EXHIBIT 10.3
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is dated this 28th day of
January, 1997 by and between IGT, a Nevada corporation (the "Buyer"), and Acres
Gaming, Inc., a Nevada corporation (the "Seller").
WHEREAS, the Buyer desires to purchase and the Seller desires to sell
certain amounts of its Series A Convertible Preferred Stock (the "Preferred
Stock"), as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the Buyer and the Seller agree as follows:
1. PURCHASE AND SALE
Subject to the terms and conditions set forth in this Agreement, at the
closing referred to in Section 5 hereof, the Seller will initially sell and
transfer to the Buyer, and the Buyer may purchase a maximum of 519,481 shares of
the Preferred Stock.
2. TERMS OF THE PREFERRED STOCK
The rights and preferences of the Preferred Stock (including any Preferred
Stock issued in connection with the payment of dividends, as contemplated below)
shall be as set forth in the Seller's Certificate of Designation, a copy of
which is attached hereto as Exhibit "A".
3. PURCHASE PRICE
The Buyer shall pay to the Seller, as the purchase price for the Preferred
Stock (the "Stock Purchase Price") $9.62 1/2 per share. The stock purchase
price shall be paid in the manner provided in Section 5 hereof.
4. BUYER'S PURCHASE OF ADDITIONAL SHARES
The Buyer may purchase from Seller on the same terms and conditions set
forth in Sections 2 and 3 above, up to 519,480 additional shares of the
Preferred Stock, in increments not less than 103,896 shares, as determined
solely by the Buyer, if purchased on or before August 8, 1997.
5. CLOSING
5.1 TIME AND PLACE
The Closing of the transfer and delivery of the documents and instruments
necessary to consummate the purchase and sale contemplated by this Agreement
(the "Closing") shall be held at the offices of Seller's Counsel on January 28,
1997, or at such other time or place as the Buyer and the Seller may agree. The
date on which the Closing is actually held hereunder is sometimes referred to
herein as the "Closing
Date". The date or dates, if any, on which the Closing with respect to the
additional shares of Preferred Stock shall occur is referred to herein as the
"Additional Shares Closing Date" and shall occur five business days after Buyer
gives Seller written notice of its desire to purchase additional share of
Preferred Stock as permitted by Section 4 of this Agreement.
5.2 CONDITIONS OF BUYER'S OBLIGATIONS AT INITIAL CLOSING
The obligations of Buyer under Section 1 of this Agreement are subject to
the fulfillment at or before the Closing Date of each of the following
conditions:
5.2A REPRESENTATIONS AND WARRANTIES TRUE AT SERIES A CLOSING
Except for changes contemplated by this Agreement, the representations
and warranties of Seller contained in Section 6 hereof shall be true when made
and shall be true on and as of the Closing Date with the same effect as though
such representations had been made on and as of the Closing Date.
5.2B PERFORMANCE
Seller shall have performed and complied with all agreements and
conditions contained herein required to be performed and complied with by it on
or before the Closing Date, and, without limiting the generality of the
foregoing, shall have obtained all consents, approvals, authorizations,
registrations and qualifications required to complete the transactions
contemplated hereby.
5.2C COMPLIANCE CERTIFICATE
There shall have been delivered to Buyer a certificate, dated the
Closing Date, signed by Seller's President, certifying that the conditions
specified in Sections 5.2A and 5.2B have been performed and complied with in all
respects.
5.2D PROCEEDINGS AND DOCUMENTS
All corporate and other proceedings in connection with the
transactions contemplated at the closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to Buyer.
5.2E REGISTRATION RIGHTS AGREEMENT
Buyer and Seller shall enter into a Registration Rights Agreement in
the form of Exhibit "B" hereto.
5.2F BLUE SKY
Seller shall have obtained all necessary Blue Sky law permits and
qualifications, or secured an exemption therefrom, required by any state for the
offer and sale of the Preferred Stock, and the Common Stock issuable upon
conversion of the Preferred Stock.
