Exhibit 10.3


 


EXECUTION
COPY


 


AGREEMENT AND GUARANTY


 


THIS
AGREEMENT AND GUARANTY (this “Agreement”) is
made as of the 12th day of May, 2004, by Shuffle Master, Inc., a
Minnesota corporation (“SMI”), on the one hand, and Casinos Austria
Aktiengesellschaft, an Austrian stock corporation (“CASAG”) and CAI
Casinoinvest Middle East GmbH, an Austrian limited liability company (“CAI”),
on the other hand (individually, an “Obligee” and, collectively, the “Obligees”).
Except as otherwise indicated herein, capitalized terms used in this Agreement
have the- same meanings set forth in the Purchase Agreement (as defined below).


 


WHEREAS, this
Agreement is being issued pursuant to, and as a condition to the consummation
of the transactions contemplated by, the Purchase Agreement to be dated on or
about May 13, 2004 (the “Purchase Agreement”), by and among CASAG, CM,
Shuffle Master Management-Service GmbH, an Austrian limited liability company
(“SHFMMS”), and Shuffle Master GmbH, an Austrian limited liability company
(“SHFM”) in connection with the sale by CASAG and CAI to SHFMMS and SIIFM,
respectively, of partnership interests in CARD Casinos Austria Research &
Development GmbH & Co. KG (“CARD”); and


 


WHEREAS, SMI,
in furtherance of its business objectives, has agreed to guarantee the due and
punctual payment, observance and performance of certain obligations of each of
SHFMMS and SHFM (individually, an “Obligor” and, collectively, the “Obligors”)
to such Obligees under the Purchase Agreement and to take certain other actions
and enter into certain other agreements in connection therewith, all as more
fully described herein.


 


NOW,
THEREFORE, in consideration of the premises and other valuable consideration
(receipt and sufficiency of which is hereby acknowledged), each of the parties
hereto agrees as follows:


 


SECTION 1.                                Guarantee.


 


1.1                                 Subject
to the terms, conditions, and limitations hereof, SMI hereby guarantees, as
primary obligor and as a guarantor of payment and performance (and not merely
as surety or guarantor of collection), to each of the Obligees the due,
complete and punctual payment of all amounts which are or may become due and
payable by any Obligor, and the due, complete and punctual performance of all
agreements and undertakings of any Obligor, but only as follows: (i) under
Article II of the Purchase Agreement (Purchase and Sale of Shares,
including the payment of the Purchase Price and all other payments and
deliveries tp be made by the Obligors at the Closing), and (ii) under
Article IX of the Purchase Agreement (Indemnification), together with all
claims for damages arising from or in connection with the failure punctually
and completely to pay or perform such obligations ‘(such obligations being
herein collectively called the “Obligations”), in any case, subject to
the terms, conditions, and limitations applicable to the Obligors set forth in
the Purchase Agreement. Notwithstanding the above, the Obligees acknowledge and
agree that SMI has not made, and does not hereby make (and, except for the
representations and warranties of any Buyer contained in the Purchase


 


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Agreement, no Buyer, nor any Affiliate of SMI or any Buyer has made or
hereby makes), any representations, express or implied, with respect to the
inherent or trading value of the SMI Stock, the availability of a liquid or
open trading market with respect to the SMI Stock or the present or future
performance of SMI, CARD or the SMI Stock.


 


1.2                                 The
obligations of SMI under this Agreement shall be direct and primary obligations
which shall, subject to the terms hereof, constitute a guaranty of payment,
performance and compliance and not of collection, and SMI specifically agrees
that it shall not be necessary, and that SMI shall not be entitled to require,
before or as a condition of enforcing the liability of SMI under this Agreement
or requiring payment or performance of the Obligations by SMI hereunder, or at
any time thereafter, that any Person or Obligee (or any of their respective
successors and assigns) exhaust any of its rights or remedies against the
Obligors or take any other action of any kind prior to making any demand on or
invoking any of the Obligee’s rights and remedies against SMI pursuant to this
Agreement. Subject to Section 1.7, SMI agrees that the guarantee under
this Agreement shall be continuing, and that the Obligations will be paid and
performed in accordance with their terms and the terms of this Agreement, and
are absolute and unconditional, to the fullest extent permitted by applicable
law, irrespective of any circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 1.2 that the obligations of SMI
hereunder shall be absolute and unconditional only to the extent expressly set
forth herein under any and all circumstances. SMI hereby expressly waives
notice of acceptance of and reliance upon this Agreement, diligence,
presentment, demand of payment or performance, protest and all other notices
whatsoever.


