is entered into as of April 21st, 1997, by and among
SPINTEK GAMING TECHNOLOGIES, INC., a California
corporation (the "Company"), and the persons and entities
listed on Exhibit A attached hereto (the "Investors").
Recitals
WHEREAS, pursuant to Subscription Agreements (the
"Agreements"), by and among the Company and the Investors,
the Company has agreed to sell and the Investors have
agreed to purchase an aggregate of 1429 shares of the
Company's Series A Preferred Stock (the "Preferred Stock")
of the Company for aggregate purchase price of One
Million Dollars ($1,000,000.00 U.S.) Face value of each
share shall be $1,000.00 each.
WHEREAS, the Preferred Stock is convertible into
shares of the Company's Common Stock, $.002 par value per
share (the "Shares"); and
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Investors' agreement to enter into
the Agreements, the Company has agreed to provide the
Investors with certain registration rights with respect to
the Shares;
NOW THEREFORE, in consideration of the mutual
promises, representations, warranties, covenants and
conditions set forth in the Agreements and this
Registration Rights Agreement, the Company and the
Investors agree as follows:
Agreement:
I. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective
meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other Federal agency at the time
administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock,
par value $.002 per share.
"Initiating Holders" shall mean holders of the
Company's Preferred Stock having an aggregate initial
purchase price from the Company of $500,000 or more.
"Other Registrable Securities" shall mean those
shares of Common Stock heretofore or hereafter issued
pursuant to one or more agreements granting the purchasers
of such securities the right to have the Company register
such securities or include such securities in any other
registration of the Company's equity securities.
"Registrable Shares" shall means (i) the Shares, and
(ii) any Common Stock of the Company issued or issuable in
respect of the Shares or upon any stock split, stock
dividend, recapitalization or similar event; provided,
however, that Registrable Shares or other securities shall
no longer be treated as Registrable Shares if (A) they
have been sold to or through a broker or dealer or
underwriter in a public distribution or a public
securities transaction, (B) they have been sold in a
transaction exempt from the registration and prospectus
delivery requirements of the Securities Act so that all
transfer restrictions and restrictive legends with respect
thereto are removed upon consummation of such sale or (C)
the Shares are available for sale under the Securities Act
(including Rule 144), in the opinion of counsel to the
Company, without compliance with the registration and
prospectus delivery requirements of the Securities Act so
that all transfer restrictions and restrictive legends
with respect thereto may be removed upon the consummation
of such sale.
The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and
filing a registration statement in compliance with the
Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expense
incurred by the Company in compliance with Section 2
hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements
of counsel for the Company, blue sky fees and expenses,
reasonable fees and disbursements (not to exceed $20,000)
of one counsel for all the selling holders of Registrable
Shares for a limited "due diligence" examination of the
Company, and the reasonable expenses of any special audits
incident to or required by any such registration (but
excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company,
and excluding all underwriting discounts and selling
commissions applicable to the sale of the Registrable
Shares).
"Securities Act" shall mean the Securities Act of
1933, as amended, or any similar federal statute, and the
rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale
of Registrable Shares and all fees and disbursements of
one counsel for the selling holders of Registrable Shares
(other than the fees disbursements of such counsel
included in Registration Expenses).
II.Requested Registration.
