Document:

Exhibit 10.2

 

Call Option Deed

 

CVC Communication & Technology
Pty Limited

ACN 002 700 361

 

and

 

Shuffle Master, Inc.

 

 

 

 

MLC Centre Martin Place Sydney New South Wales 2000 Australia

Telephone +61 2 9225 5000 
Facsimile +61 2 9322 4000

www.freehills.com  DX 361 Sydney

 

SYDNEY MELBOURNE PERTH BRISBANE SINGAPORE

Correspondent Offices HANOI HO CHI MINH CITY JAKARTA KUALA LUMPUR

 

Reference FGH:30C

 

 

Table
of contents

 

	
  Clause

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1

  	
  Interpretation

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
  1.2

  	
  Rules for interpreting this document

  	
   

  
	
   

  	
  1.3

  	
  Business Days

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  Call Option

  	
   

  
	
   

  	
  2.1

  	
  Call Option

  	
   

  
	
   

  	
  2.2

  	
  Takeover Bid by Bidder

  	
   

  
	
   

  	
  2.3

  	
  Exercise Notice

  	
   

  
	
   

  	
  2.4

  	
  Nature of the Call Option

  	
   

  
	
   

  	
  2.5

  	
  Contract of Sale

  	
   

  
	
   

  	
  2.6

  	
  Settlement

  	
   

  
	
   

  	
  2.7

  	
  Obligations on Settlement Date

  	
   

  
	
   

  	
  2.8

  	
  Lapse for Non-Exercise

  	
   

  
	
   

  	
  2.9

  	
  Lapse for Delay

  	
   

  
	
   

  	
  2.10

  	
  Nominee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  Restrictions on the shares

  	
   

  
	
   

  	
  3.1

  	
  Exercise of Voting Rights

  	
   

  
	
   

  	
  3.2

  	
  Restraint on Disposal

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  Representations and warranties

  	
   

  
	
   

  	
  4.1

  	
  Representations and warranties

  	
   

  
	
   

  	
  4.2

  	
  Repetition of representations and warranties

  	
   

  
	
   

  	
  4.3

  	
  Reliance on representations and warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  Warranty by the Shareholder

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  Notices

  	
   

  
	
   

  	
  6.1

  	
  How to give a notice

  	
   

  
	
   

  	
  6.2

  	
  When a notice is given

  	
   

  
	
   

  	
  6.3

  	
  Address for notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  Amendment and assignment

  	
   

  
	
   

  	
  7.1

  	
  Amendment

  	
   

  
	
   

  	
  7.2

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  General

  	
   

  
	
   

  	
  8.1

  	
  Governing law

  	
   

  
	
   

  	
  8.2

  	
  Liability for expenses

  	
   

  
	
   

  	
  8.3

  	
  Giving effect to this deed

  	
   

  
	
   

  	
  8.4

  	
  Waiver of rights

  	
   

  
	
   

  	
  8.5

  	
  Operation of this deed

  	
   

  

 

i

 

	
   

  	
  8.6

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1

  	
   

  

 

ii

 

This deed

 

is made on 15 November 2005 between the
following parties:

 

1.                                      CVC Communication &
Technology Pty Limited 

ACN 002 700 361

Level 42, 259 George Street, Sydney New South Wales

(the Shareholder)

 

2.                                       Shuffle Master, Inc.

1106 Palms
Airport Drive Las Vegas, Nevada 89119-3730, U.S.A

(the Bidder)

 

Recitals

 

A.                                    The
Shareholder is the registered holder and the beneficial owner of the Option
Shares.

 

B.                                      The
Shareholder wishes to grant to the Bidder the Call Option on the terms and
conditions of this document.

 

The parties agree

 

in consideration of, among other things, the
mutual promises contained in this deed

 

1                                        Interpretation

 

1.1                               Definitions

 

The following
definitions apply in this document.

 

ASTC means the securities clearing house for “CHESS Approved Securities”
or any clearing house or other entity which is substituted for it.

 

ASTC
Settlement Rules means the business rules of
ASTC.

 

Authorisation means:

 

(a)                                 an authorisation, consent, declaration, exemption, notarisation or waiver,
however it is described; and

 

(b)                                in relation to anything that could be prohibited or restricted by
law if a Government Agency acts in any way within a specified period, the
expiry of that period without that action being taken,

 

including any
renewal or amendment.

 

Business
Day means:

 

(a)                                 for determining when a notice, consent or other communication is
given, a day that is not a Saturday, Sunday or public holiday in the place to
which the notice, consent or other communication is sent; and

 

(b)                                for any other purpose, a day
(other than a Saturday, Sunday or public holiday) on which banks are open for
general banking business in Sydney.

 

Call
Option the call option granted by the Shareholder
to the Bidder under clause 2.

 

Call
Period means, subject to clauses 2.2(c)(1) and
2.9, the period:

 

(a)                                 commencing on the date of this deed; and

 

1

 

(b)                                ending on the date specified in
clause 2.8.

 

CHESS has the meaning given to it in the ASTC Settlement Rules.

 

CHESS
Sub-Register has the meaning given to it in
the ASTC Settlement Rules.

 

Closing
Date means the last day of the offer period
of the Takeover Bid.

 

Company means Stargames Limited ABN 54 003 190 501.

 

Competing
Takeover Bid means any proposal or offer with
respect to any transaction (by purchase, scheme of arrangement, takeover bid or
otherwise) that would, if completed substantially in accordance with its terms,
result in any person (or group of persons) other than Bidder or its related
corporations acquiring control of the Company.

 

Corporations
Act means the Corporations
Act 2001 (Cth).

 

Encumbrance means a mortgage, charge, pledge, lien, hypothecation or third
party interest of any kind whatever, or an agreement to create any of them or
to allow any of them to exist.

 

End
Date means 3 months and 3 Business Days from
the date of the first Offer being made or, if a Competing Takeover Bid is
announced during that 3 month and 3 Business Day period, 5 months from the date
of this document.

 

Exercise
Notice means a notice given by the Bidder to
the Shareholder under clause 2.3 substantively in the form of schedule 1.

 

Government
Agency means:

 

(a)                                 a government or government department or other body;

 

(b)                                a governmental, semi-governmental or judicial person; or

 

(c)                                 a person (whether autonomous or not) who is charged with the
administration of a law.

 

HIN has the meaning given to it in the ASTC Settlement Rules.

 

Issuer
Sponsored Statement has the meaning given to
it in the ASTC Settlement Rules.

 

Issuer
Sponsored Sub-Register has the meaning given
to it in the SCH Business Rules.

 

Option
Shares means 6,304,512 ordinary shares in
the Company.

 

Offer means an offer under the Takeover Bid.

 

Prescribed
Matter means a resolution concerning or in
relation to:

 

(a)                                 a Competing Takeover Bid;

 

(b)                                  the
Offer, including without limitation approving a course of conduct by the
Company in connection with the Offer or that is related to the conditions of
the Offer;

 

(c)                                 item 7 of section 611 of the Corporations Act; or

 

(d)                                Chapter 11 of the ASX Listing Rules;

 

Rights means all accretions and rights attaching to the Option Shares (as
the case may be) including, but not limited to, all rights to receive dividends
and other

 

2

 

distributions
declared or paid and to receive or subscribe for shares, notes or options
issued by Company as at the date of this agreement and which accrue between the
date of this agreement and the Settlement Date.

 

Settlement
Amount means $9,771,993.60.

 

Settlement
Date means:

 

(a)                                 if the Offer period is open when the Call Option is exercised, the
earlier of:

 

(1)                                 the
date of first payment to a Company shareholder under the Offer; and

 

(2)                                 the Closing
Date; or

 

(c)                                 if the Offer period is not open when the Call Option is exercised, 5
Business Days after the Shareholder receives an Exercise Notice from the Bidder
for the Option Shares.

