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EXHIBIT 10.4
INNOVATIVE GAMING CORPORATION OF AMERICA
INNOVATIVE GAMING, INC.
SUBSCRIPTION AGREEMENT AND
LETTER OF INVESTMENT INTENT
12% SECURED CONVERTIBLE PROMISSORY NOTE
AND WARRANT OFFERING
Innovative Gaming, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxx, Xxxxxx 00000
hereby subscribes for the purchase of
a) $ principal amount of 12% Secured Convertible Promissory Note (the
"Note"), in the form attached to as Annex A, of Innovative Gaming, Inc., a
Nevada corporation, and the Warrant (the "Warrant," and collectively with the
"Note," the "Securities") in the form attached hereto as Annex B to purchase
Common Stock of Innovative Gaming Corporation of America, a Minnesota
corporation and beneficial owner of 100% of IGI's issued and outstanding stock
("IGCA" and collectively with IGI, the "Company") upon the terms and conditions
set forth below. The undersigned acknowledges that this subscription is
contingent upon acceptance in whole or in part by the Company.
(1) Payment of Purchase Price; Delivery of Note and Warrant. The
undersigned subscriber will pay the purchase price in full to the order of
Innovative Gaming, Inc. and deliver a complete and manually signed copy of this
Subscription Agreement with such payment to the Company. THE UNDERSIGNED WILL
SEND 1) A COMPLETED AND EXECUTED SUBSCRIPTION AGREEMENT AND 2) WIRE PURSUANT TO
THE INSTRUCTIONS INDICATED BELOW OR ENCLOSE A CHECK IN THE AMOUNT OF YOUR
SUBSCRIPTION, MADE PAYABLE TO "INNOVATIVE GAMING, INC" TO THE ATTENTION OF XXXXX
X. XXXXXXXXXX, CHIEF FINANCIAL OFFICER, INNOVATIVE GAMING CORPORATION OF
AMERICA, 0000 XXXXXXXXX XXXXXX, XXXX, XXXXXX 00000. THE WIRE INSTRUCTIONS FOR
YOUR SUBSCRIPTION ARE AS FOLLOWS:
XXXXX XXXXX XXXX
XXXX XXXXXXXXXX XXXXXXX XXXXXX
XXXX, XXXXXX 00000
ABA ROUTING: 121 000 248
ACCOUNT NUMBER: 000 000 0000
ACCOUNT NAME: INNOVATIVE GAMING, INC.
Upon acceptance of this Subscription Agreement by the Company, a Note
and a Warrant will be registered in the name or names, and will be delivered by
certified mail to the address, specified on page 7 hereof.
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(2) Representations of the Investor. In connection with, and in
consideration of, the sale of the Securities to the undersigned, the undersigned
hereby represents and warrants to the Company that the undersigned:
A. Has been given access to full and complete information
regarding the Company (including the opportunity to meet with
Company officers and review all documents as the undersigned
may have requested in writing); has utilized such access to
the undersigned's satisfaction for the purpose of obtaining
information in addition to, or verifying information included
in IGCA's filings with the Securities and Exchange Commission,
including but not limited to, the Company's Form 10-K for the
Fiscal Year ended December 31, 1998 and the Company's Form
10-Q for the first quarter ended March 31, 1999 ("SEC
Filings") thereto; and has been given reasonable opportunity
to ask questions of, and receiving answers from, such
representatives of the Company concerning the terms and
conditions of the offering of the Securities.
B. Realizes that, notwithstanding the fact that the Note is
secured, a purchase of the Securities represents a speculative
investment involving a high degree of risk, including, but not
limited to, the reasons described in the SEC Filings.
C. Understands that the Note is not convertible into IGCA's
Common Stock until one (1) year after the date of issuance.
D. Understands that the Warrant is not exercisable into IGCA's
Common Stock until the earlier of (i) Ninety (90) days from
the date of issuance, or (ii) registration of the Warrant
Shares with the Securities and Exchange Commission.
E. Understands that the Shares of Common Stock of IGCA issuable
upon conversion of the Note or exercise of the Warrant may
only be sold pursuant to a registration statement relating to
such securities or pursuant to an exemption from registration.