The following registration rights will apply if, and
only if, at any time prior to the termination of this
Agreement, Regulation S promulgated under the Securities
Act is rescinded or modified so as to preclude Initiating
Holders from reselling in United States public securities
markets Shares received from the Company pursuant to the
Agreements following expiration of the Restricted Period
(as defined in the Agreements), or if, for any other
reason, the Company refuses to issue Shares at the times
required by the Agreements bearing no restrictive legend
to Initiating Holders after expiration of the Restricted
Period; provided, however, that no Investor shall be
entitled to request registration pursuant to this
Agreement (and such Investor shall not be considered an
Initiating Holder pursuant to this Agreement, and the
securities held by such Investor shall not be considered
Registrable Shares pursuant to this Agreement) if a
representation or warranty of such Investor in the
Agreements between the Investor and the Company is
inaccurate or was inaccurate when made, or the Investor
has failed to comply with the covenants and agreements of
the Investor set forth in the Agreements between the
Investor and the Company:
(a) Request for Registration. If the Company
shall receive from Initiating Holders, at any time after
two (2) and prior to twenty four (24) months following the
final closing of the sale of the Preferred Stock pursuant
to the Agreements, a written request that the Company
effect a registration with respect to all, but not less
than all, of the Registrable Shares held by such
Initiating Holders (which notice shall specify the
intended method of disposition), the Company shall:
i) promptly give written notice of the
proposed registration to all other holders of Registrable
Shares; and
ii) as soon as practicable use its best
efforts to effect such registration (including, without
limitation, the execution of an undertaking to file post-
effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued
under the Securities Act) as may be so requested and as
would permit or facilitate the sale and distribution of
all or such portion of such Registrable Shares as are
specified in such request, together with all or such
portion of the Registrable Shares of any holder or holders
of Registrable Shares joining in such request as are
specified in a written request given within fifteen (15)
days after receipt of such written notice from the
Company; provided that the Company shall not be obligated
to effect, or to take any action to effect, any such
registration pursuant to this Section 2:
a) after the Company has effected
one such registration pursuant to this Section 2(a)
and such registration has been declared or ordered
effective by the Commission and the sale of such
Registrable Shares shall have closed; or
b) within the period starting with
the date thirty (30) days prior to the Company's
good faith estimated date of filing of, and ending
ninety (90) days following the effective date of,
any registered offering of the Company's securities
to the general public; or
c) more often than once in each
eighteen (18) month period during the term of this
agreement.
Subject to the foregoing limitations in
clauses (A) and (B) above, the Company shall file a
registration statement covering the Registrable Shares so
requested to be registered as soon as practicable after
receipt of the request or requests of the Initiating
Holders, but no later than forty-five (45) days following
receipt of such request or requests, except in the event
audited financial statements not previously prepared are
required to be prepared prior to the filing of such
registration statement, in which case such registration
statement must be filed as soon as practicable, but in any
event within ninety (90) days following receipt of such
request or requests.
The registration statement filed pursuant to the
request of the Initiating Holders may, subject to the
provision of Section 2(b) below, include Other Registrable
Securities, other securities of the Company which are held
by officers or directors of the Company or which are held
by other holders of registration rights, and may include
securities of the Company being sold for the account of
the Company.
(b) Underwriting. If the Initiating Holders
intend to distribute the Registrable Shares covered by
their request by means of an underwriting, they shall so
advise the Company as a part of their request made
pursuant to Section 2 and the Company shall include such
information in the written notice referred to in Section
2(a)(i) above. The right of any holder of Registrable
Shares to registration pursuant to Section 2 shall be
conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's
Registrable Shares in such underwriting (unless otherwise
mutually agreed by a majority in interest of the
Initiating Holders and such holder with respect to such
participation and inclusion) to the extent provided
herein. A holder of Registrable Shares may elect to
include in such underwriting all or a part of the
Registrable Shares it holds.
i) If the Company shall request inclusion
in any registration pursuant to Section 2 of securities
being sold for its own account, or if officers or
directors of the Company holding other securities of the
Company or other holders of registration rights, shall
request inclusion in any registration pursuant to Section
2, the Initiating Holders shall, on behalf of all holders
of Registrable Shares, offer to include Other Registrable
Securities and the securities of the Company, such
officers and directors and such other holders of
registration rights in the underwriting and may condition
such offer on their acceptance of the further applicable
provisions of this Agreement. The Company shall (together
with all holders of Registrable Shares, officers and
directors, other holders of registration rights and
holders of Other Registrable Securities proposing to
distribute their securities through such underwriting)
enter into an underwriting agreement in customary form
with the underwriter or representative of the underwriters
selected for such underwriting by the Company, which
underwriter(s) shall be reasonably acceptable to a
majority in interest of the Initiating Holders.
ii) Notwithstanding any other provision of
this Section 2, if the representative of the underwriters
advises the Company in writing that marketing factors
require a limitation on the number of shares to be
underwritten, the Company shall so advise all holders of
Registrable Shares and other shareholders whose securities
would otherwise be underwritten pursuant hereto, and the
number of Registrable Shares and other securities that may
be included in the registration and underwriting shall be
allocated in the following manner: the securities of the
Company held by officers and directors of the Company
(other than Registrable Shares) shall be excluded from
such registration and underwriting to the extent required
by such limitation, and, if a limitation on the number of
shares is still required, the Other Registrable Securities
shall be excluded pro rata with Registrable Shares, unless
another method of determining such exclusion is specified
in the agreements governing the Other Registrable
Securities, according to the relative number of Other
Registrable Securities requested to be included in such
registration and underwriting, from such registration and
underwriting to the extent required by such limitation,
and, if a limitation on the number of shares is still
required, the number of Registrable Shares that may be
included in the registration and underwriting shall be
allocated among all holders of Registrable Shares in
proportion, as nearly as practicable, to the respective
amounts of Registrable Shares which they had requested to
be included in such registration at the time of filing the
registration statement. No Registrable Shares or any
other securities excluded from the underwriting by reason
of the underwriter's marketing limitation shall also be
included in such registration.