 

Sponsoring
Participant has the meaning given to it in
the ASTC Settlement Rules.

 

SRN has the meaning given to it in the ASTC Settlement Rules.

 

Takeover
Bid means a takeover bid for the shares in the
Company for a total consideration of at least $1.55 per share (which bid may or
may not be subject to defeating conditions).

 

Transfer means dispose of in any way and incudes (without limitation)
assign, assure, declare a trust over, transfer or sell and also includes
agreeing to do any of those things.

 

1.2                               Rules for
interpreting this document

 

In this deed,
unless the context otherwise requires, headings and bold text are for convenience
only and do not affect the interpretation of this deed and:

 

(a)                                 words importing the singular include the plural and vice versa;

 

(b)                                words importing a gender include any gender;

 

(c)                                 other parts of speech and grammatical forms of a word or phrase defined
in this deed have a corresponding meaning;

 

(d)                                an expression importing a natural person includes any company,
partnership, joint venture, association, corporation or other body corporate
and any Government Agency;

 

(e)                                 a reference to any thing (including, but not limited to, any right)
includes a part of that thing but nothing in this subclause (e) implies
that performance of part of an obligation constitutes performance of the
obligation;

 

(f)                                   a reference to a clause, party or schedule is a reference to a
clause of, and a party or schedule to, this deed and a reference to this deed
includes any schedule;

 

(g)                                a reference to a statute, regulation, proclamation, ordinance or by-law
includes all statutes, regulations, proclamations, ordinances or by-laws
amending, consolidating or replacing it, whether passed by the same or another
Government Agency with legal power to do so, and a reference

 

3

 

to a statute includes all regulations,
proclamations, ordinances and by-laws issued under that statute;

 

(h)                                a reference to a document includes all amendments or supplements to,
or replacements or novations of, that document;

 

(i)                                    a reference to a party to a document includes that party’s
successors and permitted assigns;

 

(j)                                    a reference to an agreement or deed other than this deed includes an
undertaking, deed, agreement or legally enforceable arrangement or
understanding whether or not in writing;

 

(k)                                 a reference to any time is a reference to that time in Sydney; and

 

(l)                                    an expression defined in, or given a meaning for the purpose of, the
Corporations Act in a context similar to that in which the expression is used
in this deed has the same meaning or definition.

 

1.3                               Business
Days

 

If the day on
or by which a person must do something under this document is not a Business
Day:

 

(a)                                 if the act involves a payment that is due on demand, the person must
do it on or by the next Business Day; and

 

(b)                                in any other case, the person must do it on or by the previous
Business Day.

 

2                                        Call Option

 

2.1                               Call
Option

 

In return for
the Bidder agreeing to pay to the Shareholder $10.00 following a written
request from the Shareholder, the Shareholder grants to the Bidder the right, by
giving an Exercise Notice to the Shareholder during the Call Period, to require
the Shareholder to sell to the Bidder (or to its nominee as the Bidder may
direct) the Option Shares for the Settlement Amount.

 

2.2                               Takeover
Bid by Bidder

 

(a)                                 The Bidder must make or cause to be made the Takeover Bid.

 

(b)                                Subject to paragraph (c), the Shareholder may only accept an Offer
under the Takeover Bid in respect of the Option Shares if directed to do so by
the Bidder. If the Bidder gives such a direction, the Shareholder must accept
the Offer in accordance with its terms within 3 Business Days after receipt of
the direction.

 

(c)                                 If the Shareholder accepts an Offer under the Takeover Bid under
paragraph (b) in respect of the Option Shares then:

 

(1)                                 if
the Offer does not become void under section 650G of the Corporations Act,
the Shareholder will receive for the shares accepted into the Takeover Bid the
consideration offered in accordance with the terms of the Takeover Bid and the
Call Option

 

4

 

will be
taken to have lapsed and to have been of no further force and effect in
relation to the shares accepted into the Takeover Bid from the moment they were
so accepted into the Takeover Bid (but without prejudice to their continued
operation in relation to any Option Shares not accepted into the Takeover Bid);
or

 

(2)                                 if
the Offer does become void under section 650G of the Corporations Act, the
Call Option will continue in force throughout the Call Period unaffected by the
fact that some or all of the shares the subject of the Call Option were
accepted into the Takeover Bid.

 

2.3                               Exercise
Notice

 

The Bidder may
exercise the Call Option in respect of all of the Option Shares by giving to
the Shareholder an Exercise Notice during the Call Period.

 

2.4                               Nature
of the Call Option

 

The Call
Option:

 

(a)                                 confers on the Bidder the right, but not the obligation, to give the
Shareholder the Exercise Notice, which is irrevocable and which may only be
given once on or before 6 pm (Sydney time) during the Call Period; and

 

(b)                                on exercise of the rights conferred by clause 2.4(a) in
accordance with this document, requires the Shareholder to sell the shares
specified in the Exercise Notice to the Bidder or to its nominee as the Bidder
may direct.

 

2.5                               Contract
of Sale

 

(a)                                 Upon giving an Exercise Notice, a contract arises between the Bidder
and the Shareholder under which the Shareholder must sell to the Bidder or to
its nominee as the Bidder may direct all the Option Shares together with the
Rights free from any Encumbrance or restriction on transfer and the Bidder must
buy the Option Shares from the Shareholder for the Settlement Amount.

 

(b)                                The Bidder agrees and undertakes to give an Exercise Notice within 5
Business Days of its Offer becoming unconditional (and for the avoidance of
doubt the Bidder retains the right in its absolute discretion to determine as
to whether or not it waives any conditions to the Offer that are not
fulfilled).

 

2.6                               Settlement

 

Settlement of
the sale and purchase of the Option Shares must take place on the Settlement
Date.

 

5

 

2.7                               Obligations
on Settlement Date

 

On a
Settlement Date:

 

(a)                                 the Shareholder must:

 

(1)                                 give
the Bidder all relevant CHESS details for the shares specified in the Exercise
Notice to be delivered by the Shareholder including:

 

(A)                             if the
shares are on an Issuer Sponsored Sub-Register, a copy of the Shareholder’s
Issuer Sponsored Statement showing the holding of those shares and its SRN; or

 

(B)                               if the
Option Shares are on a CHESS Sub-Register, the Shareholder’s HIN and the Shareholder’s
written instructions to its Sponsoring Participant to deliver those shares to
the Bidder or its nominee; and

 

(2)                                 procure
performance of all that is required under the ASTC Settlement Rules to
enable those shares to be acquired by the Bidder; and

 

(b)                                the Bidder or its nominee must pay to the Shareholder the Settlement
Amount (as directed by the Shareholder).

 

2.8                               Lapse
for Non-Exercise

 

Subject to
clauses 2.2(c)(1) and 2.9, the Call Option lapses on the earlier of:

 

(a)                                 6pm (Sydney time) on the End Date; or

 

(b)                                6pm (Sydney time) on the day which is 5
Business Days after the Closing Date.

 

2.9                               Lapse
for Delay

 

Despite
anything else in this document, if the Bidder does not either:

 

(a)                                 publicly propose the Takeover Bid within 2 Business Days of this
deed; or

 

(b)                                make or cause to be made the Takeover Bid within 10 Business Days of
the date of this deed (except where a delay to the making of the Takeover Bid
is caused by an action of or application to the Takeovers Panel),

 

then the Call
Option automatically lapses and is of no further force or effect.

 

2.10                        Nominee

 

(a)                                 Bidder may appoint one or more of its wholly owned subsidiaries as
its nominee to exercise the Call Option and acquire some or all of the Option
Shares (so long, as if that nominee acquires some of the Option Shares, Bidder
or another nominee permitted by this clause acquires the remaining of the
Option Shares).