 


1.3                                 The
obligations of SMI under this Section 1 shall continue and be
automatically reinstated if and to the extent that for any reason any payment
to any Obligee by or on behalf of any Obligor in respect of the Obligations is
rescinded or must be otherwise restored by such Obligee, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise, and SMI agrees
that it will indemnify such Obligee on demand for all reasonable costs and
expenses (including, without limitation, fees and expenses of counsel) incurred
by such Obligee in connection with its compliance with or resistance to any
such rescission or restoration.


 


1.4                                 Until
the earlier of (a) all Obligations have been indefeasibly paid or performed in
full or (b) all of the provisions of Section 1.7 have become applicable,
SMI hereby waives: (i) all rights of subrogation or reimbursement or any
similar right or concept which it may at any time otherwise have (a) as a
result of this Agreement (whether contractual, under applicable bankruptcy law
or otherwise) to the claims of the Obligees against any Obligor and (b) any
right to enforce any other remedy which any Obligee now has or may hereafter
have against any Obligor and (ii) any benefit of, and any right to participate,
in any security or collateral given to or for the benefit of the Obligees to
secure payment of the Obligations.


 


1.5                                 SMI
agrees that, as between SMI and each Obligee, the Obligations may be declared
to be forthwith due and (in the case of payment Obligations) payable as
provided herein, notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such Obligations from becoming automatically
due and (in the case of payment Obligations) payable as against any Obligor, as
the case may be) and that, in the
event of any such declaration, such obligations that are due and (in the case
of payment Obligations) payable by any Obligor, shall forthwith become due and
(in the case of payment Obligations) payable by


 


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SMI.


 


1.6                                 This
Agreement shall inure to the benefit of the Obligees and their successors and
assigns.


 


1.7                                 Notwithstanding
anything contained herein to the contrary, SMI’s aggregate Obligations under
Section 1.1(i) shall be limited to any portion of the Purchase Price that
is not paid or delivered at the Closing in accordance with Article II of
the Purchase Agreement; and once any such unpaid or undelivered portion of the
Purchase Price has been so paid or delivered, SMI’s Obligations under
Section 1.1(i) shall be deemed to have been satisfied in full.


 


SECTION 2.                                Other Agreements.


 


2.1                                 SMI
and CASAG each agree to negotiate in good faith, and to use commercially
reasonable efforts to enter into (and/or cause one or more of its Affiliates to
enter into), a supply agreement between SMI (and/or one or more of its
Affiliates) and CASAG (and/or one or more of its Affiliates) within sixty (60)
days of the Closing Date containing the terms set forth in the draft proposed
term sheet for the supply agreement attached hereto as Exhibit 1 and such other
terms as are reasonable and customary for such an agreement.


 


2.2                                 SMI
hereby acknowledges and agrees that, pursuant to and as provided in the
Purchase Agreement, it is the intent of the parties that, following the first
anniversary of the Closing Date, the shares of SMI common stock shall be freely
tradable (subject only to the terms of the right of first refusal contained in
Section 5.5 of the Purchase Agreement) and in furtherance thereof hereby
agrees (i) to comply with the terms of the Registration Rights Agreement dated
as May 13, 2004 by and between SMI and each Obligee receiving shares of SMI
common stock at the Closing, and (ii) pursuant to and as provided in the Purchase
Agreement, at such times as such shares become freely tradable, upon the
written request of the holder of such shares, to take all other actions
necessary to remove any transfer restrictions imposed by it or any of its
Affiliates, including without limitation, by removing any restrictive legends
(other than those relating to the right of first refusal) on the certificates
representing such shares.


 


2.3                                 SMI
hereby agrees (i) to be bound by the provisions of Section 5.3 of the
Purchase Agreement as a primary obligor, including without limitation to comply
with all applicable provisions thereof relating to any exercise by SMI of any
rights granted to it thereunder, and (ii) to be bound by the provisions of
Section 5.6 of the Purchase Agreement as a primary obligor, including
without limitation to, upon request by CASAG, buy back all, but not less than
all, of the SMI Stock, all in accordance with the terms thereof.