2
5.2G OPINION OF COUNSEL
There shall have been delivered to Buyer the opinion of Seller's
counsel dated the Closing Date in the form attached hereto as Exhibit "C".
5.2H EMPLOYMENT CONTRACT
The Employment Contract dated as of July 1, 1996 between Seller and
Xxxx Xxxxx shall be in full force and effect and shall not have been amended or
modified.
5.2I AMENDMENT OF ARTICLES OF INCORPORATION
The Articles of Incorporation of Seller shall have been amended to
authorize the issuance of the Preferred Stock and such amendment shall have
received the required approval of the shareholders of Seller. Seller shall have
delivered to Buyer stock certificate(s) representing 519,481 shares of
Preferred Stock.
5.2J NO PROHIBITION
Neither the consummation nor the performance of this Agreement will,
directly or indirectly (with or without notice or lapse of time), materially
contravene, or conflict with, or result in a material violation of, or cause
Seller or any person or entity affiliated with Seller to suffer any material
adverse consequence under (a) any applicable legal requirement or order, or (b)
any legal requirement or order that has been published, introduced, or otherwise
formally proposed by or before any governmental body, and no proceeding
challenging the transaction contemplated herein shall be pending or threatened.
5.2K OTHER AGREEMENT(S)
The Seller and Buyer shall have entered into an appropriate technology
agreement(s), which shall be reasonably satisfactory in form and substance to
both parties.
5.3 CONDITIONS OF THE SELLER'S OBLIGATIONS AT INITIAL CLOSING
The obligations of Seller under Section 1 of this Agreement are subject to
the fulfillment at or before the Closing Date of each of the following
conditions:
5.3A REPRESENTATIONS AND WARRANTIES TRUE AT SERIES A CLOSING
The representations and warranties of the Buyer contained in Section 7
hereof shall be true when made and shall be true on and as of the Closing Date
with the same effect as though said representations and warranties had been made
on and as of the Closing Date.
3
5.3B PAYMENT
Buyer shall have made payment to Seller by check or wire transfer in
the amount of $5,000,004.60.
5.3C PERFORMANCE
Buyer shall have performed and complied with all agreements and
conditions contained herein required to be performed and complied with by it on
or before the Closing Date, and, without limiting the generality of the
foregoing, shall have obtained all consents, approvals, authorizations,
registrations and qualifications required to complete the transactions
contemplated hereby.
5.3D COMPLIANCE CERTIFICATE
There shall have been delivered to Seller a certificate, dated the
Closing Date, signed by Buyer's President, certifying that the conditions
specified in Sections 5.3A and 5.3C have been performed and complied with in all
respects.
5.3E PROCEEDINGS AND DOCUMENTS
All corporate and other proceedings to be conducted by Buyer in
connection with the transactions contemplated at the closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Seller.
5.3F NO PROHIBITION
Neither consummation nor the performance of this Agreement will,
directly or indirectly (with or without notice or lapse of time), materially
contravene, or conflict with, or result in a material violation of, or cause
Seller or any person or entity affiliated with Seller to suffer any material
adverse consequence under (a) any applicable legal requirement or order, or (b)
any legal requirement or order that has been published, introduced, or otherwise
formally proposed by or before any governmental body, and no proceeding
challenging the transaction contemplated herein shall be pending or threatened.
5.3G OTHER AGREEMENT(S)
The Seller and Buyer shall have entered into an appropriate technology
agreement(s), which shall be reasonably satisfactory in form and substance to
both parties.
5.4 CONDITIONS OF BUYER'S OBLIGATIONS AT ADDITIONAL SHARES CLOSING DATE(S)
The obligations of the Buyer to purchase additional shares of Preferred
Stock after giving notice of its intention to do so is subject to the
fulfillment at or before the Additional Shares Closing Date of each of the
following conditions each of which may be waived at its sole discretion.
