Exhibit 3.12
REDEMPTION AGREEMENT
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THIS REDEMPTION AGREEMENT ("Agreement") is made as of February 25, 1997 by
and among Sky Games International, Inc., a Nevada Corporation ("SGII"), Xxxxxxx
Xxxx Xxxxxxxx and Xxx Xxxxxxxxx (each, a "Shareholder" and collectively, the
"Shareholders") and Sky Games International Ltd., a Bermuda exempted company
(the "Company").
RECITALS
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A. The Shareholders own 3,525,000 issued and outstanding shares of common
stock, Cdn. $.01 par value per share, of the Company (the "Common Stock") which
are held in escrow (the "Escrow" and such stock, the "Escrowed Stock") with the
Montreal Trust Company of Canada (the "Escrow Agent") pursuant to the securities
laws of British Columbia, Canada and that certain Escrow Agreement dated as of
May 27, 1992 by and among the Escrow Agent, the Company and each Shareholder
(the "Escrow Agreement").
B. The Company desires to redeem the Escrowed Stock from the Shareholders
and the Shareholders desire to have the Company redeem the Escrowed Stock in
accordance with and on the terms and conditions set forth herein.
AGREEMENTS
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NOW, THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Representations and Warranties. Assuming receipt of the Regulatory
Approval (as defined herein) or the release of Escrowed Stock from the Escrow
for any reason whatsoever:
(a) each Shareholder, including, without limitation, SGII, hereby
represents and warrants:
(1) neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated will result in a
violation of any statute, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority or of any
arbitration award;
(2) the Shareholder is not a party to any unexpired,
undischarged or unsatisfied written or oral contract, agreement,
indenture, mortgage, debenture, note or other instrument under the
terms of which performance by the Shareholder according to the terms
of this Agreement will be a default, or whereby timely performance by
the Shareholder according to the terms of this Agreement may be
prohibited, prevented or delayed; and
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(3) the Escrowed Stock is owned beneficially and of record by
the Shareholder in the amount set forth opposite the Shareholder's
name on Exhibit A attached hereto free and clear of all voting trust
and other voting arrangements, liens, encumbrances, security
interests, transfer restrictions and claims of every nature, other
than those obligations arising out of the Escrow Agreement or by the
shareholders of SGII set forth on Exhibit B attached hereto with
respect to and in the amount of the Escrowed Stock set forth on
Exhibit B opposite their name;
(4) the Common Stock to be acquired by the Shareholders pursuant
to this Agreement as part of the Redemption Consideration (as herein
defined) is and shall be acquired for such holder's own account, for
investment purposes only and not with a present view to, or intention
of, distribution or resale thereof in violation of the United States
Securities Act of 1933, as amended (the "1933 Act") or any state
securities laws and that, irrespective of any other provisions of this
Agreement, such Common Stock shall be transferred only in compliance
with all applicable federal and state securities laws, including,
without limitation, the 1933 Act;
(5) the shares of Common Stock to be received by the
Shareholders hereunder are not registered under the 1933 Act and must
be held by the Shareholders until such shares of Common Stock are
registered under the 1933 Act or an exemption from such registration
is available; the Company shall have no obligation to take any actions
that may be necessary to make available any exemption from
registration under the 1933 Act; and the Company shall place "stop
transfer" restrictions on the party responsible for recording
transfers of shares of Common Stock in violation of the foregoing
provisions of this paragraph;
(6) the Shareholder is familiar with Rule 144 adopted by the
United States Securities and Exchange Commission (the "SEC") which
establishes guidelines governing, among other things, the resale of
"restricted securities" (securities, such as shares of Common Stock
acquired hereunder); and
(7) the Shareholder is able to evaluate the risks and merits of
the transaction contemplated by this Agreement and of making an
informed decision with respect thereto and has had an opportunity to
ask questions and receive answers concerning the terms and conditions
of this Agreement and to consult with legal counsel regarding this
Agreement;
(b) SGII hereby represents and warrants to the Company as follows:
(1) SGII is a corporation duly organized, existing and in good
standing, under the laws of the State of Nevada;
(2) all corporate action necessary to authorize the execution
and delivery of this Agreement by SGII, and the consummation of the
transactions contemplated hereby, has been taken; and
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(3) neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, will
conflict with or result in the breach of any of the terms, conditions
or provisions of the Articles of Incorporation or the By-laws of SGII;
and
(c) the Company represents and warrants to the Shareholders as
follows:
(1) the Company is a corporation duly organized and existing
under and in compliance with the corporate laws of Bermuda;
(2) all corporate action necessary to authorize the execution
and delivery of this Agreement by the Company, and the consummation of
the transactions contemplated hereby, has been taken;
(3) neither the execution and delivery of this Agreement, nor
the consummation of the transactions herein contemplated, will
conflict with or result in the breach of any of the terms, conditions
or provisions of the Memorandum of Continuance or the Bye-laws of the
Company, or, to the Company's knowledge, result in a violation of any
statute, administrative regulation, order, writ, injunction, judgment
or decree of any court or governmental authority or of any arbitration
award;
(4) the Company is not a party to any material unexpired,
undischarged or unsatisfied written or oral contract, agreement,
indenture, mortgage, debenture, note or other instrument under the
terms of which performance by the Company according to the terms of
this Agreement will be a default or an event of acceleration, or
grounds for termination, or whereby timely performance by the Company
according to the terms of this Agreement may be prohibited, prevented
or delayed; and
(5) all shares of Common Stock issued as the Redemption
Consideration (as defined herein) pursuant to the terms of this
Agreement shall be duly and validly issued and fully paid and
nonassessable.
