<PAGE>
As filed with the Securities and Exchange Commission on December 21, 1998
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
<TABLE>
<S> <C> <C>
CALIFORNIA SILICON GAMING, INC. 77-0357939
(State or Other Jurisdiction (Exact Name of Registrant (I.R.S. Employer
of Incorporation or Organization) as Specified in its Charter) Identification Number)
</TABLE>
2800 West Bayshore Road
Palo Alto, California 94303
(650) 842-9000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------
DAVID MORSE
President and Chief Executive Officer
SILICON GAMING, INC.
2800 West Bayshore Road
Palo Alto, California 94303
(650) 842-9000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
---------------------
Copy to:
James M. Koshland, Esq.
William A. Rodoni, Esq.
Paul B. Johnson, Esq.
GRAY CARY WARE & FREIDENRICH LLP
400 Hamilton Avenue
Palo Alto, California 94301
(650) 328-6561
_____________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective Act amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
Amount Proposed Maximum Proposed Maximum
Title of Each Class of to be Aggregate Price Per Aggregate Offering Amount of
Securities to be Registered Registered Security (1) Price (1) Registration Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value (2) 250,000 shares (2) $1.75 $437,500 $122
==========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
(2) Such number represents the number of shares of Common Stock offered hereby
and issuable upon exercise of the warrants issued by Silicon Gaming, Inc.
as more fully described herein.
---------------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
===============================================================================
<PAGE>
********************************************************************************
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
********************************************************************************
SUBJECT TO COMPLETION DATED DECEMBER 21, 1998
250,000 SHARES
SILICON GAMING, INC.
COMMON STOCK
This prospectus relates to the non-underwritten public offering of 250,000
shares of our common stock issuable upon exercise of warrants issued to B III
Capital Partners, L.P., a Delaware Limited Partnership, the selling shareholder,
in connection with our sale of the warrants and $17,250,000 principal amount of
senior discount notes due September 30, 2002, to the selling shareholder, which
was consummated on July 8, 1998.
The selling shareholder may sell all or a portion of its SGI common stock
from time to time in The Nasdaq National Market, at prices determined by the
prevailing market price for the shares or in negotiated transactions.
We will not receive any of the proceeds from the sale of the shares of common
stock in connection with this prospectus.
The shares have not been registered for sale under the securities laws of any
state or jurisdiction as of the date of this prospectus. Brokers or dealers
effecting transactions in the shares should confirm the registration of the
shares under the securities laws of the states in which such transactions occur,
or the existence of any exemptions from such registration.
Our common stock is quoted on The Nasdaq National Market under the symbol
"SGIC." On December 15, 1998, the last sales price of our common stock as
reported on The Nasdaq National Market was $1-3/4.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SEC OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
Neither the Nevada gaming commission, the Nevada state gaming control board,
the Mississippi gaming commission, the Colorado limited gaming control
commission, the Missouri gaming commission, the New Jersey Casino Control
Commission nor any other gaming authority has passed upon the accuracy or
adequacy of this offering memorandum or the investment merits of the common
stock hereby. Any representation to the contrary is unlawful.
---------------
The date of this prospectus is December __, 1998.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and/or copy any document we file at the
SEC's public reference rooms in Washington, D.C., Chicago, Illinois or New York,
New York. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public from
the SEC's Website at "http://www.sec.gov." Our common stock is traded on The
Nasdaq National Market and as such reports and other information concerning SGI
can also be inspected at the offices of the National Association of Securities
Dealers, Inc. in Washington, D.C.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13a, 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
1. The description of SGI's securities contained in SGI's Registration
Statement on Form 10 filed on April 24, 1996 as amended on June 13, 1996 and
October 25, 1996;
2. Annual Report on Form 10-K for the year ended December 31, 1997;
3. Quarterly Reports on Form 10-Q for the three month periods ended
March 31, 1998, June 30, 1998 and September 30, 1998;
4. Definitive Proxy Statement dated April 16, 1998; and
5. Current Report on Form 8-K filed July 21, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Silicon Gaming, Inc.
2800 West Bayshore Road
Palo Alto, CA 94303
Attn: Investor Relations
(650) 842-9000
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
2
<PAGE>
THE COMPANY
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act. Actual results could differ materially from those projected in these
forward-looking statements as a result of a variety of factors, including those
set forth below and elsewhere in this prospectus.