iii) If the Company or any officer,
director or holder of Registrable Shares or Other
Registrable Securities who has requested inclusion in such
registration and underwriting as provided above
disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the
Company, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from
registration.
III. Expenses of Registration. The Company shall
bear all Registration Expenses incurred in connection with
any registration, qualification or compliance of the
Registrable Shares pursuant to this Agreement. All
Selling Expenses shall be borne by the holders of the
securities so registered pro rata on the basis of the
number of their shares so registered.
IV. Registration Procedures. Pursuant to this
Agreement, the Company will keep each holder of
Registrable Shares advised in writing as to the initiation
of a registration under this Agreement and as to the
completion thereof. At its expense, the Company will:
(a) Use reasonable efforts to keep such
registration effective for a period of one hundred eighty
(180) days or until the holder or holders of Registrable
Shares have completed the distribution described in the
registration statement relating thereto or until the
securities registered cease to be Registerable Shares,
whichever first occurs;
(b) Prepare and file with the Commission such
amendments and supplements to such registration statement
and the prospectus used in connection with such
registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the
disposition of securities covered by such registration
statement; and
(c) Furnish such number of prospectuses and
other documents incidental thereto, including any
amendment of or supplement to the prospectus, as a holder
of Registrable Shares from time to time may reasonably
request.
V. Indemnification.
(a) The Company will indemnify each holder of
Registrable Shares, each of its officers, directors and
partners, and each person controlling such holder of
Registrable Shares, with respect to which registration has
been effected pursuant to this Agreement, and each
underwriter, if any and each person who controls any
underwriter, and their respective counsel against all
claims, losses, damages and liabilities (or actions,
proceedings or settlements in respect thereof) arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus,
or other document incident to any such registration, or
based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
or any violation by the Company of the Securities Act or
any rule or regulation thereunder applicable to the
Company in connection with any such registration and will
reimburse each such holder of Registrable Shares, each of
its officers, directors and partners, and each person
controlling such holder of Registrable Shares, each such
underwriter and each person who controls any such
underwriter, for any legal and any other expenses as they
are reasonably incurred in connection with investigating
and defending any such claim, loss, damage, liability or
action, provided, however, that the indemnity contained in
this Section 5(a) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or
action if such Settlement is effected without the consent
of the Company; and provided further that the Company
shall not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises
out of or is based on any untrue statement or omission
based upon written information furnished to the Company by
such holder of Registrable Shares or underwriter and
stated to be specifically for use therein. The foregoing
indemnity agreement is further subject to the condition
that insofar as it relates to any untrue statement,
alleged untrue statement, omission or alleged omission
made in a preliminary prospectus, such indemnity agreement
shall not inure to the benefit of the foregoing
indemnified parties if copies of a final prospectus
correcting the misstatement, or alleged misstatement,
omission or alleged omission upon which such loss,
liability, claim or damage is based is timely delivered to
such indemnified party and a copy thereof was not
furnished to the person asserting the loss, liability,
claim or damage.