 

(b)                                In the event that two or more persons permitted by clause 2.10(a) acquire
the Option Shares, then appropriate amendments to the Exercise Notice will be
permitted to account for the fact that Option Shares are being acquired by more
than one party.

 

6

 

3                                        Restrictions
on the shares

 

3.1                               Exercise
of Voting Rights

 

Pending
exercise of the Call Option and settlement of the sale and purchase of the
Option Shares under clause 2.6 of this deed, the Shareholder must, in
relation to a Prescribed Matter, exercise its votes in respect of the Option
Shares as directed by the Bidder or the Bidder’s authorised representative or
nominee.

 

3.2                               Restraint
on Disposal

 

The Shareholder
must not Transfer or allow any Encumbrance to attach to any interest in any of
the Option Shares other than in accordance with this deed.

 

4                                        Representations
and warranties

 

4.1                               Representations
and warranties

 

Each party
represents and warrants that:

 

(a)                                 (documents effective) this deed
constitutes its legal, valid and binding obligations, enforceable against it in
accordance with its terms (except to the extent limited by equitable principles
and laws affecting creditors’ rights generally), subject to any necessary
stamping or registration; and

 

(b)                                (no contravention) neither its
execution of this deed nor the carrying out by it of the transactions that it
contemplates, does or will:

 

(1)                                 contravene
any law to which it or any of its property is subject or any order of any
Government Agency that is binding on it or any of its property;

 

(2)                                 contravene
any Authorisation;

 

(3)                                 contravene
any undertaking or instrument binding on it or any of its property;

 

(4)                                 contravene
its constitution; or

 

(5)                                 require
it to make any payment or delivery in respect of any financial accommodation or
financial instrument before it would otherwise be obliged to do so.

 

4.2                               Repetition
of representations and warranties

 

The
representations and warranties in clause 4.1 are taken to be repeated on the Settlement
Date, on the basis of the facts and circumstances as at that date.

 

4.3                               Reliance
on representations and warranties

 

Each party
acknowledges that the other party has executed this deed and agreed to take
part in the transactions that it contemplates in reliance on the
representations and warranties that are made or repeated in this clause.

 

7

 

5                                        Warranty by
the Shareholder

 

The Shareholder
represents and warrants to the Bidder that on the date of this deed and,
subject to the transactions under this deed, on the Settlement Date:

 

(a)                                 the Shareholder is, and will be, legally and beneficially entitled
to the Option Shares; and

 

(b)                                the Option Shares are not, and will not be, subject to any
Encumbrance.

 

6                                        Notices

 

6.1                               How
to give a notice

 

A notice,
consent or other communication under this deed is only effective if it is:

 

(a)                                 in writing, signed:

 

(1)                                 if it
is an Exercise Notice, by an officer (as defined in section 9 of the
Corporations Act) or under common seal or as provided in section 127(1) and
127(2) of the Corporations Act; and

 

(2)                                 for
any other notice, by or on behalf of the person giving it;

 

(b)                                addressed to the person to whom it is to be given; and

 

(c)                                 either:

 

(1)                                 delivered
or sent by pre-paid mail (by airmail, if the addressee is overseas) to that
person’s address; or

 

(2)                                 sent
by fax to that person’s fax number and the machine from which it is sent
produces a report that states that it was sent in full.

 

6.2                               When
a notice is given

 

A notice,
consent or other communication that complies with this clause is regarded as
given and received:

 

(a)                                 if it is delivered or sent by fax:

 

(1)                                 by
6.00 pm (local time in the place of receipt) on a Business Day - on that
day; or

 

(2)                                 after
6.00 pm (local time in the place of receipt) on a Business Day, or on a
day that is not a Business Day - on the next Business Day; and

 

(b)                                if it is sent by mail:

 

(1)                                 within
Australia – 3 Business Days after posting; or

 

(2)                                 to or
from a place outside Australia – 7 Business Days after posting.

 

8

 

6.3                               Address
for notices

 

A person’s
address and fax number are those set out below, or as the person notifies the
sender:

 

	
  Shareholder

  
	
  Address:

  	
  Level 42, 259 George Street, Sydney Australia 2000

  
	
  Fax number:

  	
  +61 2 9087 8088

  
	
  Attention:

  	
  Sandy Beard

  
	
   

  	
   

  
	
  Bidder

  	
   

  
	
  Address:

  	
  1106 Palms Airport Drive Las Vegas, Nevada
  89119-3730, U.S.A

  
	
  Fax number:

  	
  +1 702 270 5161

  
	
  Attention:

  	
  Jerry Smith

  
	
   

  	
   

  
	
  with a copy to Susan Livingstone:

  
	
   

  	
   

  
	
  Address:

  	
  Suite 12, 5 Michigan Drive

  
	
   

  	
  Oxenford

  
	
   

  	
  Queensland 4210

  
	
  Fax number:

  	
  61 7 5561 8700

  

 

7                                        Amendment and
assignment

 

7.1                               Amendment

 

This deed can
only be amended, supplemented, replaced or novated by another document signed
by the parties.

 

7.2                               Assignment

 

A party may
not dispose of, declare a trust over or otherwise create an interest in its
rights under this deed.

 

8                                        General

 

8.1                               Governing
law

 

This deed is
governed by the laws of New South Wales, Australia. Each party irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the courts of New South Wales
for determining any dispute concerning this deed or the transactions
contemplated by this deed. Each party waives any right it has to object to an
action being brought in those courts including, but not limited to, claiming
that the action has been brought in an inconvenient forum or that those courts
do not have jurisdiction.

 

8.2                               Liability
for expenses

 

(a)                                 Subject to paragraph (b), each party must pay its own expenses
incurred in negotiating, executing and registering this deed.

 

9

 

(b)                                The Bidder must indemnify each other party against, and must pay
each other party on demand the amount of, any duty that is payable on or in
relation to this deed and the transactions that it contemplates.

 

8.3                               Giving
effect to this deed

 

Each party
must do anything (including execute any document), and must ensure that its
employees and agents do anything (including execute any document), that the
other party may reasonably require to give full effect to this deed.

 

8.4                               Waiver
of rights

 

A right may
only be waived in writing, signed by the party giving the waiver, and:

 

(a)                                 no other conduct of a party (including a failure to exercise, or
delay in exercising, the right) operates as a waiver of the right or otherwise
prevents the exercise of the right;

 

(b)                                a waiver of a right on one or more occasions does not operate as a
waiver of that right if it arises again; and

 

(c)                                 the exercise of a right does not prevent any further exercise of
that right or of any other right.

 

8.5                               Operation
of this deed

 

(a)                                 This deed contains the entire agreement between the parties about
its subject matter. Any previous understanding, agreement, representation or
warranty relating to that subject matter is replaced by this deed and has no
further effect.

 

(b)                                Any provision of this deed which is unenforceable or partly
unenforceable is, where possible, to be severed to the extent necessary to make
this deed enforceable, unless this would materially change the intended effect
of this deed.

 

8.6                               Counterparts

 

This deed may
be executed in counterparts.

 

10

 

	
  Executed as a deed:

  	
   

  
	
   

  	
   

  
	
  Signed sealed and delivered by

  	
   

  
	
  CVC Communication &
  Technology Pty Limited

  	
   

  
	
  by:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secretary/Director

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name (please print)

  	
  Name (please print)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signed sealed and delivered by

  	
   

  
	
  Shuffle Master, Inc.

  	
   

  
	
  by:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Officer

  	
  Witness

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name (please print)

  	
  Name (please print)

  

 

11

 

Schedule 1

 

EXERCISE
NOTICE - OPTION SHARES

 

To:  CVC Communication & Technology Pty Limited

 

By this notice Shuffle Master, Inc. exercises
the Call Option conferred by clause 2.1 of the deed entitled Call Option Deed
(the “Deed”) dated 15 November 2005 and
requires you to sell your Option Shares for the relevant Settlement Amount and
otherwise in accordance with the Deed.