We are engaged in the design, development, production, marketing and sale
of what we believe will be the next generation of interactive slot machines for
use in casinos and other gaming establishments. Our first product, Odyssey(R),
combines an advanced multimedia gaming platform with software-based games that
we believe will be more engaging and entertaining than other gaming devices
currently available and will, as a result, generate increased gaming revenue per
device, otherwise known as "win per machine," for the casino operator. We
recently announced our new product, Quest(TM), which is designed as a lower-
priced, single-game product to further meet the needs of casino operators, add
flexibility to our product line, and allow further penetration and expansion of
new and existing markets.
Odyssey and Quest feature high resolution video presented across the full
surface of a large touchscreen display. The games feature high quality
animation, video clips, digital sound and a level of visual appeal and
interactivity that we believe is unattainable by the current generation of slot
machines. The majority of today's slot machines are "hardware dominant,"
consisting of a fixed and unvarying game played out on spinning reels or a small
video screen mounted within a large metal box. By contrast, our machines are
"software dominant," in that the attraction and entertainment value of our
machines is created by software programs that run our games. Odyssey offers a
selection of a suite of up to six different games on a single machine, while
Quest is designed as a single-game machine. We expect that casino operators
will be able to quickly and easily upgrade our machines simply by installing new
software, rather than by replacing an entire slot machine.
We commenced commercial sale of Odyssey in May 1997, prior to which we were
in the development stage. Since introducing Odyssey we have focused our efforts
on entering new markets and jurisdictions, introducing its product and ramping
up our sales in such markets. As of September 30, 1998 we had an installed base
of over 3,000 machines. We shipped 505 machines to customers during the quarter
ended September 30, 1998, increasing our installed base by 12%. Odyssey is
licensed for sale in Nevada, Missouri, Mississippi, Michigan, Indiana,
Connecticut, Alberta-Canada and certain native American tribes in Louisiana,
Mississippi, Minnesota, Iowa and New Mexico. We have received our corporate
license in these jurisdictions as well as New Jersey and is in the process of
gaining licenses in additional jurisdictions. We offer multiple denomination
machines to our customers and in June 1998 began operating our "game factory"
concept which intends to introduce new game titles to customers on a monthly
basis. In June we introduced Arabian Riches,(TM) and in July introduced Riddle
of the Sphinx(TM) and Banana-Rama(TM) into Nevada. We plan to introduce these
games into other jurisdictions pending regulatory approval.
We generate revenue from machine sales direct to customers as well as from
software license and participation revenue. We install units on casino floors
through direct sales, as well as on a trial basis, consistent with industry
practice. Our initial sales of Odyssey include the hardware platform bundles
with a suite of six games, play stoppage entertainment and the Machine
Management System(TM). We recently announced our new product Quest, which has
been designed as a single-game product. We offer two alternative purchase
programs, consisting of the sale of hardware bundled with either (1) a single-
game or a suite of games or (2) a renewable one-year software license, including
access to our entire game library for the term of the license. In addition, in
many gaming jurisdictions we offer a revenue participation plan that allows us
to share with casino operators the aggregate win generated by the machines, with
20% going to us. Under this plan, the casino accumulates credits that may be
applied to the purchase of the machines. We expect to introduce a multi-site
progressive product in December 1998, which is also under a program of revenue
participation.
SGI was incorporated in California on July 27, 1993. SGI's principal
offices are located at 2800 W. Bayshore Road, Palo Alto, California 94303. SGI
also maintains sales and support offices in Las Vegas and Reno, Nevada and in
Gulfport and Tunica, Mississippi. SGI's telephone number is (650) 842-9000.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth SGI's consolidated ratio of earnings to
fixed charges for the periods shown.
<TABLE>
<CAPTION>
Period from Nine-months Year Year Nine Months Ended
inception Year ended ended ended ended -------------------
(July 17, 1993) March 31, December 31, December 31, December 31, Sept. 30, Sept. 30,
to March 31, 1994 1995 1995 1996 1997 1997 1998
----------------- ---------- ------------ ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges... -- -- -- -- -- -- --
</TABLE>
For the purposes of calculating the ratio of earning to fixed charges, (i)
earnings consists of consolidated income (loss) before income taxes plus fixed
charges and (ii) fixed charges consists of interest expense incurred and the
portion of rental expense under operating leases deemed by SGI to be
representative of the interest factor. Earnings were inadequate to cover fixed
charges by $1,844,000, $13,557,000, $21,746,000, $16,861,000 and $22,607,000 for
the year ended March 31, 1995, the year ended December 31, 1996 and 1997 and for
the nine-month periods ended September 30, 1997 and 1998, respectively. SGI had
no fixed charges during the period from inception (July 27, 1993) through March
31, 1994 and the nine months ended December 31, 1995.
