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EXHIBIT 10.1
SERIES B CONVERTIBLE PREFERRED
STOCK AMENDMENT AGREEMENT
THIS AGREEMENT is made and entered into effect as of June 1, 1999 by
and between Innovative Gaming Corporation of America, a Minnesota corporation
(the "Company") and KA Investments, LDC, a corporation organized under the laws
of the British Virgin Islands (the "Shareholder").
WHEREAS, the Shareholder beneficially owns all of the issued and
outstanding shares of Series B Convertible Preferred Stock of the Company issued
May 13, 1998 ("Preferred Stock");
WHEREAS, the parties hereto entered into a Letter Agreement dated May
18, 1999, as amended May 28, 1999, pursuant to which the Shareholder agreed to
amend the Certificate of Designation relating to the Preferred Stock (the
"Preferred Stock Terms") as indicated herein in exchange for a warrant to
acquire 350,000 shares on the terms indicated herein; and
WHEREAS, the Shareholder and The Shaar Fund, Ltd. (the "Purchaser")
will enter into a Preferred Stock Purchase Agreement (the "Preferred Stock
Purchase Agreement") pursuant to which the Shareholder will sell to the
Purchaser 2,375 shares of Preferred Stock, all of the issued and outstanding
shares of Preferred Stock.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually agreed as follows:
1. Amendment of Preferred Stock Terms. Concurrently with consummation of
the sale contemplated by the Preferred Stock Purchase Agreement, the
holders of Preferred Stock agree to have filed or cause to be filed,
the Amended Preferred Stock Terms in the form attached hereto as
Exhibit 1.
2. Warrant. In consideration for amending the Preferred Stock Terms in the
form attached hereto as Exhibit 1, the Company shall issue a five year
warrant to acquire 350,000 shares of the Company's Common Stock at
$1.50 per share in the form attached hereto as Exhibit 2.
3. Shareholder Covenants. Shareholder hereby agrees and covenants
to the Company that it will not, nor will it cause its affiliates to,
enter into any short sales or other hedging transactions with respect
to the Company's Common Stock at any time for six months after the
execution of this Agreement. After such six month period, the
Shareholder will not, for the subsequent six month period, nor will it
cause its affiliates for such subsequent six month period to, enter
into short sales or other hedging transactions with respect to the
Company's Common Stock in excess of 25,000 shares per month. For
purposes of this Agreement, the term "affiliate" shall mean the
Shareholder, or any successor thereto, Deephaven Capital, Inc.,
("Deephaven") any entity for which Deephaven serves as general partner
or otherwise provides investment advisory services, or of Deephaven's
executive officers or directors.
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Shareholder owns as of the date hereof 2,375 shares of Preferred Stock,
constituting 100% of the outstanding Preferred Stock of the Company.
4. General
4.1 Parties and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective
successors and assigns, including any subsequent shareholder of the
Preferred Stock; provided, however, that this Agreement may not be
assigned by any party without the consent of the other parties.
4.2 Notices. Any notice that any party hereto is required or may desire
to give to any other party hereto shall be in writing and shall be
deemed to have been properly given only if hand delivered, sent by
personal courier service, telecopied, or mailed by registered,
certified, or express mail, postage prepaid (mailed notices shall be
deemed given upon receipt), to the following persons at the following
addresses (or to such address as may be specified from time to time by
such party by notice given as provided herein):
To the Company: Innovative Gaming Corporation of America.
0000 Xxxxx Xxxxxx
Xxxx, Xxxxxx 00000
Attention: Chief Financial Officer
To the Shareholder: Bank of Xxxxxxxxxxx International (Cayman) Ltd.
Xxxxxxxxxxx House
Fort Street, Georgetown
Grand Cayman, Cayman Island
With a Copy to: KA Investments, LDC
c/o Deephaven Capital
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
4.3 Counterparts. For the convenience of the parties and to facilitate
the execution of this Agreement, any number of counterparts hereof may
be executed and each such executed counterpart shall be deemed to be an
original instrument.
4.4 Headings. The headings of paragraphs hereunder are for convenience
and reference only, and shall not be deemed a part of this Agreement.
4.5 Waiver; Remedies. No delay or failure on the part of any party
hereto to exercise any right, power, or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any
party hereto of any right, power, or privilege hereunder operate as a
waiver
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of any other right, power, or privilege hereunder, nor shall any single
or partial exercise of any right, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege hereunder.
4.6 Entire Agreement. This Agreement sets forth the parties' final and
entire agreement with respect to its subject matter and supersedes any
and all prior understandings and agreements. This Agreement shall not
be modified or amended in any fashion except by an instrument in
writing signed by the parties hereto.
4.7 No Third Party Beneficiaries. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
4.8 Severability. If any provision of this Agreement shall be held by
any court of competent jurisdiction to be illegal, invalid or
unenforceable, such provision shall be construed and enforced as if it
had been more narrowly drawn so as not to be illegal, invalid or
unenforceable, and such illegality, invalidity or unenforceability
shall have no effect upon and shall not impair the enforceability of
any other provision of this Agreement.
4.9 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Nevada (without regard to principles of
conflicts of laws) applicable to contracts made and to be performed
within such State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly signed in their respective names all as of the date and year first above
written.
INNOVATIVE GAMING CORPORATION
OF AMERICA
By: s/ Xxxxxx X. Xxxxxxxxx
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Its: Chairman and CEO
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KA INVESTMENTS, LDC
By: Xxxx Jobczak
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Its: Secretary
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