 


2.4                                 Obligees,
jointly and severally, agree that the original signed copy of this Agreement
shall not, nor shall any certified, notarized or legalized copy thereof, ever
be brought by Obligees into the country of Austria; provided that
Obligees may bring into the country of Austria a simple copy of this Agreement
without it being certified, notarized or legalized. Any tax, stamp duty or fee,
if any, in connection with the execution, delivery or performance of this
Agreement (collectively, a “Tax”), other than any Tax arising out of any
Obligee’s breach of this Section 2.4 (which Tax will be paid by the
Obligees), shall be paid by SMI, and SW shall indemnify and hold each Obligee
and its Affiliates harmless for any such Tax and agree to indemnify and
reimburse each Obligee for any and all legal or other


 


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expenses incurred in connection with such Obligee’s enforcement of this
Section 2.4 or collection of indemnifiable amounts pursuant to this
Section 2.4. Obligees jointly and severally agree to indemnify and hold
SMI harmless for any Tax, if any, incurred
as a result of any Obligee’s breach of this Section 2.4, and further
jointly and severally agree to indemnify and reimburse SMI for any and all
legal or other expenses incurred in connection with SMI’s enforcement of this
Section 2.4 or collection of indemnifiable amounts pursuant to this
Section 2.4. Nothing herein is intended to imply that this Agreement
constitutes a suretyship (Btirgschaft) obligation.


 


2.5                                 Upon
any merger or consolidation of SMI with or into any other Person (unless SMI is
the survivor entity), or the sale or other disposition of all or substantially
all of the assets of S1VII, whether in a single transaction or a series of
transactions, to any Person (any such merger, consolidation, sale or other
disposition being referred to as a “Guarantor Transfer”), SMI or the
Person formed by such Guarantor Transfer or the Person which acquires all or
substantially all of the assets of SMI (such Person being the “Successor
Guarantor”), shall deliver or cause to be delivered to each Obligee on or prior
to the effective date of such Guarantor Transfer, unless the obligations of SMI
under this Agreement (the “Guarantor  Obligations”) are assumed by
the Successor Guarantor by operation of law, an agreement, in form and
substance reasonably satisfactory to each Obligee, containing an express
assumption by the Successor Guarantor of SMI’s Obligations and an
acknowledgment and agreement (in form and substance reasonably satisfactory to
each Obligee executed and delivered by SMI under this Agreement (after giving
effect to such transfer) to the effect that this Agreement shall remain in full
force and effect and enforceable in accordance with its teams. Notwithstanding
anything herein to the contrary, unless otherwise agreed to in writing by the
Obligees, following any such merger, consolidation, sale or other disposition,
SMI shall remain jointly and severally liable for the Obligations and other
agreements hereunder.


 


2.6                                 SMI
hereby acknowledges, that the Obligees willingness to enter into the Purchase
Agreement and to consummate the transaction contemplated thereby are subject
SMI’s legal and valid execution and delivery of this Agreement.


 


SECTION 3.                                Representations and
Warranties.


 


3.1                                 SMI
hereby represents and warrants as follows (each such representation and
warranty being made as of the date hereof):


 


(i)                                     SMI is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota, with full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder.


 


(ii)                                  The
execution, delivery and performance of this Agreement have been duly and
validly authorized by all requisite corporate action on the part of SMI, and do
not require any consent or approval of, or the giving notice to, or the taking
of any other action in respect of, any stockholder or trustee or holder of any
indebtedness or obligations of SMI. This Agreement has been duly and validly
executed and delivered by SMI, and constitutes a legal, valid and binding
obligation of SMI, enforceable against SMI in accordance with its terms.


 


(iii)                               The
execution, delivery and performance of this Agreement do not and will not
conflict with or result in any violation of or default under any provision of
the organizational documents of SMI, or any indenture, mortgage, deed of trust,
instrument, law, rule or regulation binding on SMI or to which SMI is a party.


 


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(iv)                              The execution, delivery
and performance of this Agreement do not and will not result in violation of
any judgment or order applicable to SMI or result in the creation or imposition
of any Lien on any of the properties or revenues of SMI pursuant to any
requirement of law or any indenture, mortgage, deed of trust or other instrument
to which SMI is a party.


 


(v)                                 The
execution, delivery and performance of this Agreement do not and will not
conflict with and do not and will not require any consent, approval or
authorization of, or registration or filing with, any  governmental authority or agency binding on it.