F. Can bear the economic risk of an investment in the Note, can
afford to sustain a complete loss of such investment, has no
need for liquidity in connection with an investment in the
Securities, and can afford to hold the Securities
indefinitely.
G. Realizes that there will be no market for the Securities, that
there are significant restrictions on the transferability of
the Securities and that for these and other reasons, the
undersigned may not be able to liquidate an investment in the
Securities for an indefinite period until the undersigned can
convert such security.
H. Realizes that the Securities have not been, and will not be,
registered for sale under the Securities Act of 1933, as
amended (the "Act"), or applicable state securities laws (the
"State Laws") and may be sold only pursuant to registration
under the Act and State Laws, or an opinion of counsel
satisfactory to counsel for the Company that such registration
is not required.
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I. Believes that the investment in the Securities is suitable for
the undersigned based upon the undersigned's investment
objectives and financial needs, and the undersigned has
adequate means to provide for the undersigned's current
financial needs and personal/business contingencies and has no
need for liquidity of investment with respect to the
Securities.
J. Is experienced and knowledgeable in financial and business
matters, capable of evaluating the merits and risks of
investing in the Securities, and does not need or desire the
assistance of a knowledgeable representative to aid in the
evaluation of such risks (or, in the alternative, has a
knowledgeable representative who such investor intends to use
in connection with a decision as to whether to purchase the
Securities and who together with such investor has such
knowledge and experience in financial and business matters
that they are together capable of evaluating the merits and
risks of investing in the Securities).
(3) Investment Intent. The undersigned has been advised that the
Securities have not been registered under the Act or the relevant State Laws but
are being offered, and will be offered and sold, pursuant to exemptions from the
Act and State Laws, and that the Company's reliance upon such exemptions is
predicated in part on the undersigned's representations contained herein. The
undersigned represents and warrants that the Securities are being purchased for
the undersigned's own account and for long term investment and without the
intention of reselling or redistributing the Securities, that the undersigned
has made no agreement with others regarding any of the Securities, and that the
undersigned's financial condition is such that it is not likely that it will be
necessary for the undersigned to dispose of any of the Securities in the
foreseeable future. The undersigned is aware that (i) in the view of the
Securities and Exchange Commission (the "SEC"), a purchase of securities with an
intent to resell by reason of any foreseeable specific contingency or
anticipated change in market values, or any change in the liquidation or
settlement of any loan obtained for the acquisition of any of the Securities and
for which the Securities were or may be pledged as security would represent an
intent inconsistent with the investment representations set forth above and (ii)
the transferability of the Securities is restricted.
The undersigned understands that the Note will contain the following
legend:
"Neither this note nor the shares of common stock issuable
upon conversion hereunder have been registered under the
securities act of 1933 or under the securities laws of any
state or other jurisdiction (together, the "securities laws")
and may not be offered for sale, sold or otherwise transferred
or encumbered in the absence of compliance with such
securities laws and until the company (as defined herein)
thereof shall have received an opinion from counsel acceptable
to it that the proposed disposition will not violate any
applicable securities laws. This Note is non-negotiable and
non-transferable and no interest shall be paid except to the
payee named herein except as otherwise noted herein. This Note
is secured pursuant to the terms of the security agreement of
even date hereof."
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The undersigned further represents and agrees that if, contrary to the
undersigned's foregoing intentions, the undersigned should later desire to
dispose of or transfer any of the Securities in any manner, the undersigned
shall not do so without first obtaining (i) an opinion of counsel satisfactory
to the Company that such proposed disposition or transfer may be made lawfully
without the registration of such Securities pursuant to the Act and applicable
State Laws, or (ii) registration of such Securities (it being expressly
understood that the Company shall not have any obligation to register such
Securities except as specifically set forth herein).
(4) Residence. The undersigned represents and warrants that the
undersigned is a bona fide resident of (or, if an entity, is organized or
incorporated under the laws of, and is domiciled in) the State of and that the
Securities are being purchased by the undersigned in the undersigned's name
solely for the undersigned's own beneficial interest and not as nominee for, on
behalf of, for the beneficial interest transfer to, any other person, trust, or
organization (except as specifically set forth in paragraph (9) of this
Agreement).