2. Redemption, Issuance and Cancellation. On the terms and subject to the
conditions contained in this Agreement, including, without limitation, receipt
of the Regulatory Approval, the Shareholders agree to sell the Escrowed Stock to
the Company, and the Company agrees to purchase the Escrowed Stock of each
Shareholder by issuing to each Shareholder, as directed by each Shareholder, one
(1) share of the Common Stock for every three (3) shares of Escrowed Stock
redeemed as set forth on Exhibit A attached hereto (the "Redemption
Consideration"). Upon redemption, the Company shall cancel the Escrowed Stock.
3. Time and Place of Closings. The consummation of the transactions
described in paragraph 2 hereof (the "Closing") shall be deemed to have occurred
at the offices of Altheimer & Xxxx, 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000 at 10:00 a.m., local time, on the date hereof (the "Initial
Closing") and thereafter on the date which is five (5) business days following
the date of the Regulatory Approval or the date of each release of Escrowed
Stock, in whole or in part, from the Escrow for any reason whatsoever (each, a
"Closing Date").
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4. Conditions Precedent to Closing Deliveries. The obligation of each of
the Shareholders to make the deliveries set forth in Section 5 is subject to the
fulfillment of the following conditions on the Closing Date:
(a) the parties shall have received the approval of the
Superintendent of Brokers appointed under the British Columbia Securities
Act, S.B.C. 1985, c. 83, to the transactions contemplated hereby in form
and substance reasonably satisfactory to the parties (the "Regulatory
Approval"); or
(b) Escrowed Shares shall have been released, in whole or in part,
from the Escrow, for any reason whatsoever (including, without limitation,
termination of the Escrow).
5. Closing Deliveries. To effectuate the transactions contemplated
hereby:
(a) SGII shall deliver to the Company at the Initial Closing a
certified copy of the resolutions of SGII's board of directors, authorizing
the execution and performance of this Agreement and all documents to be
delivered in connection with this Agreement; and
(b) the Shareholders, including SGII, shall deliver to the Company at
each Closing all of the following:
(1) an assignment separate from certificate, duly executed in
blank, for the Escrowed Stock as to which Regulatory Approval has been
received or which has been released from the Escrow for any other
reason whatsoever and, certificates representing such Escrowed Stock;
and
(2) a certificate duly executed by each Shareholder pursuant to
which the Shareholder represents and warrants to the Company that the
Shareholder's representations and warranties to the Company are true
and correct as of the Closing Date as if then originally made and that
all documents to be executed and delivered by the Shareholder at the
Closing have been duly executed; and
(c) the Company shall deliver at Initial Closing to the Shareholders
all of the following:
(1) a certified copy of resolutions of the Company's board of
directors, authorizing the execution and performance of this Agreement
and all documents to be delivered in connection with this Agreement;
and
(2) the Redemption Consideration as set forth on Exhibit A
attached hereto; provided, however, the Company acknowledges that it
is hereby instructed by SGII to issue the number of shares of Common
Stock which constitutes part of SGII's Redemption Consideration to the
parties and in the amounts set forth on Exhibit B attached hereto and
SGII hereby agrees that it shall be responsible for the compliance by
such parties with SGII's and their obligations hereunder, including,
without limitation,
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the obligations set forth under Section 6(b);
(d) in the event the Escrowed Shares are cancelled prior to release
from the Escrow, the Shareholders, including SGII, shall deliver to the
Company a general release of the Company from all claims in connection with
the Escrowed Stock, except for obligations of the Company under this
Agreement; and
(e) the parties shall execute and deliver at any Closing, or any time
thereafter, such further documents, and shall perform such further acts, as
may be necessary or desirable to effectuate the transactions contemplated
by this Agreement.