4
5.4A REPRESENTATIONS AND WARRANTIES TRUE AT ADDITIONAL SHARES CLOSING DATE
The representations and warranties of Seller contained in Section 6
hereof shall be true when made and shall be true on and as of the Additional
Shares Closing Date with the same effect as though such representations and
warranties had been made on and as of the initial Closing Date, except for
changes occurring since the initial Closing Date, none of which changes shall
have had a material and adverse affect on the business, properties or prospects
of the Seller, and for changes in the capitalization of Seller occurring as a
result of the issuance of the Preferred Stock.
5.4B PERFORMANCE
Seller shall have performed and complied with all agreements and
conditions contained herein required to be performed and complied with by it on
or before the Additional Shares Closing Date.
5.4C BLUE SKY
Seller shall have obtained all necessary Blue Sky law permits and
qualifications, or secured an exemption therefrom required by any state for the
offer and sale of the additional shares of Preferred Stock, and Common Stock
issuable upon conversion of such shares of Preferred Stock.
5.4D OPINION OF COUNSEL
There shall have been delivered to Buyer the opinion of counsel to
Seller, dated the Additional Shares Closing Date, substantially in the form
attached hereto as Exhibit C with appropriate changes to reflect the fact that
additional shares of Preferred Stock are being issued.
6. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Schedule of Exceptions, attached hereto as
Schedule 6.0, Seller represents and warrants to Buyer as follows:
6.1 ORGANIZATION OF THE SELLER; AUTHORITY
The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. The Seller has all requisite
power, authority, and capacity to execute and deliver this Agreement and all
other agreements, documents, and instruments contemplated hereby and to carry
out all actions required of it pursuant to the terms of this Agreement, and this
Agreement has been duly executed and delivered by the Seller and constitutes the
legal, valid, and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms.
5
6.2 TITLE TO PREFERRED STOCK
All of the shares of the Preferred Stock, when duly authorized and issued
to Buyer, will be free and clear of any security interest, liens, claims,
charges, encumbrances of any kind, or restrictions against the transfer or
assignment thereof imposed by Seller, except as imposed by applicable
securities laws, gaming laws and Section 7.7 and Section 9.2.
6.3 NO CONFLICT
After giving effect to the proposed amendment to the Articles of
Incorporation, and after Seller authorizes the issuance of the Preferred Stock,
neither the execution and delivery of this Agreement nor the consummation or
performance of it will, directly or indirectly (with or without notice or lapse
of time), contravene, conflict with or result in a violation of (A) any
provision of the organizational documents of the Seller, or (B) any resolution
adopted by the board of directors or the stockholders of Seller, or (C) any
mortgage, indenture, contract, agreement, instrument, judgment, decree or order,
to which Seller is bound or any statute, rule or regulation applicable to
Seller.
6.4 CONFORMITY TO LAW
The Seller has materially complied with, and is in material compliance
with, (a) all material laws, statutes, governmental regulations, and all
material judicial or administrative tribunal orders, judgments, writs,
injunctions, decrees, or similar commands applicable to its business (including,
without limitation, any labor, environmental, occupational health, zoning, or
other law, regulation or ordinance); (b) all material unwaived terms and
provisions of all material contracts, agreements, and indentures to which the
Seller is a party, or by which the Seller is subject; and (c) its charter
documents and Bylaws, each as amended to date. The Seller has not committed,
been charged with, or been under investigation with respect to, nor does there
exist, any material violation of any material provision of any federal, state,
or local law or administrative regulation in respect of its business.
6.5 PATENTS, TRADEMARKS, ETC.
Seller owns or has the right to use, free and clear of all liens, charges,
claims and restrictions, all trademarks, service marks, trade names, copyrights,
proprietary information, licenses and rights necessary to its business as now
conducted, and will not, to Seller's knowledge, when so acting, infringe upon or
otherwise act adversely to the right or claimed right of any person under or
with respect to any of the foregoing. Seller has not received any communications
alleging that Seller has violated or, by conducting its business as proposed,
would violate, the proprietary or intellectual property rights of any other
person or entity and Seller is not aware of any violation or infringement by a
third party of any of Seller's licenses, trademarks, service marks, trade names,
copyrights, trade secrets or other proprietary rights.