 

This Exercise Notice is irrevocable.

 

In this Exercise Notice, words defined in the
Deed have the same meanings.

 

 

DATED

 

 

Signed for and on behalf of

Shuffle Master, Inc. by:

 

	
   

  	
   

  
	
  Officer:

  
	
  Name:

  

 

12Exhibit 10.3

 

Pre-bid Agreement

 

 

 

 

 

MLC Centre Martin Place Sydney New South
Wales 2000 Australia

Telephone +61 2 9225 5000  Facsimile +61 2 9322 4000

www.freehills.com  DX 361 Sydney

 

SYDNEY MELBOURNE PERTH BRISBANE SINGAPORE

Correspondent Offices HANOI HO CHI MINH
CITY JAKARTA KUALA LUMPUR

 

Reference

 

 

Table of contents

 

	
  Clause

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1

  	
  Definitions and interpretation

  	
   

  
	
   

  	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
  1.2

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2

  	
  Takeover
  Bids

  	
   

  
	
   

  	
  2.1

  	
  Making of Takeover Bid

  	
   

  
	
   

  	
  2.2

  	
  Target’s
  assessment of Takeover Bid

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  Release from Bidder’s obligations in Non-Disclosure
  Agreement

  	
   

  
	
   

  	
  3.1

  	
  Disclosure of confidential information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  Undertaking to reimburse expenses

  	
   

  
	
   

  	
  4.1

  	
  Detriment
  to Bidder

  	
   

  
	
   

  	
  4.2

  	
  Benefit
  to Target and its shareholders

  	
   

  
	
   

  	
  4.3

  	
  Reimbursement amount

  	
   

  
	
   

  	
  4.4

  	
  Limited
  exceptions

  	
   

  
	
   

  	
  4.5

  	
  Compliance
  with law

  	
   

  
	
   

  	
  4.6

  	
  Repayment

  	
   

  
	
   

  	
  4.7

  	
  Reasonableness of Reimbursement Amount

  	
   

  
	
   

  	
  4.8

  	
  Enforcement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  Facilitation
  of Offer

  	
   

  
	
   

  	
  5.1

  	
  Assistance by Target

  	
   

  
	
   

  	
  5.2

  	
  Regulatory approvals

  	
   

  
	
   

  	
  5.3

  	
  Confidentiality

  	
   

  
	
   

  	
  5.4

  	
  Early dispatch of offers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  No
  solicitation

  	
   

  
	
   

  	
  6.1

  	
  Prohibition

  	
   

  
	
   

  	
  6.2

  	
  Response to unsolicited approach

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  Takeover Offer – Variation and Waiver

  	
   

  
	
   

  	
  7.1

  	
  Variation

  	
   

  
	
   

  	
  7.2

  	
  Waiver of Conditions and extension

  	
   

  
	
   

  	
  7.3

  	
  Disclosures by
  Target 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  Warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9

  	
  General

  	
   

  
	
   

  	
  9.1

  	
  Notices

  	
   

  
	
   

  	
  9.2

  	
  Governing law and jurisdiction

  	
   

  
	
   

  	
  9.3

  	
  Prohibition and enforceability

  	
   

  
	
   

  	
  9.4

  	
  Waivers and variation

  	
   

  

 

1

 

	
   

  	
  9.5

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  9.6

  	
  Costs
  and expenses

  	
   

  
	
   

  	
  9.7

  	
  Assignment

  	
   

  
	
   

  	
  9.8

  	
  Further
  assurances

  	
   

  
	
   

  	
  9.9

  	
  Time
  of the essence

  	
   

  
	
   

  	
  9.10

  	
  Counterparts

  	
   

  
	
   

  	
  9.11

  	
  Attorneys

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1 – Agreed Announcement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 2
  – Agreed Bid Terms

  	
   

  

 

2

 

This agreement

 

is made on 15 November 2005
between the following parties:

 

1                                        Stargames Limited

ACN 003 190 501

1 Sheridan Close, Milperra NSW 2214, Australia

(Target)

 

2                                        Shuffle Master, Inc.

of 1106 Palms
Airport Drive Las Vegas, NV 89119-3730, United States of America

(Bidder)

 

Recitals

 

A.                                  Bidder is considering making, or causing a subsidiary to make, a
Takeover Bid to acquire Target Shares.

 

B.                                    Bidder has represented to Target that it is a pre-requisite to
Bidder making, or causing a subsidiary to make, the Takeover Bid that Target
enters into this agreement.

 

The parties agree

 

in
consideration of, among other things, the mutual promises contained in this
agreement:

 

1                                        Definitions and interpretation

 

1.1                               Definitions

 

In this
agreement:

 

ACCC means the Australian Competition and Consumer Commission;

 

ASIC means the Australian Securities and Investments Commission;

 

Agreed Announcement means the announcement set out in Schedule 1;

 

Agreed Bid Terms means the terms and conditions set out in Schedule 2;

 

Announcement Date means the date on which Bidder makes the public proposal referred to
in clause 2.1;

 

Bidder Group means the Bidder and its related bodies corporate;

 

Business Day means a day on which the banks are open for business in Sydney
excluding a Saturday, Sunday or public holiday;

 

Condition Period means the period beginning on the Announcement Date and ending at
the end of the Offer Period;

 

Competing Takeover Bid means any proposal or offer with respect to any transaction (by
purchase, scheme of arrangement, takeover bid or otherwise) that would, if
completed substantially in accordance with its terms, result in any person (or
group of persons) other than Bidder or its related corporations acquiring
control of Target;

 

1

 

Corporations Act means the Corporations Act 2001 (Cth);

 

Gaming Authority means any government or governmental, administrative, monetary,
fiscal or judicial body, department, commission, authority, tribunal, agency or
entity in any part of the world that has responsibility for the regulation of
and/or licensing in the gaming industry and includes without limitation the Department of Gaming and Racing
(NSW), Director of Liquor and Gaming (NSW), the Licensing Court of New South
Wales, Queensland Office of Gambling Regulation, Department of Racing, Gaming
and Liquor (WA), Victorian Commission for Gambling Regulation, Office of the
Liquor and Gambling Commissioner (QLD), ACT Gambling and Racing Commission,
Northern Territory Licensing Commission and the Tasmanian Gaming Commission,
Liquor and Gaming Branch of the Revenue, Gaming and Licensing Division of the
Department of Treasury and Finance (Tas), Commissioner for Licensing (Tas) and
the Licensing Board of Tasmania;

 

Government Agency means any government or governmental, administrative, monetary,
fiscal or judicial body, department, commission, authority, tribunal, agency or
entity in any part of the world;

 

Impugned Amount has the meaning given in clause 4.5;

 

Non-Disclosure Agreement means the mutual non-disclosure agreement and exclusivity agreement
between the Target and the Bidder dated 3 October 2005;

 

Offer means the offer to acquire the Target Shares made in connection
with the Takeover Bid;

 

Offer Period means the period that the Offer is open for acceptance;

 

Prescribed Date means the earlier of the date which is:

 

(a)                                           90 days after the first date on which the documents are sent by the
Bidder under item 6 of section 633(1) of the Corporations Act; and

 

(b)                                          30 days after the conditions in each of paragraphs 2(a) and 2(e) of
Schedule 2 are either fulfilled or waived;

 

Public Authority means any government or any governmental, semi-governmental,
administrative, statutory or judicial entity, authority or agency, whether in
Australia or elsewhere, including the ACCC (but excluding the Takeovers Panel,
ASIC and any court that hears or determines proceedings under section 657G
or proceedings commenced by a person specified in section 659B of the
Corporations Act in relation to the Takeover Bid).  It also includes any self-regulatory
organisation established under statute or any stock exchange. For the avoidance
of doubt it also includes without limitation any Gaming Authority;

 

Reimbursement Amount means A$1,536,000;

 

Takeover Bid means a takeover bid of Bidder or a wholly owned subsidiary of
Bidder that satisfies the requirements in clause 2.1;

 

Target Board means the board of directors of Target;

 

Target Group means the Target and its related bodies corporate;

 

Target Option means an option, issued by Target, to acquire an unissued ordinary
share in Target;

 

Target Share means an ordinary share in the capital of Target;

 

2

 

Target Shareholder means a holder of Target Shares; and

 

A$ or $ means the lawful currency of
the Commonwealth of Australia.