6. Piggyback Registration.
(a) If, at any time or times, prior to the second anniversary of the
date of this Agreement the Company determines to file with the SEC a
registration statement covering any shares of Common Stock to be issued or
sold by the Company (other than shares of Common Stock which are issuable
in an offering (i) to directors and employees of the Company or its
subsidiaries pursuant to an employee stock option, bonus or other employee
benefit plan, or (ii) in connection with the acquisition of another
company's asset or business by the Company or any of its subsidiaries or
the formation of a joint venture) (a "Piggyback Event"), the Company shall
notify each Shareholder in writing of the proposed registration statement,
such notification to describe in detail the proposed registration
(including those jurisdictions where registration is required under federal
and/or state securities laws). If one or more Shareholders or parties set
forth on Exhibit B attached hereto (individually, a "Piggyback Seller" and
collectively, the "Piggyback Sellers") requests the Company in writing,
within ten (10) days of the receipt of such notification from the Company,
to include in such registration statement all, and not less than all, of
such Piggyback Seller's shares of Common Stock constituting part of the
Redemption Consideration (the "Registrable Shares") then, subject to the
remaining provisions hereof, the Company will use reasonable efforts to
include those shares in the registration statement. Each such request by a
Piggyback Seller shall specify the number of Registrable Shares intended to
be offered and sold by each such Piggyback Seller, shall express each such
Piggyback Seller's present intent to offer such Registrable Shares for
distribution, shall, if the Company has not arranged for a plan of
distribution or other marketing arrangements for such distribution,
describe the nature or method of the proposed offer and sale thereof and
shall contain the undertaking of each such Piggyback Seller to provide all
such information and materials and take all such action as may be requested
in order to permit the Company to comply with all applicable requirements
of the SEC and to obtain acceleration of the effective date of such
registration statement. The Company, at its sole option, may elect not to
proceed with the registration statement which is the subject of such
notice. The obligations of the Company under this Section 6(a) are subject
to the limitations, conditions and qualifications set forth in Section
6(b).
(b) The obligation of the Company to use its reasonable efforts to
cause Registrable Shares to be registered under the 1933 Act, pursuant to
Section 6(a) are subject to each of the following limitations, conditions
and qualifications:
(1) the Company shall be entitled to reduce the number of
Registrable Shares of any Piggyback Seller to be included in such
registration if the managing underwriter(s) of a proposed public
offering of the Company's securities advises the Company that, in its
opinion, (or, if the
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offering is not underwritten, upon the Company's reasonable
determination that) inclusion of all of such Piggyback Seller's
requested Registrable Shares would adversely affect the public
offering of securities being sold by the Company;
(2) provided that the Company has not arranged for a plan of
distribution and other marketing arrangements for such registration,
it shall be a condition of the right of a Piggyback Seller to
participate that it shall have arranged for a plan of distribution of
its Registrable Shares which are to be registered which is reasonably
acceptable to the Company and made all pertinent marketing
arrangements for such Registrable Shares;
(3) all expenses incurred in connection with any registration
or qualification pursuant to Section 6(a), including, without
limitation, all SEC registration fees, state securities filing fees,
printing expenses (excluding the printing of any agreements, memoranda
or other documents pertaining solely to the sale of Registrable Shares
by Piggyback Sellers) shall, subject to requirements of any applicable
regulatory agency, be borne by the Company, and each participating
Piggyback Seller shall bear the fees and disbursements of its own
legal counsel, underwriting or brokerage discounts and commissions,
and transfer taxes, on the sale of its Registrable Shares;
(4) the Company may require, as a condition to fulfilling its
obligations under the registration provisions of Section 6(a) of this
Agreement, receipt of executed customary indemnification agreements in
form reasonably satisfactory to the Company from the Piggyback Sellers
whose Registrable Shares are to be registered.