6
6.6 REGISTRATION RIGHTS
Except as set forth in Schedule 6.0 and contemplated by Section 5.2E of
this Agreement, Seller is not under any obligation to "register" any of its
outstanding securities or any of its securities which may hereafter be issued.
For purposes of this Agreement, the term "register" refers to a registration
effected by filing a registration statement in compliance with the Securities
Act of 1933, as amended or the securities laws of any state.
6.7 CAPITALIZATION
The authorized capital of Seller consists of (or will consist of prior to
the initial Closing Date):
(a) PREFERRED STOCK: 20,000,000 shares of preferred stock, $.01 par
value, 1,038,961 of which will have been designated Series A
Convertible Preferred Stock. The rights, privileges and
preferences of the Series A Convertible Preferred Stock will be
as stated in the Certificate of Designation.
(b) COMMON STOCK: 50,000,000 shares of Common Stock, $.01 par value. As of
December 6, 1996, there are 8,071,856 issued and outstanding shares
of Seller's Common Stock.
Except (i) as set forth on Schedule 6.0 hereto and (ii) with regard to the
Preferred Stock to be sold hereunder, no options, calls, warrants, conversion on
privileges, preemptive rights, rights of first refusal or other commitments or
rights, of any character whatsoever, are outstanding or in existence with
respect to the purchase or other acquisition of any of the authorized but
unissued capital stock of Seller.
6.8 FINANCIAL STATEMENTS
Seller has delivered to Buyer: (a) audited consolidated balance sheets as
at June 30 in each of the years 1993 through 1996, and the related audited
consolidated statements of operations, stockholders' equity, and cash flows for
each of the fiscal years then ended, together with the reports thereon of Xxxxxx
Xxxxxxxx, independent certified public accountants; and (b) an unaudited
consolidated balance sheet as of September 30, 1996 (the "Interim Balance
Sheet") and the related unaudited statements of operations, stockholders' equity
and cash flow for the nine months then ended, including in each case the notes
thereto. Such financial statements and notes fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flow as at the respective dates of and for the period referred to in such
financial statements, all in accordance with GAAP, subject, in the case of
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes.
7
6.9 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other records
of the Seller, all of which have been made available to Buyer, are complete and
correct and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. The minute
books contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Board of Directors, and
committees of the Board of Directors, and no meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books.
6.10 NO UNDISCLOSED LIABILITIES
The Seller has no material liabilities or obligations of any nature which
are required to be disclosed in financial statements, including footnotes
thereto, prepared in accordance with GAAP (whether known or unknown and whether
absolute, accrued, contingent, or otherwise ) except for liabilities or
obligations reflected or reserved against in the Balance Sheet as of June 30,
1996 and current liabilities incurred in the ordinary course of business since
the date thereof.
6.11 BROKERS
Except as set forth in the Schedule of Exceptions, the Seller has not
retained, utilized, or been represented by any broker or finder in connection
with the transaction contemplated by this Agreement.
6.12 DISCLOSURE
(a) The representations and warranties of Seller in this Agreement, and
the reports filed with the Securities and Exchange Commission ("SEC") since
January 1, 1995, taken as a whole and in light of the circumstances in
which they were made, do not omit to state a material fact necessary to
make the statements herein or therein, not misleading.
(b) There is no fact known to Seller that has specific application to
Seller (other than general economic or industry conditions) and that
materially adversely affects the business, financial condition, or results
of operations of the Seller (on a consolidated basis) that has not been set
forth in this Agreement or reflected in the SEC filings of the Seller.
6.13 CONSENTS OF THIRD PARTIES
Except as set forth in the Schedule of Exceptions, the Seller has no
obligation to secure any consent from any third party in order to permit the
consummation of the transaction contemplated by this Agreement.