 


(vi)                              The
execution, delivery and performance by SMI of this Agreement will not render
SMI insolvent, nor is it being made in contemplation of SMI’s insolvency, and
SMI does not have an unreasonably small capital.


 


3.2                                 Each
Obligee hereby represents and warrants as follows (each such representation and
warranty being made as of the date hereof):


 


(i)                                     It is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with full corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder.


 


(ii)                                  The execution,
delivery and performance of this Agreement have been duly and validly
authorized by all requisite corporate action on its part, and do not require
any consent or approval of, or the giving notice to, or the taking of any other
action in respect of, any stockholder or trustee or holder of any its
indebtedness or obligations. This Agreement has been duly and validly executed
and delivered by it, and constitutes a legal, valid and binding obligation of
it, enforceable against it in accordance with its terms.


 


(iii)                               The
execution, delivery and performance of this Agreement do not and will not
conflict with or result in any violation of or default under any provision of
its organizational documents, or any indenture,
mortgage, deed of trust, instrument, law, rule or regulation binding on it or
to which it is a party.


 


(iv)                              The
execution, delivery and performance of this Agreement do not and will not
result in violation of any judgment or order applicable to it or result in the
creation or imposition of any Lien on any of the properties or revenues of it
pursuant to any requirement of law or any indenture, mortgage, deed of trust or
other instrument to which it is a party.


 


(v)                                 The
execution, delivery and performance of this Agreement do not and will not (
conflict with and do not and will not require any consent, approval or
authorization of, or / a . registration or filing with, any governmental
authority or agency binding on it.


 


SECTION 4.                            Miscellaneous.


 


4.1                                 Governing
Law; Arbitration. (a) This Agreement, and all questions concerning the
construction, validity and interpretation of this Agreement, or breach hereof,
shall be governed by and construed in accordance with the laws of the State of
New York applicable therein (including Section 5-1401 of the New York
General Obligations Law but excluding all other choice-of-law and
conflicts-of-law rules).


 


(b)                                 All
disputes, controversies or claims arising under or relating to this Agreement
or any breach or threatened breach of this Agreement or violation, termination
or


 


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nullity of this Agreement (an “Arbitrable Dispute”), shall be
finally settled under the Rules of Arbitration of the International Chamber of
Commerce by three arbitrators appointed in accordance with the said Rules,
subject to the following:


 


(i)                                     As
more than two persons ,are party to this Agreement, it is expressly stipulated
that more than one claimant and/or more than one defendant are permitted. For
the purpose of the nomination of arbitrators, there is deemed to be only one
claimant party and one defendant party, regardless of whether multiple parties
appear.


 


(ii)                                  All
such arbitration proceedings shall take place in London, United Kingdom. The
language of the arbitration shall be the English language.


 


4.2                                 No
Waiver; Cumulative Remedies. No failure on the part of any Obligee or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by any Obligee or any
of its agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.


 


4.3                                 Notices.
The provisions of Section 12.2 of the Purchase Agreement concerning
notices are hereby incorporated herein by reference, as if fully set forth
herein. SMI’s address and other information for purposes of such
Section 12.2 is as follows: Shuffle Master, Inc., 1106 Palms Airport
Drive, Las Vegas, Nevada 89119, Attention: Jerome R. Smith, Senior Vice
President and General Counsel.


 


4.4                                 Amendments,
etc. This Agreement, together with the exhibit hereto (which is
incorporated herein by reference), and any provision hereof or thereof may be
terminated, waived, amended, modified or supplemented only by an agreement or
instrument in writing, specifying the provision (or, if applicable, the whole
of this Agreement) intended to be terminated, waived, amended, modified or
supplemented, and executed by SMI and each Obligee in their sole discretion.


 


4.5                                 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit
of the respective successors and assigns of SMI and the Obligees; provided,
that except as otherwise provided in Section 2.5, SMI shall not assign or
transfer its rights or obligations hereunder without the prior written consent
of each Obligee. Notwithstanding anything herein to the contrary, unless
otherwise agreed to in writing by the Obligees, following any such assignment
or transfer, SMI shall remain jointly and severally liable for the Obligations
and other agreements hereunder. Any attempted assignment in breach of this
Section shall be void. SMI hereby acknowledges receipt of a copy of the
Purchase Agreement and consents in all respects (to the extent such consent may
be necessary) to the provisions of the Purchase Agreement.