(5) each participating Piggyback Seller, upon receipt of any
notice from the Company that any prospectus relating to Registrable
Stock contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, will immediately
discontinue disposition of Registrable Stock until such Piggyback
Seller's receipt of copies of a supplemented or amended prospectus or
until such Piggyback Seller is advised in writing by the Company that
the use of the prospectus may be resumed, and, if so directed by the
Company, such Piggyback Seller will, or will request the managing
underwriter or underwriters (if any) to, deliver to the Company all
copies, other than permanent file copies then in such holder's
possession, of the prospectus covering such Registrable Shares current
at the time of receipt of such notice; and
(6) each Piggyback Seller agrees (A) to notify the Company as
promptly as practicable of any inaccuracy or change in information
previously furnished by such Piggyback Seller to the Company or of the
occurrence of any event, in either case, as a result of which any
prospectus relating to such registration contains or would contain an
untrue statement of a material fact regarding such Piggyback Seller or
omits or would omit to state any material fact regarding such
Piggyback Seller required to be stated therein or necessary to make
the statements therein not misleading, and (B) promptly to furnish to
the Company any additional information required to correct and update
any previously furnished information or required so that such
prospectus shall not contain, with respect to such Piggyback Seller,
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
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7. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and shall be
binding on them and on their respective legal representatives, successors and
assigns. Each exhibit to this Agreement is incorporated herein by reference. Any
amendments to this Agreement, and any alternative or supplementary provision,
must be made in writing and duly executed by an authorized representative or
agent of each of the parties hereto.
8. Non-Waiver. Neither the failure in any one or more instances of a
party to insist upon performance of any of the terms, covenants or conditions of
this Agreement or to exercise any right or privilege conferred in this
Agreement, nor the waiver by said party of any breach of any of the terms,
covenants or conditions of this Agreement, shall be construed as a subsequent
waiver of any such terms, covenants, conditions, rights or privileges, and all
of such terms, covenants, conditions, rights or privileges shall continue and
remain in full force and effect as if no such forbearance or waiver had
occurred. Any provision of this Agreement may be waived by the party for whose
benefit it is made, but no waiver shall be effective unless it is in writing and
signed by an authorized representative or agent of the waiving party.
9. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original, and all of which when taken
together shall constitute but one instrument.
10. Severability. The invalidity of any provision of this Agreement or a
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
11. Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Illinois.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SKY GAMES INTERNATIONAL LTD.
By: /s/ Xxxxxxx X. Xxxxx
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Its: President
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SKY GAMES INTERNATIONAL, INC.
By:
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Its:
--------------------------
/s/ Xxxxxxx Xxxx Xxxxxxxx
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Xxxxxxx Xxxx Xxxxxxxx
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
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Exhibit A
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Escrowed Stock Ownership
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No. of shares of
Shareholder No. of Escrowed Shares Redemption Consideration
----------- ---------------------- ------------------------
Sky Games International, Inc. 2,000,000 666,667
Xxxxxxx Xxxx Xxxxxxxx 1,000,000 333,333
Xx. Xxx Xxxxxxxxx 525,000 175,000
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Total 3,525,000 1,175,000
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Exhibit B
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Recipients of SGII Redemption Consideration
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No. of shares of SGII
Party Redemption Consideration
----- ------------------------
Xxxxxxx Xxxxxxxxx 21,733
Xxxxx Xxxxxx 16,533
Xxxx Xxxxxxx 6,400
Xxxxxxx Xxxxx 6,133
X.X. Xxxx Xxxxx, Xx. 6,133
Xxxx and Xxxx XxXxxxx 3,067
Xxxxx Xxxxxxx 3,067
Xxxxxx Xxxxxxxx 2,467
Xxx Xxxxx 2,467
Xxxxxxx and Xxxxx Xxxxxxxxx 1,867
Xxx and Xxxxx Xxxxx 1,200
Xxxxxxx and Xxxxx Xxxx 1,200
Xxxxxxx Xxxxxxx 1,200
Xxxxxxxx Xxxxxx 1,200
Xxxx Xxxxxxxxxx 1,200
Baby X. Xxxxxxx 1,200
Xxxx X. Xxxxxxxx 867
Xxxxx Xxxx 600
Katie and Xxxxx Xxxxx 533
Xxxxxxxx X. Xxxxxxxxxx 467
Xxxxxx Xxx 400
Xxx Xxxxxxxx 333
Xxxxx Xxxxx 267
SGII 586,133
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Total 666,667
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