8
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
7.1 ORGANIZATION AND STANDING OF BUYER
The Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Nevada. The Buyer has full power and
authority under its Certificate of Incorporation and Bylaws and applicable laws
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Buyer has taken all corporate action necessary for the
authorization, execution, and delivery of this Agreement and the other
agreements and transactions contemplated herein, the performance of all
obligations of Buyer hereunder and thereunder and the authorization and delivery
of this Agreement and the other agreements contemplated herein, and this
Agreement and the other agreements constitute valid and legally binding
obligations of Buyer, enforceable in accordance with its and their terms.
7.2 NO CONFLICT
Neither the execution and delivery of this Agreement nor the consummation
or performance of it will, directly or indirectly (with or without notice or
lapse of time), contravene, conflict with or result in a violation of (A) any
provision of the organizational documents of Buyer, (B) any resolution adopted
by the board of directors or the stockholders of Buyer, or (C) any mortgage,
indenture, contract, agreement, instrument, judgment, decree or order, to which
Buyer is bound or any statute, rule or regulations applicable to Buyer.
7.3 PURCHASE ENTIRELY FOR OWN ACCOUNT
This Agreement is made with Buyer in reliance upon Buyer's representation
to the Seller, which, by Buyer's execution of this Agreement, Buyer hereby
confirms, that the Preferred Stock to be received by the Buyer and the Common
Stock issuable upon conversion of the Preferred Stock will be acquired for
investment for Buyer's own account and not with a view to the distribution of
any part thereof, and that Buyer has no present intention of selling, granting
any participation in, or otherwise distributing the same in a manner contrary to
the Securities Act of 1933, as amended (the "Act"), or applicable state
securities laws.
7.4 CERTAIN PROCEEDINGS
There is no pending proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with this transaction. To Buyer's knowledge, no such
proceeding has been threatened.
9
7.5 INVESTMENT EXPERIENCE
Buyer represents that it is an "accredited investor" as defined in
Regulation D promulgated under the Act.
7.6 RESTRICTED SECURITIES
Buyer understands that the Preferred Stock and the Common Stock issuable
upon conversion of the Preferred Stock are characterized as "restricted
securities" under the federal securities laws inasmuch as it is being acquired
from the Seller in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances and in
accordance with the terms and conditions set forth in the legend described in
Section 7.7 below. In this connection, the Buyer represents that it is familiar
with SEC Rule 144, as in effect, and understands the resale limitations imposed
thereby and by the Act.
7.7 LEGEND
It is understood that the certificates evidencing the Preferred (and the
Common Stock issuable upon conversion of the Preferred Stock) may bear the
following legends:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND
NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS (IF REQUIRED) COVERING ANY
SUCH TRANSACTION INVOLVING SAID SECURITIES; (ii) THIS CORPORATION RECEIVES AN
OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION; OR (iii) THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
REDEMPTION BY THE COMPANY IN ACCORDANCE WITH ARTICLE IX OF THE COMPANY'S
ARTICLES OF INCORPORATION.
7.8 RESIDENCE
For purposes of the application of state securities laws, the Buyer
represents that it is a resident of Nevada.
7.9 NO SELLER SECURITIES
Neither Buyer nor any affiliate owns any debt or equity securities,
including bank and trade debt, of the Seller.
10
8. COVENANTS OF SELLER PRIOR TO CLOSING DATE
8.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Seller will (a)
afford Buyer and its affiliates and representatives full and free access to
Seller's personnel, contracts, books and records, and other documents and data,
(b) furnish Buyer with copies of all such contracts, books and records, and
other existing documents and data as Buyer may reasonably request, and (c)
furnish Buyer with such additional financial, operating, and other data and
information as Buyer may reasonably request.
8.2 OPERATION OF SELLER'S BUSINESS
Between the date of this Agreement and the Closing Date, Seller will
conduct its business only in the ordinary course of business.