 

1.2                               Interpretation

 

In this
agreement, headings and bold text are for convenience only and do not affect
the interpretation of this agreement and, unless the context otherwise
requires:

 

(a)                                 the singular includes the plural and vice versa;

 

(b)                                other parts of speech and grammatical forms of a word or phrase
defined in this agreement have a corresponding meaning;

 

(c)                                 an expression importing a natural person includes any company,
partnership, joint venture, association, corporation or other body corporate
and any Government Agency;

 

(d)                                a reference to any thing (including, but not limited to, any right)
includes a part of that thing but nothing in this clause 1.2(d) implies
that performance of part of an obligation constitutes performance of the
obligation;

 

(e)                                 a reference to a clause, party or schedule is a reference to a
clause of, and a party or schedule to, this agreement and a reference to
this agreement includes any schedule;

 

(f)                                   a reference to a statute, regulation, proclamation, ordinance or by-law
includes all statutes, regulations, proclamations, ordinances or by-laws
amending, consolidating or replacing it, whether passed by the same or another
Government Agency with legal power to do so, and a reference to a statute
includes all regulations, proclamations, ordinances and by-laws issued under
that statute;

 

(g)                                a reference to a document includes all amendments or supplements to,
or replacements or novations of, that document;

 

(h)                                a reference to a party to a document includes that party’s
successors and permitted assigns;

 

(i)                                    a reference to an agreement other than this agreement includes an
undertaking, deed, agreement or legally enforceable arrangement or
understanding whether or not in writing;

 

(j)                                    a reference to any time is a reference to that time in Sydney;

 

(k)                                 an expression defined in, or given a meaning for the purpose of, the
Corporations Act in a context similar to that in which the expression is used
in this agreement has the same meaning or definition; and

 

(l)                                    if an event must occur on a stipulated day that is not a Business
Day then the stipulated day will be taken to be the next Business Day.

 

3

 

2                                        Takeover Bids

 

2.1                               Making
of Takeover Bid

 

(a)                                 Bidder agrees to:

 

(1)                                 make offers pursuant to a takeover bid under Chapters 6 to 6C of the
Corporations Act to acquire all the Target Shares (other than Target Shares
held by the Bidder prior to the commencement of the Offer Period) on terms no
less favourable to Target Shareholders than the Agreed Bid Terms; and

 

(2)                                 publicly propose (by means of an announcement to the Australian
Stock Exchange which is substantially in accordance with the form of the Agreed
Announcement) to make offers under the Takeover Bid immediately after both
parties have executed this agreement.

 

(b)                                Bidder may satisfy its obligations under clause 2.1(a) by
causing a wholly owned subsidiary to do the things referred to in paragraphs 2.1(a)(1) or
2.1(a)(2). If Bidder does that:

 

(1)                                 references to the Takeover Bid are references to the takeover bid of
the subsidiary; and

 

(2)                                 references to the Bidder making the Takeover Bid are to the Bidder
causing the subsidiary to make the Takeover Bid.

 

2.2          Target’s assessment of Takeover Bid

 

Target
represents and warrants that:

 

(a)                                 the Target Board has met and considered the possibility of Bidder
agreeing to make the Takeover Bid; and

 

(b)                                each Target director has informed Target that, if Bidder complies
with clause 2.1(a)(2), the director will recommend that Target Shareholders
accept an offer under the Takeover Bid and that recommendation will be subject
only to a qualification that there is no Competing Takeover Bid or other
qualification consistent with the directors’ reasonable exercise of their
fiduciary duties.

 

3                                        Release from Bidder’s obligations in Non-Disclosure
Agreement

 

3.1                               Disclosure
of confidential information

 

The Target
releases the Bidder from its confidentiality obligations under the Non-Disclosure
Agreement to the extent that the Bidder is required by law to disclose any Confidential
Information (as defined in the Non-Disclosure Agreement) in a bidder’s
statement relating to the Takeover Bid.

 

4

 

4                                        Undertaking to reimburse expenses

 

4.1                               Detriment
to Bidder

 

Target
acknowledges that Bidder will suffer significant costs, expenses and losses as
set out in clause 4.7 if Bidder announces or makes the Takeover Bid but does
not succeed with that Takeover Bid including as a direct or indirect result of:

 

(a)                                 any Target director not making a recommendation that Target
Shareholders accept the offer under the Takeover Bid; or

 

(b)                                a Competing Takeover Bid; or

 

(c)                                 Target Shareholders not accepting the Offer.

 

4.2          Benefit
to Target and its shareholders

 

Target and its
directors consider that significant benefits will flow to Target and Target
Shareholders if Bidder makes the Takeover Bid. 
Target acknowledges that Target’s entry into to this agreement generally
and this clause 4 in particular is necessary to induce Bidder to do the things
referred to in clause 2.1.

 

4.3                               Reimbursement
amount

 

(a)                                 Target must pay to Bidder as compensation for the reasonable costs,
expenses and losses incurred by Bidder in relation to the announcement  or making of the Takeover Bid an amount equal
to the Reimbursement Amount if:

 

(1)                                 any Target director does not make or withdraws the recommendation
referred to in clause 2.2(b);

 

(2)                                 any Target director makes a recommendation to Target Shareholders in
favour of a Competing Takeover Bid;

 

(3)                                 a Competing Takeover Bid is made, and the Competing Bidder acquires
a relevant interest in more than 50% of Target Shares; or

 

(4)                                 the Bidder does not acquire a relevant interest in at least 90% of
Target Shares by the end of the Offer Period and clause 4.4 does not except the
Target from its obligations under this clause .

 

(b)                                The Reimbursement Amount must be paid by Target to Bidder within 10
Business Days upon a written demand being made by Bidder at any time after the
occurrence of any of the events referred to in paragraphs 4.3(a)(1), 4.3(a)(2),
4.3(a)(3) and 4.3(a)(4) which specifies the event that has given rise
to the obligation of Target to pay the Reimbursement Amount.

 

4.4                               Limited
exceptions

 

(a)                                 The Target is not required to pay the Reimbursement Amount under clause
4.3(a)(4) if the Bidder does not acquire a relevant interest in at least
90% of Target Shares by the end of the Offer Period if:

 

(1)                                 regulatory approvals: a
condition set out in paragraphs 2(a) or 2(e) in Schedule 2 is
not or will not be fulfilled and that non-fulfilment

 

5

 

is a direct result solely of an act or omission by a
member of the Bidder Group; or

 

(2)                                 other conditions: a
condition set out in any of paragraphs 2(h), 2(j),  2(k) or 2(l) in Schedule 2 is not or will
not be fulfilled; and

 

(3)                                 no other condition triggered: there are no other circumstances,  other than one of the non-fulfilment circumstances
described in clause 4.4(a)(1) or 4.4(a)(2), which would entitle the Bidder
not to complete the purchase of Target Shares the subject of acceptances of the
Offer.

 

(b)                                The Target is not required to pay the Reimbursement Amount under
clause 4.3(a)(4) if the Bidder does not acquire a relevant interest in at
least 90% of Target Shares by the end of the Offer Period and the Offer Period
closes before the Prescribed Date.