PARAGRAPH (5) IS REQUIRED IN CONNECTION WITH THE EXEMPTIONS FROM THE
ACT AND STATE LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO THE OFFER AND
SALE OF THE SECURITIES. ALL OF SUCH INFORMATION WILL BE KEPT CONFIDENTIAL AND
WILL BE REVIEWED ONLY BY THE COMPANY AND ITS COUNSEL. The undersigned agrees to
furnish any additional information which the Company or its legal counsel deem
necessary in order to verify the responses set forth below.
(5) Accredited Status. The undersigned represents and warrants as
follows (check all that apply):
A. The undersigned is an individual with a net
------ worth, or a joint net worth together with his
or her spouse, in excess of $1,000,000. (In
calculating net worth, you may include equity
in personal property and real estate,
including your principal residence, cash,
short-term investments, stock and securities.
Equity in personal property and real estate
should be based on the fair market value of
such property minus debt secured by such
property.)
B. The undersigned is an individual (not a
------ partnership, corporation, etc.) with income
in excess of $200,000 in each of the prior
two years and reasonably expects an income in
excess of $200,000 in the current year.
C. The undersigned is an individual (not a
------ partnership, corporation, etc.) who, with his
or her spouse, had joint income in excess of
$300,000 in each of the prior two years and
reasonably expects joint income in excess of
$300,000 in the current year.
D. The undersigned, if other than an individual,
------ is an entity all of whose equity owners meet
one of the tests set forth in (a) through (d)
above (if relying on this category alone,
each equity owner must complete a separate
copy of this Agreement).
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E. The undersigned is an entity, and is an
------ "Accredited Investor" as defined in Rule
501(a) of Regulation D under the Act.
(6) Entities. If the undersigned is not an individual but an entity,
the individual signing on behalf of such entity and the entity jointly and
severally agree and certify that:
A. The undersigned was not organized for the specific
purpose of acquiring the Securities; and
B. This Agreement has been duly authorized by all
necessary action on the part of the undersigned, has
been duly executed by an authorized officer or
representative of the undersigned, and is a legal,
valid and binding obligation of the undersigned
enforceable in accordance with its terms.
(7) Legal Age. If the undersigned is an individual, the undersigned
is of legal age.
(8) Miscellaneous.
A. Manner in which title is to be held: (check one):
_____ Individual Ownership
_____ Joint Tenants with Right of Survivorship*
_____ Partnership*
_____ Tenants in Common*
_____ Corporation
_____ Trust
_____ Other (describe):
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* Multiple signatures required.
B. The undersigned agrees that the undersigned understands the
meaning and legal consequences of the agreements,
representations and warranties contained herein, agrees that
such agreements, representations and warranties shall survive
and remain in full force and effect after the execution hereof
and payment for the Securities, and further agrees to indemnify
and hold harmless the Company, each current and future officer,
director, employee, agent and shareholder from and against any
and all loss, damage or liability due to, or arising out of, a
breach of any agreement, representation or warranty of the
undersigned contained herein.
C. This Agreement shall be construed and interpreted in accordance
with Nevada law without regard to conflict of law provisions.
D. The undersigned agrees to furnish to the Company, upon request,
such additional information as may be deemed necessary to
determine the undersigned's suitability as an investor.
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INDIVIDUAL SUBSCRIBERS: ENTITY SUBSCRIBERS:
(including joint tenants and tenants in common)
x x
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Signature Signature
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Name (typed or printed) -----------------------------------
Name (typed or printed)
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Address, city, state and zip code Name of entity
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Social security number -----------------------------------
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Address,city, state and zip code
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Business telephone number
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Tax identification number
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Fax number
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Telephone number
x
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Signature (If more than one individual
subscriber)
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Name (typed or printed)
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Date signed
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Address, city, state and zip code
----------------------------------------
Social security number
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Date signed
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ACCEPTANCE
This Subscription Agreement and Letter of Investment Intent is accepted
as of this ____ day of _________, 1999.
INNOVATIVE GAMING, INC.
By:
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Its:
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