 


4.6                                 Severability.
Should any of the provisions of this Agreement be or become fully or in part
invalid or unenforceable, the other provisions hereof shall remain enforceable
and in full force and effect.


 


4.7                                 Enforcement.
Any Obligee may enforce this Agreement to the extent of any Obligations owing
to it in accordance with the terms hereof.


 


4.8                                 Survival.
All warranties, representations and covenants made by SMI, whether herein or in
any certificate or other instrument delivered by it or on behalf of it under
this


 


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Agreement, shall be considered to have been relied upon by each Obligee
and shall survive the consummation of the transactions contemplated hereby on
the Closing Date regardless of any investigation made by any such party or on
behalf of any such party.


 


4.9                                 Integration.
This Agreement contains the entire and complete agreement of the parties
concerning the subject matter hereof and supercedes any prior understandings,
agreements or presentations, if any, by or between the parties, written or
oral, which may have related to the subject matter hereof.


 


4.10                           Effectiveness.
Notwithstanding any execution hereof, this Agreement shall only become
effective upon the execution and delivery of the Purchase Agreement.


 


4.11                           Counterparts.
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which taken together shall constitute one and the
same instrument.


 


IN WITNESS WHEREOF, this
Agreement has been duly executed in New York City, New York, by the undersigned
parties on this 12th day of May, 2004.


 


	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  

  
	
   

  	
   

  



 


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Exhibit 1


 


Supply
Agreement Term Sheet


 


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FINAL VERSION


May 11, 2004


 


TERM SHEET


 


Sales Frame Agreement


 


The Sales Frame Agreement shall be consistent with this Term Sheet and
shall be concluded between CASAG and/or its Affiliates on the one hand and SMI
and/or its Affiliates on the other no later than 30.062004.


 


1.                                       Seller:
SMI and SMI Affiliates (including CARD)


 


2.                                       Buyer.
CASAG and CASAG Affiliates (the term Affiliates includes casinos (co-) owned or
(co-) operated by a CASAG-group company)


 


3.                                       Duration:


(a)                                  start:
13.05.2004


(b)                                 indefinite


(c)                                  ordinary termination
with three months prior written notice at the end of each calendar quarter


(d)                                 minimum
duration: 31.12.2009


(e)                                  extraordinary
termination reserved


 


Purpose: Sale of all of Seller’s products now
existing or later developed, produced or traded by Seller.


 


Minimum quantity: none


 


6.                                       After
sale services: optional, at request of Buyer, on terms mutually agreed upon


 


7.                                       Full
warranty for products sold by Seller: one year


 


8.                                       Prices:
basis is list price minus applicable volume discounts as offered by Sellers
from time to time. Rebate payable in cash due 15.46 of each year for preceding
12 months (May 1 - April 30).


 


if total purchases exceed EUR 200.000, per year, then an annual rebate
(separate from any applicable  volume
discount) on the total amount of 20%;


if total purchases exceed EUR 400.000, per year, then an annual rebate
(separate from any applicable volume discount) on the total amount of 25%;


 


The first purchases under this agreement for a total amount of EUR
300.000 (after any applicable  volume
discount)- are free of charge.


 


9.                                       Rebates
Refund:


 


In the event that CASAG or any Affiliate violates the covenant not to
compete contained in Section 10.10 of the Purchase Agreement, or if either
CASAG or any CASAG Affiliate commits any acts which would be in violation of
the covenant not to compete, if such


 


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covenant were fully enforceable, then Buyers shall refund to Sellers
all rebates received.


 


10.                                 Testing:


 


For as long  as Buyer shall
enjoy all benefits of Sales Frame Agreement, CASAG shall allow Seller, at no
charge to Seller, to test new product developments in casinos owned or operated
by Buyer. Details to be mutually agreed.


 


11.                                 Confidentiality:


 


Data and information obtained (including prices and  testing results) to be kept confidential
against third parties unless on a need to know basis, or unless required by law
or statute.


 


12.                                 Law:


 


Sales Frame Agreement and deliveries under the Agreement are  exclusively subject to Austrian law
(excluding UN Sales Law and conflict of law principles of Austrian law).


 


13.                                 Disputes:


 


Disputes to be resolved by ICC arbitration; place of arbitration:
London. Governing language = English


 


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