8.3 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Seller will
make all filings required to be made by it in order to consummate this
Agreement. Between the date of this Agreement and the Closing Date, Seller will,
(a) cooperate with Buyer with respect to all filings that Buyer elects to make
or is required to make in connection with the purchase, and (b) cooperate with
Buyer in obtaining all consents.
8.4 NOTIFICATION
Between the date of this Agreement and the Closing Date, Seller will
promptly notify Buyer in writing if Seller becomes aware of any fact or
condition that causes or constitutes a breach of any of Seller's representations
and warranties as of the date of this Agreement, or if Seller becomes aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition.
9. COVENANTS OF BUYER
9.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will
make all filings required to be made by it to consummate this Agreement. Between
the date of this Agreement and the Closing Date, Buyer will cooperate with
Seller with respect to all filings that Seller is required to make in connection
with this Agreement, and cooperate with Seller in obtaining all required
consents; PROVIDED that this Agreement will not require Buyer to dispose of or
make any change in any portion of its business or to incur any other burden to
obtain a governmental authorization.
11
9.2 PURCHASE OF ADDITIONAL SELLER SECURITIES
Except as set forth in Section 4. of this Agreement, after the date hereof,
the Buyer agrees that neither it nor any affiliate will purchase, directly or
indirectly, before the earliest of (a) five years from the Closing Date or (b)
the date when the number of shares of the Common Stock owned by Xxxx F Acres is
less than 1,000,000 shares (adjusted for any stock splits or stock dividends
after the date hereof), any debt or equity securities including bank and trade
debt, of Seller without the prior written consent of Seller, such consent not to
be unreasonably withheld. Notwithstanding this provision, the Buyer may at any
time purchase additional equity securities of the Seller PROVIDED that Buyer
shall not, without the consent of the Seller, own more than 20% of the then
outstanding Common Stock of the Seller, including for calculation of the Buyer's
interest, the shares of Common Stock into which the Preferred Stock owned by the
Buyer is convertible at the time of such purchase.
9.3 SALE OF SELLER SECURITIES
Buyer shall not, without the prior written consent of Seller, such consent
not to be unreasonably withheld, directly or indirectly sell, transfer, assign,
exchange, convey, donate, pledge, hypothecate or otherwise dispose of any debt
or shares of the Preferred Stock of Seller. Any such sale shall be of all
shares of the Preferred Stock of Seller then owned by Buyer, and Seller shall
have the right to purchase said securities on the same terms and conditions
Buyer proposes to sell such securities to a third party. Seller shall have 30
days in which to approve any sale after receipt of written notice from Buyer
(which shall contain the name of the buyer(s), price and terms) or in which to
exercise its right to purchase said securities.
10. COVENANTS OF SELLER AFTER THE INITIAL CLOSING DATE
Until Buyer owns less than Ten Percent (10%) of the Preferred Stock or the
shares of Common Stock into which such Preferred is convertible, Seller hereby
covenants and agrees as follows:
10.1 FINANCIAL INFORMATION
Seller will furnish the following reports to Buyer:
(a) Within 90 days after the end of each fiscal year, a balance sheet of
Seller, as of the end of such fiscal year, and statements of
operations, stockholders' equity and cash flows for such year,
prepared in accordance with generally accepted accounting principles
and setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and certified by
independent public accountants of reputable and recognized national
standing selected by Seller;
12
(b) Within 45 days after the end of each fiscal quarter, financial
statements of Seller as at the end of such quarter (including a
balance sheet, statements of operations, shareholders' equity and cash
flows, in form prepared in accordance with generally accepted
accounting principles (except for the absence of accompanying notes
and subject to normal year-end adjustments).
(c) Copies of all filings made with the SEC, NASDAQ or any exchange on
which Seller's securities are traded.
10.2 MAINTENANCE OF INSURANCE AND LICENSES
Seller shall maintain insurance covering its operations that is customary
in scope and amount for entities engaged in similar businesses. Seller shall
maintain its trademarks, service marks, trade names, copyrights, proprietary
information, licenses and rights necessary to its business as now conducted.