 

(c)                                 For the avoidance of doubt, if the written demand given under clause
4.3(b) specifies a number of events as the basis for the demand, provided
that at least one of the events does not fall within clauses 4.4(a)(1), 4.4(a)(2) or
4.4(b), then the Target will be obliged to pay the Reimbursement Amount on the
terms set out in this agreement, even if one or more of the events set out in
clauses 4.4(a)(1), 4.4(a)(2) or 4.4(b) is also included in the
written demand.

 

4.5                               Compliance
with law

 

If it is
finally determined following the exhaustion of all reasonable avenues of appeal
by the Takeovers Panel or a Court that all or any part of the payment required
to be made under clause 4.3 (the Impugned Amount):

 

(a)                                 is unlawful;

 

(b)                                involves a breach of the duties of the directors of Target; or

 

(c)                                 constitutes unacceptable circumstances,

 

then:

 

(d)                                Target’s obligation under clause 4.3 does not apply to the extent of
the Impugned Amount; and

 

(e)                                 if Bidder has received the Impugned Amount, Bidder must refund it to
Target within 10 Business Days of the final determination.

 

4.6                               Repayment

 

If,
notwithstanding the occurrence of any of the events referred to in paragraphs 4.3(a)(1),
4.3(a)(2), 4.3(a)(3) or 4.3(a)(4), Bidder and its related bodies corporate
ultimately acquire full beneficial ownership of more than 50% of Target Shares
and Target, Bidder must repay to Target any amount received by it under this
clause 4.

 

4.7                               Reasonableness
of Reimbursement Amount

 

The parties
acknowledge that the Reimbursement Amount is reasonable in the context of the
Takeover Bid and fair compensation for the costs, expenses and losses which
Bidder has incurred or will incur in connection with the

 

6

 

consideration
of, announcing or the making of the Takeover Bid if the Bidder does not succeed
in the Takeover Bid, having regard to Bidder’s reasonable costs, expenses and
losses which include, but are not limited to:

 

(a)                                 the professional costs of financial, public relations, legal and
accounting advisers;

 

(b)                                travel and accommodation expenses and other  out of pocket costs and expenses incurred by
the Bidder, including for its directors, officers, employees and advisers, in
planning and making the Takeover Bid (including, without limitation, expenses
incurred in connection with conducting due diligence investigations into the
Target); and

 

(c)                                 costs of raising, servicing, maintaining and managing Bidder’s
funding, interest and exchange rate exposure and any exchange rate gains or
losses resulting from these and other risks in contemplation and implementation
of the Takeover Bid (including any fees and costs payable to the US Securities
and Exchange Commission related to the payment of the consideration under the
Takeover Bid or the registration of securities or any other public filings in
relation to the Takeover Bid or the financing of the Takeover Bid.)

 

4.8                               Enforcement

 

(a)                                 The parties agree that the
exclusive forum for and that all disputes arising out of or in connection with clause
4 must be finally settled under the Rules of Arbitration of the
International Chamber of Commerce (Rules) by one
or more arbitrators appointed in accordance with the said Rules.

 

(b)                                The arbitration will be held in New York.

 

(c)                                 A party must not commence or maintain any other proceeding or action
relating to any dispute arising out of or in connection with clause 4 other than in accordance
with this clause 4.8.

 

(d)                                The party that is unsuccessful in the arbitration must pay the costs
and expenses (including attorney fees) of the successful party and the costs of
the arbitration.

 

(e)                                 The parties acknowledge that it is their intention that any and all
disputes arising under clause 4 of this agreement be resolved in accordance
with this clause 4.8.

 

(f)                                   Bidder and Target each agree that they will not (and will procure
that their associates will not) engage in any activities which frustrate or
which may frustrate or which otherwise conflicts with the parties intentions as
stated in this clause 4.8(c).

 

5                                        Facilitation of Offer

 

5.1          Assistance by Target

 

Target must
ensure that Bidder is given reasonable access to the senior management of
Target to discuss, review and be shown such information concerning Target as
Bidder may reasonably require for the purpose of remaining

 

7

 

current with
developments in Target’s business and for preparing for the integration of
Target’s business with that of Bidder, but only to the extent to which Target
or its directors may comply with this clause 5.1 without breaching any of their
statutory or fiduciary duties or contractual obligations (in the reasonable
opinion of the directors of Target reasonably formed in the utmost good faith
in reliance on specific written legal and other appropriate advice).

 

5.2                               Regulatory
approvals

 

(a)                                 Each party must:

 

(1)                                 use reasonable endeavours to perform all acts and do all things
within its reasonable control so as to obtain the regulatory approvals or
consents described in the condition in paragraph 2(a) of schedule 2;
and

 

(2)                                 lodge all necessary applications with each relevant Gaming Authority
as soon as is practicable after the date of this agreement,

 

but neither party is required to take any
action or make any commitment which would require the divestiture of assets by
Target or the Bidder or any subsidiary of either or would require an appeal to,
or other review of a decision by, a Court or other Government Agency.

 

(b)                                A party will not be in breach of clause 5.2(a) unless the party
does not remedy a failure to comply with that clause within 5 Business Days of
a notice from the other party specifying the failure.

 

(c)                                 The parties agree that the Target’s liability and the Bidder’s
rights under clause 4 are not affected by any breach or alleged breach of
clause 5.2(a) except if provided by paragraph 4.3 where the act or
omission by the Bidder is the breach of clause 5.2(a).

 

5.3                               Confidentiality

 

The Non-Disclosure
Agreement applies, subject to clause 3.1 of this agreement, to information
disclosed by the Target under clause 5.1.

 

5.4                               Early
dispatch of offers

 

(a)                                 Subject to clause 5.4(b), Target agrees that the offers and
accompanying documents to be sent by the Bidder under the Takeover Bid under
Item 6 of section 633(1) of the Corporations Act may be sent on a
date nominated by the Bidder in consultation with Target that is earlier than
the date for sending under Item 6 of section 633(1).

 

(b)                                The date on which the documents are sent by the Bidder under item 6
of section 633(1) of the Corporations Act must be no later than the
date which is 7 days after the bidder’s statement relating to the Takeover Bid
is sent to Target.

 

8

 

6                                        No solicitation

 

6.1                               Prohibition

 

For the period
until the earlier of the last day of the Offer Period and the day which is 120
days after the date of this agreement Target must not and must ensure that each
of its related bodies corporate, officers, employees, agents, consultants,
investment bankers, lawyers or other advisers (each a Relevant
Person) does not, directly or indirectly:

 

(a)                                 solicit, initiate or encourage (including, without limitation, by
the provision of non-public information) any expression of interest, offer or
proposal by any person to make a Competing Takeover Bid;

 

(b)                                participate in any negotiations or discussions or provide any
information to any person with respect to any expression of interest, offer or
proposal by any person to make a Competing Takeover Bid.

 

6.2                               Response
to unsolicited approach

 

Clause 6.1(b) does
not prohibit any action or inaction by the Target or any Relevant Person if
compliance with that prohibition would, in the opinion of the directors of the
Target reasonably formed in the utmost good faith in reliance on specific written
legal and other appropriate advice, constitute a breach of the duties of the
directors of Target.

 

7                                        Takeover Offer – Variation and Waiver

 

7.1                               Variation

 

Bidder may
vary the terms and conditions of the Takeover Bid if the varied terms and
conditions are not less favourable to Target Shareholders than those set out in
Schedule 2.

 

7.2                               Waiver
of Conditions and extension

 

Subject to the
Corporations Act, Bidder may declare the Takeover Bid to be free from any
condition or extend the Takeover Bid at any time.

 

7.3          Disclosures by Target

 

To the extent
that facts disclosed by Target pursuant to clause 8(f) constitute a breach
of any condition in Schedule 2, Bidder agrees that such facts shall not
constitute a breach of the condition.