(b) Each holder of Registrable Shares will, if
Registrable Shares held by it are included in the
securities as to which such registration is being
effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each
person who controls the Company or such underwriter within
the meaning of the Securities Act and the rules and
regulations thereunder, each other such holder of
Registrable Shares and each of its officers, directors and
partners, and each person controlling such holder of
Registrable Shares, and their respective counsel
(collectively, the "Company, Underwriters and Counsel")
against all claims, losses, damages and liabilities (or
actions, proceedings or settlements in respect thereof)
arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact relating to
such Holder contained in any such registration statement,
prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material
fact required to be stated therein relating to such holder
or necessary to make the statements therein relating to
such holder not misleading or any violation by such holder
of any rule or regulation promulgated under the Securities
Act applicable to such holder and relating to action or
inaction required of such holder in connection with any
such registration; and will reimburse the Company, such
holders of Registrable Shares, directors, officers,
partners, persons, underwriters or control persons for any
legal or any other expense reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged
omission) relating to such holder is made in such
registration statement, prospectus, offering circular or
other document in reliance upon and in conformity with
written information furnished to the Company by such
holder of Registrable Shares and stated to be specifically
for use therein; provided, however, that such
indemnification obligations shall not apply if the Company
modifies or changes to a material extent written
information furnished by such Holder. Each holder of
Registrable Shares will, if Registrable Shares held by it
are included in the securities as to which such
registration is being effected, indemnify the Company,
Underwriters and Counsel against all claims, losses,
damages and liabilities (or actions, proceedings or
settlements in respect thereof), arising out of or based
on any sale of Registrable Shares made by such holder
following receipt by such holder of written notice from
the Company, Underwriters or Counsel that the registration
statement filed with respect to such Registrable Shares
contains an untrue statement of material fact or omits to
state a material fact necessary in order to make the
statements made therein, in light of the circumstances
under which they were made, not misleading.
(c) Each party entitled to indemnification
under this Section 5 (the "Indemnified Party") shall give
notice to the party required to provide indemnification
(the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of
such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall
not unreasonably be withheld or delayed), and the
Indemnified Party may participate in such defense at such
Indemnified Party's expense. No Indemnifying Party, in
the defense of any such claim or litigation, shall except
with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question
as an Indemnifying Party may reasonably request in writing
and as shall be reasonably required in connection with
defense of such claim and litigation resulting therefrom.
VI. Information by Holder of Registrable Shares.
Each holder of Registrable Shares shall furnish to the
Company such information regarding such holder of
Registrable Shares and the distribution proposed by such
holder of Registrable Shares as the Company may reasonably
request in writing and as shall be reasonably required in
connection with any registration referred to in this
Agreement.
VII. Miscellaneous.
A. Governing Law. This agreement shall be
governed by and construed in accordance with the laws of
the State of California without giving effect to conflict
of laws.
B. Successors and Assigns. Except as
otherwise provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators
of the parties hereto.
C. Entire Agreement. This Agreement
constitutes the full and entire understanding and
agreement between the parties with regard to the subject
matter hereof.
D. Notices, etc. All notices and other
communications required or permitted hereunder shall be in
writing and shall be mailed by first-class mail, postage
prepaid, or delivered by hand or by messenger or courier
delivery service, addressed (a) if to an Investor, at such
Investor's address set forth on Exhibit A hereof, or at
such other address as such Investor shall have furnished
to the Company in writing, or (b) if to the Company at 000
Xxxxx Xxxxx, Xxxxx X, Xxx Xxxxx, Xxxxxx 00000, Attn:
President, or at such other address as the Company shall
have furnished to each Investor and each such other holder
in writing.
E. Delays or Omissions. No delay or omission
to exercise any right, power or remedy accruing to any
holder of any Registrable Shares, upon any breach or
default of the Company under this Agreement, shall impair
any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring, nor shall
any waiver of any single breach or default be deemed a
waiver of any other breach or default thereafter
occurring. Any waiver, permit, consent or approval of any
kind or character on the part of any holder of any breach
or default under this Agreement, or any waiver on the part
of any party of any provisions of conditions of this
Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or
otherwise afforded to any holder, shall be cumulative and
not alternative.
F. Counterparts. This agreement may be
executed in any number of counterparts, each of which may
be executed by less than all of the Investors, each of
which shall be enforceable against the parties actually
executing such counterparts, and all of which together
shall constitute one instrument.
G. Severability. In the case any provision of
this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
H. Amendments. The provisions of this
Agreement may be amended at any time and from time to
time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing
signed by the Company and by the Investors currently holding fifty
percent (50%) of the Registrable Shares as of the date of
such amendment or waiver.
I. Termination of Registration Rights. This
Agreement shall terminate at such time as there ceases to
be at least $500,000 in stated value (face amount) of
Preferred Stock which constitute Registrable Shares as
defined herein.
The foregoing Registration Rights Agreement is hereby
executed as of the date first above written.
SPINTEK GAMING TECHNOLOGIES, INC.
INVESTOR
RBB Bank Aktiengesellschaft
By:/s/ XXXX X. XXXXXXX By: /s/ XXXXXXX XXXXXXX
Name: Xxxx X. Xxxxxxx Name: Xxxxxxx Xxxxxxx
Title:Chairman Title: Headtrader