10.3 COMPLIANCE WITH LAW
Seller will comply with all laws, statutes, governmental regulations, and all
judicial or administrative tribunal orders, judgments, writs, injunctions,
decrees, or similar commands applicable to its business (including, without
limitation, any labor, environmental, occupational health, zoning or other law,
regulation or ordinance).
10.4 INDEMNIFICATION
Seller will indemnify, defend and hold harmless each representative of
Buyer that serves as a director of Seller who is a party to or is threatened to
be made a party in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, from all
liabilities arising therefrom, including attorneys' fees, judgments, fines and
amounts paid in settlement actually incurred by the director in connection with
any such action, suit or proceeding; provided, however, that the action of such
director is not determined (by a final judicial determination) to have been the
result of bad faith or deliberately wrongful conduct. The director shall have
the right to select counsel to defend such action, suits or proceedings, which
counsel shall be reasonably acceptable to Seller. Seller will cause the Bylaws
and Articles of Incorporation of Seller to contain provisions with respect to
limitation of liability and indemnification of directors to the maximum extent
permitted by law.
11. TERMINATION
11.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) By either Buyer or Seller if a material breach of any provision of
this Agreement has been committed by the other party and such breach has
not been waived;
13
(b) (i) By Buyer if any of the conditions in Section 5.2 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply
with its obligations under this Agreement) and Buyer has not waived such
condition on or before the Closing Date; or (ii) by Seller, if any of the
conditions in Section 5.3 has not been satisfied as of the scheduled
Closing or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Seller to comply with its obligations
under this Agreement) and Seller has not waived such condition on or before
the scheduled Closing;
(c) By mutual consent of Buyer and Seller; or
(d) By either Buyer or Seller if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before
January 31, 1997, or such later date as the parties may agree upon.
11.2 EFFECT OF TERMINATION
Each party's right of termination under Section 11.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 11.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
12.1 and 12.13 will survive; provided, however, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
12. GENERAL
12.1 EXPENSES
All expenses of the preparation, execution, and consummation of this
Agreement and of the transactions contemplated hereby, including, without
limitation, attorneys', accountants' and outside advisors' fees and
disbursements, shall be borne by the party incurring such expenses.
12.2 NOTICES
All notices, demands, and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally, or if mailed by certified mail, return receipt
requested, postage prepaid, or sent by written telecommunication, as follows:
14
If to the Seller, to:
Acres Gaming, Inc.
000 X.X. 0xx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxx, Chairman
with a copy to:
XXXXXXX COIE
0000 X.X. 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
If to the Buyer, to:
IGT
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000
Attention: G. Xxxxxx Xxxxx, President/Chief Operating Officer
with a copy to:
IGT
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000
Attention: Xxxxx XxXxx, Vice President/General Counsel
12.3 ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties, supersedes
all prior agreements and understandings relating to the subject matter hereof,
and shall not be amended except by a written instrument hereafter signed by all
of the parties hereto.
12.4 GOVERNING LAW
The validity and construction of this Agreement shall be governed by the
laws of the State of Nevada.
12.5 SECTIONS AND SECTION HEADINGS
All enumerated subdivisions of this Agreement are herein referred to as
"section" or "subsection." The headings of sections and subsections are for
reference only and shall not limit or control the meaning hereof.
15
12.6 ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the heirs
and successors of each of the parties. Neither this Agreement nor the
obligations of any party hereunder shall be assignable or transferable by such
party without the prior written consent of the other party hereto.
12.7 SURVIVAL AND MATERIALITY OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the parties hereto contained in this
Agreement or otherwise made in writing in connection with the transactions
contemplated hereby (in each case except as affected by the transactions
contemplated by this Agreement) shall be deemed to have been relied on by the
other parties hereto and shall survive the Closing and the consummation of the
transactions contemplated hereby for a period of one year.