 

8                                        Warranties

 

Each party
represents and warrants to the other that, at the date of this agreement:

 

(a)                                 it is duly incorporated under the laws of the place of its
incorporation;

 

(b)                                it has the power and authority to sign this agreement and perform
and observe all its terms;

 

9

 

(c)                                 this agreement has been duly executed and is a legal, valid and
binding agreement, enforceable against it in accordance with its terms;

 

(d)                                it is not bound by any contract which may restrict its right or
ability to enter into or perform this agreement;

 

(e)                                 no resolutions have been passed and no other step has been taken or
legal proceedings commenced or threatened against it for its winding up or
dissolution or for the appointment of a liquidator, receiver, administrator or
similar officer over any or all of its assets, and no regulatory action of any
nature has been taken, which would prevent, inhibit or otherwise have a
material adverse effect on its ability to fulfil its obligations under this
agreement; and

 

(f)                                   it is not aware of any act, omission, event or fact that would
result in one or more of the conditions set out in Schedule 2 being
triggered, except as disclosed by the party to the other party in writing on
the date of this agreement.

 

9                                        General

 

9.1                               Notices

 

(a)                                 Any notice, demand, request, consent, approval or other
communication including, under this agreement:

 

(1)                                 must be in legible writing and in English addressed as shown below:

 

(A)                             Target

 

Address:                                              1 Sheridan Close

Milperra NSW 2214

Attention:                                        Mark Gardiner

Facsimile:                                           61 2 9773 0828

 

(B)                               Bidder

 

Address:                                              1106 Palms Airport Drive

Las Vegas, NV89119

Attention:                                        Jerry Smith

Facsimile:                                         +1 702 270 5161

 

with a copy to Susan Livingstone

 

Address:                                              Suite 12, 5 Michigan Drive

Oxenford

Queensland 4210

Facsimile:                                         61 7 5561 8700

 

or as specified to the sender by any party
by notice;

 

(2)                                 must be signed by the sender (if a natural person) or an officer or
under the common seal of the sender (if a corporation);

 

(3)                                 is regarded as being given by the sender and received by the
addressee:

 

10

 

(A)                             if by delivery in person, when delivered to the addressee;

 

(B)                               if by facsimile transmission, whether or not legibly received, when
transmitted to the addressee,

 

but if the delivery or receipt is on a day
which is not a Business Day or is after 4.00pm (addressee’s time) it is
regarded as received at 9.00am (addressee’s time) on the following Business
Day; and

 

(4)                                 can be relied upon by the addressee and the addressee is not liable
to any other person for any consequences of that reliance if the addressee
believes it to be genuine, correct and authorised by the sender.

 

(b)                                A facsimile transmission is regarded as legible unless the addressee
telephones the sender within 2 hours after transmission is received or
regarded as received under clause 9.1(a)(3) and informs the sender
that it is not legible.

 

(c)                                 In this clause 9.1, a reference to an addressee includes a
reference to an addressee’s officers, agents or employees.

 

9.2                               Governing
law and jurisdiction

 

(a)                                 This agreement is governed by the laws of New South Wales.

 

(b)                                Target and Bidder irrevocably submit to the non-exclusive
jurisdiction of the courts of New South Wales.

 

9.3                               Prohibition
and enforceability

 

(a)                                 Any provision of, or the application of any provision of, this
agreement or any power which is prohibited in
any jurisdiction is, in that jurisdiction, ineffective only to the extent of
that prohibition.

 

(b)                                Any provision of, or the application of any provision of, this
agreement which is void, illegal or unenforceable in any jurisdiction does not
affect the validity, legality or enforceability of that provision in any other
jurisdiction or of the remaining provisions in that or any other jurisdiction.

 

(c)                                 Where a clause is void, illegal or unenforceable, it may be severed
without affecting the enforceability of the other provisions in this agreement.

 

9.4                               Waivers
and variation

 

(a)                                 Waiver of any right, power, authority, discretion or remedy arising
from a breach of this agreement must be in writing and signed by the party
granting the waiver.

 

(b)                                A failure or delay in exercise, or partial exercise, of a right,
power, authority, discretion or remedy arising from a breach of this agreement
does not result in a waiver of that right, power, authority, discretion or
remedy.

 

(c)                                 A variation of any term of this agreement must be in writing and
signed by the parties.

 

11

 

9.5                               Entire
Agreement

 

(a)                                 This agreement supersedes all previous agreements in respect of its
subject matter and embodies the entire agreement between the parties in respect
of its subject matter.

 

(b)                                Clause 9.5(a) does not affect the Non-Disclosure Agreement
except clause 14 of that agreement. For the avoidance of doubt, Target has
no obligation to pay any amount under clause 14 of the Non-Disclosure Agreement
after execution of this agreement.

 

9.6                               Costs
and expenses

 

Each party
must pay its own legal costs and expenses in respect of the negotiation,
preparation, completion and stamping of this agreement.

 

9.7                               Assignment

 

Neither party
may assign or otherwise transfer any of its rights arising under this agreement
without the prior written consent of the other party.

 

9.8                               Further
assurances

 

Each party
must do all things and execute all further documents necessary to give full
effect to this agreement.

 

9.9                               Time
of the essence

 

Time is of the
essence of this agreement.

 

9.10                        Counterparts

 

This agreement
may be executed in any number of counterparts.

 

9.11                        Attorneys

 

Each of the
attorneys executing this agreement (if any) states that the attorney has no
notice of the revocation of the power of attorney appointing that attorney.

 

12

 

Schedule 1 – Agreed Announcement

 

13

 

Schedule 2 – Agreed Bid
Terms

 

1                                        Offer Price

 

$1.55 (cash)
per Target Share, calculated on the assumption that the Target Shares are cum
all dividends and distributions declared after the Announcement Date.

 

2                                        Offer conditions

 

The Offer may
be subject only to conditions substantially on the terms set out below.

 

(a)                                  Regulatory approvals

 

Before the end
of the Offer Period, all approvals, consents or waivers that are required by
law, or by any Public Authority, as are necessary to permit the Offer to be
lawfully made to and accepted by Target Shareholders and the nominees of the
Bidder to be appointed to the Board of Target and any subsidiary of Target are
granted, given, made or obtained on a basis which is unconditional (except for
any procedural filing requirements), remain in full force and effect in all
respects, and do not become subject to any notice, intimation or indication of
intention to revoke, suspend, restrict, modify or not renew the same.

 

(b)                                  Minimum acceptance condition

 

That at the
end of the Offer Period, Bidder has a relevant interest in at least 90% (by
number) of the Target Shares in the bid class.

 

(c)                                 No prescribed occurrences

 

That none of
the following events occurs during the period beginning on the date the Bidder’s
Statement is given to Target and ending at the end of the Offer Period:

 

(1)                                 Target converts all or any of its shares into a larger or smaller
number of shares;

 

(2)                                 Target or a subsidiary of Target resolves to reduce its share
capital in any way;

 

(3)                                 Target or a subsidiary of Target:

 

(A)                             enters into a buy-back agreement; or

 

(B)                               resolves to approve the terms of a buy-back agreement under section 257C(1) or
257D(1) of the Corporations Act;

 

(4)                                 Target or a subsidiary of Target issues shares (other than Target
Shares issued as the result of the exercise of Target Options) or grants an
option over its shares, or agrees to make such an issue or grant such an option
other than the issue of 750,000 Target Options to the managing director if
approved by a resolution of members at the annual general meeting to be held in
November 2005 or any adjournment of that meeting;

 

(5)                                 Target or a subsidiary of Target issues, or agrees to issue,
convertible notes;

 

14

 

(6)                                 Target or a subsidiary of Target disposes, or agrees to dispose, of
the whole, or a substantial part, of its business or property;

 

(7)                                 Target or a subsidiary of Target charges, or agrees to charge, the
whole, or a substantial part, of its business or property;

 

(8)                                 Target or a subsidiary of Target resolves to be wound up;

 

(9)                                 the appointment of a liquidator or provisional liquidator of Target
or of a subsidiary of Target;

 

(10)                           a court makes an order for the winding up of Target or of a
subsidiary of Target;

 

(11)                           an administrator of Target, or of a subsidiary of Target, is
appointed under section 436A, 436B or 436C of the Corporations Act;

 

(12)                           Target or a subsidiary of Target executes a deed of company arrangement;
or

 

(13)                           a receiver, or a receiver and manager, is appointed in relation to
the whole, or a substantial part, of the property of Target or of a subsidiary
of Target.