12.8 FURTHER ASSURANCES
The Seller and the Buyer shall execute and deliver to the appropriate other
party such other instruments as may be reasonably required in connection with
the performance of this Agreement, and each shall take all such further actions
as may be reasonably required to carry out the transactions contemplated by this
Agreement.
12.9 NO IMPLIED RIGHTS OR REMEDIES
Except as otherwise expressly provided herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or to give any person,
firm, or corporation, other than the Seller and the Buyer and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
12.10 COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
12.11 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Nevada, County of Washoe, or, if it has or
can acquire jurisdiction, in the United States District Court for the District
of Nevada, and each of the parties consents to the jurisdiction of such, courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
16
12.12 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
12.13 CONFIDENTIAL INFORMATION
Any information concerning Buyer and its affiliates furnished to the
Seller, or by Seller to Buyer, or any of their respective officers, attorneys,
accountants, consultants, representatives or agents (collectively, such party's
"Representatives"), in connection with the transactions contemplated by this
Agreement shall be treated as confidential information. The party so furnished
the information (the "Recipient") shall not disclose such information and shall
use its best efforts to keep its Representatives from disclosing such
information, except that the Recipient may disclose the confidential information
or portions thereof (i) to Recipient's Representatives who need to know such
information for the purpose of advising the Recipient in connection with the
transactions contemplated by this Agreement; (ii) if, at the time of the
disclosure, the confidential information is generally available to and known by
the public (other than as a result of disclosure directly or indirectly in
violation of any duty of confidentiality); or (iii) if the information has been
independently acquired or developed by the Recipient without violating a duty of
confidentiality. To the extent that the Recipient or one of its Representatives
may become legally compelled to disclose any confidential information not
encompassed by (i), (ii), or (iii) above, the Recipient or its Representative
may disclose such information if the Recipient has used its commercially
reasonable efforts, and has afforded the delivering party the opportunity, to
obtain an appropriate protective order or other satisfactory assurance of
confidential treatment for the information required to be disclosed. In the
event that the transactions contemplated by this Agreement are not consummated,
the Recipient and its Representatives shall return to the delivering party all
written information furnished by the delivering party.
12.14 NO PUBLICITY
Except as provided herein, neither Buyer nor Seller shall make any public
disclosure or publicity release pertaining to the existence of this Agreement or
of the subject matter contained herein without the consent of the other parties
hereto. Notwithstanding the foregoing, each party shall be permitted to make
such specific disclosures to the public or to governmental agencies as its
counsel shall deem necessary to maintain compliance with and to prevent
violation of applicable federal or state laws. In the event that either party
proposes to issue, make or distribute any press release, public announcement or
other written publicity or disclosure prior to the Closing Date that refers to
the transaction(s) contemplated herein, the party proposing to make such
disclosure shall provide a copy of such disclosure to the other parties and
shall afford the other parties reasonable opportunity (subject to any legal
obligation of prompt disclosure) to comment on such disclosure or the portion
thereof which refers to the transactions contemplated herein prior to making
such disclosure.
17
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered by their
respective duly authorized officers as an instrument under seal as of the date
and year first above written.
SELLER:
------------------------------
By:
---------------------------
Its:
--------------------------
BUYER:
------------------------------
By:
---------------------------
Its:
--------------------------
18
SCHEDULE 6.0
6.6 REGISTRATION RIGHTS
Seller issued Ladenburg, Xxxxxxxx & Co. Inc. ("Ladenburg") a warrant dated
October 9, 1995 (the "Warrant") to purchase 125,000 shares of Seller's common
stock at a purchase price of $9.00 per share. Pursuant to Section 5 of the
Warrant, Seller has granted Ladenburg demand registration rights, and piggy-back
registration rights for the period from September 15, 1998 to September 15,
2000. Seller must pay all expenses incurred in connection with any registration
pursuant to Section 5 of the Warrant, including attorneys' fees and expenses
incurred in connection with such registration other than underwriting discounts
and applicable transfer taxes.
19