 

(d)                                 No prescribed occurrences between announcement and service

 

That none of
the events referred to in sub-paragraph 2(c)(1) to (c)(13) of this Schedule 2
happens in relation to Target during the period beginning on the Announcement
Date and ending at the end of the day before the Bidder’s Statement is given to
Target.

 

(e)                                 No action by Public Authority adversely affecting the Takeover Bid

 

That during
the Condition Period:

 

(1)                                 there is not in effect any preliminary or final decision, order or
decree issued by a Public Authority;

 

(2)                                 no action or investigation is instituted, or threatened by any
Public Authority; or

 

(3)                                 no application is made to any Public Authority (other than an
application by Bidder or any company within the Bidder Group, an application
under section 657G of the Corporations Act, or an application commenced by
a person specified in section 659B of the Corporations Act in relation to
the Takeover Bid),

 

in consequence
of, or in conjunction with, the Takeover Bid (other than an application to, or
a decision or order of, ASIC or the Takeovers Panel in exercise of the powers
and discretions conferred by the Corporations Act), which restrains or
prohibits or threatens to restrain or prohibit, or may otherwise materially
adversely impact upon, the making of the Takeover Bid or the objectives of the
Takeover Bid (including without limitation the appointment of
Bidder nominees to the board of Target and any subsidiary of Target) or seeks
to require the divestiture by Bidder of any Target Shares, or the divestiture
of any assets by any company within the Target Group or the Bidder Group.

 

(f)                                   No material acquisitions, disposals, etc.

 

Except for any
proposed transaction publicly announced by Target before the Announcement Date
and any transaction undertaken by Target in its ordinary

 

15

 

course of
business, none of the following events occur during the period from that date
to the end of the Offer Period:

 

(1)                                 Target, or any subsidiary of Target, acquires, offers to acquire or
agrees to acquire (other than components to be used in the manufacture of
Target’s goods)  one or more companies or
assets (or an interest in one or more companies or assets) for an amount in
aggregate greater than $200,000 or makes an announcement in relation to such an
acquisition;

 

(2)                                 Target, or any subsidiary of Target, disposes, offers to dispose or
agrees to dispose of (other than goods manufactured and sold by Target in the
ordinary course of business) one or more companies or assets (or an interest in
one or more companies or assets) for an amount in aggregate greater than $200,000
or makes an announcement in relation to such a disposal;

 

(3)                                 Target, or any subsidiary of Target, enters into, offers to enter
into or announces that it proposes to enter into any joint venture or
partnership, involving a commitment of greater than $200,000 or makes an
announcement in relation to such a commitment; or

 

(4)                                 Target, or any subsidiary of Target, incurs or commits to, or grants
to another person a right the exercise of which would involve a member of the
Target Group incurring or committing to any capital expenditure or other
liability of any nature (whether conditional or otherwise) in respect of one or
more related items of greater than $200,000 or makes an announcement in
relation to such a commitment.

 

(g)                                Conduct of Target’s business

 

That, during
the Condition Period, none of Target, or (except in relation to (g)(1) or
(g)(2)) any body corporate which is or becomes a subsidiary of Target, without
the written consent of Bidder:

 

(1)                                 declares, or distributes any dividend, bonus or other share of its
profits or assets;

 

(2)                                 makes any change in its constitution;

 

(3)                                 borrows or agrees to borrow any money (except for temporary
borrowing from its bankers in the ordinary course of business) in an amount
exceeding $50,000;

 

(4)                                 releases, discharges or modifies any obligation owed to it of a
value exceeding $50,000 or agrees to do so (other than in the ordinary course
of business by extending the time for payment under terms for sale);

 

(5)                                 enters or agrees to enter into any contract of service or varies or
agrees to vary any existing contract of service with any director or manager,
or pays (other than pursuant to the terms existing as at the date of this
agreement of a contract of service) or agrees to pay any retirement benefit or
allowance to any director, manager, or make or agree to make any substantial
change in the basis or amount of remuneration of any director or manager  (other than in each case as required by law
or provided under any superannuation, provident or retirement scheme as in
effect on the Announcement Date) to the extent that any of these matters (or
any

 

16

 

combination of these matters) would give
rise to a liability of the Target of an amount exceeding $100,000;

 

(6)                                 conducts its business otherwise than substantially in the ordinary
course (although the Target may take such action as is required in connection
with the Takeover Bid);

 

(7)                                 has commenced or threatened against it any material claims or proceedings
in any court or tribunal (including, but not limited to, a petition for winding
up or an application for appointment of a receiver or receiver and manager);

 

(8)                                 becomes subject to investigation under the Australian
Securities and Investments Commission Act 2001 (Cth) or any
corresponding legislation (other than in connection with the Takeover Bid).

 

(h)                                No force majeure event

 

That during
the Condition Period no act of war (whether declared or not) or terrorism,
mobilisation of armed forces, civil commotion or labour disturbance, fire or
natural disaster, or other event beyond the control of Target or the relevant
subsidiary occurs which has or is likely to have a materially adverse effect on
the assets, liabilities, financial position, performance, profitability or
prospects of Target and its subsidiaries taken as a whole.

 

(i)                                   No material adverse change in Target

 

That during
the Condition Period no change, event or failure to act occurs, is discovered,
becomes probable or imminent or becomes public which has or could reasonably be
expected to have a material adverse effect on the assets, liabilities,
financial position, performance, profitability or prospects of Target and its
subsidiaries taken as a whole, from that as at the Announcement Date (including
without limitation any revocation or non-renewal of any licence, consent, or
approval or permit of a Public Authority in relation to Target, any subsidiary
of Target, any business of any of them or any officer or employee of any of
them).

 

(j)                                   No material adverse change in Bidder

 

That during
the Condition Period no change occurs, is discovered, becomes probable or
imminent or becomes public which has or could reasonably be expected to have a
material adverse effect on the assets, liabilities, financial position,
performance, profitability or prospects of Bidder and its subsidiaries taken as
a whole, from that as at the Announcement Date (excluding any change that may
arise as a consequence of the announcement or consummation of the Offer or the financing
for the Offer, or that is within the sole control of, or as a direct result of
action by, Bidder or its associates).

 

(k)                               Decline in ASX indices

 

That, at close
of trading on the ASX on any five consecutive trading days during the Condition
Period the All Ordinaries Index of ASX is at a level that is not 15% or more
below the level of the index at the close of trading on 14 November 2005.

 

(l)                                   Decline in NASDAQ indices

 

That, at close
of trading on NASDAQ on any five consecutive trading days during the Condition
Period the NASDAQ Composite Index is at a level that is not 15% or more below
the level of the index at the close of trading on 11 November 2005.

 

17

 

Executed
as an agreement:

 

Signed
for and on behalf of

Stargames
Limited

by:

 

	
   

  	
   

  	
   

  	
   

  
	
  Director/Secretary

  	
   

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name (please
  print)

  	
   

  	
  Name (please
  print)

  	
   

  

 

Signed
for and on behalf of

Shuffle
Master, Inc.

by:

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name (please
  print)

  	
   

  	
  Name (please
  print)

  	
   

  

 

18

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