4
<PAGE>
SELLING SHAREHOLDER
The notes, the warrants and the shares of common stock issuable upon
exercise of the warrants and offered hereby were issued to the selling
shareholder in a transaction exempt from the registration requirements of the
Securities Act. The selling shareholder (which term includes its transferees,
pledgees, donees or its successors) may from time to time offer and sell any or
all of the common stock pursuant to this prospectus.
The warrants which were issued to the selling shareholder pursuant to an
amended and restated warrant agreement dated July 8, 1998, which has been filed
as an exhibit (by reference) to the registration statement of which this
prospectus forms a part, allow the selling shareholder to purchase the 250,000
shares of common stock being registered hereunder at a price of $8.00 per share.
The number of shares and the exercise price are both adjustable in various
circumstances, including declaration of a stock split or stock dividend. The
warrants expire if they are not exercised by the holder prior to September 30,
2002. The warrants may be exercised immediately prior to the consummation of a
merger in which the SGI shareholders would own less than 70% of the surviving
corporation in the merger (not counting the exercise of the warrants) or if SGI
sells all or substantially all of its assets. The warrants may be exercised
either by payment of cash or without payment of cash if the holder of the
warrant agrees to forego that number of shares of SGI common stock equal in
value to the exercise price for that number of shares the warrantholder is
purchasing. SGI has agreed to file and keep effective the registration
statement of which this prospectus is a part for at least two years after the
registration statement is declared effective, or three months after the selling
shareholder ceases to be an affiliate of SGI, whichever is longer. SGI may,
however, suspend the use of this prospectus during certain periods of time if
appropriate due to certain corporate developments, if SGI must make filings with
the Commission and in various other circumstances. If SGI suspends the use of
this prospectus more than three times during a period of twelve months, or for
more than a total of thirty total days, SGI must pay liquidated damages of $3.25
per 1,000 shares included in this registration statement to the warrantholder
for each week the suspension is in effect. This penalty increases by another
$3.25 per 1,000 shares if more than sixty days have passed since the
warrantholder received a notice from SGI regarding suspension of the
registration statement. Lastly, SGI has agreed to register the shares
purchasable upon exercise of the warrants on either the Nasdaq National Market,
or the exchange or market on which its common stock is traded, if different from
the Nasdaq.
The table below lists the selling shareholder (which has sole voting and
investment power with respect to all SGI common stock owned by them), the number
of shares of SGI common stock which it beneficially owned as of December 1,
1998, the number of shares subject to sale pursuant to this registration
statement, and the number of the shares of SGI common stock which it would own
assuming that such number of shares were offered and assuming the sale of all
such shares.
B III Capital Partners, L.P. is a Delaware limited partnership of which DDJ
Capital III, LLC is the general partner. The manager of DDJ Capital III, LLC is
DDJ Capital Management, LLC. The address of B III Capital Partners, L.P. is c/o
DDJ Capital Management, LLC, 141 Linden Street, Wellesley, MA 02181.
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares Beneficially After Offering Assuming
Owned as of Shares To All Shares Are
Selling Shareholder December 1, 1998 Be Offered Hereby Sold by Selling Shareholder
------------------- ------------------- ----------------- ---------------------------
<S> <C> <C> <C>
B III Capital Partners, L.P. 625,000 250,000 0
</TABLE>
5
<PAGE>
PLAN OF DISTRIBUTION
The sale or distribution of the shares registered by this prospectus may be
effected directly to purchasers by the selling shareholder as principal or
through one or more underwriters, brokers, dealers or agents from time to time.
Such sale or distribution may occur by one or more of the following transactions
(which may involve crosses or block transactions):
- or on any exchange or in the over-the-counter market,
- in transactions other than in the over-the-counter market, or
- through the writing of options (whether such options are listed on an
options exchange or otherwise) on, or settlement of short sales of, the Shares.
Any of the transactions listed above may be made at market prices
prevailing at the time of sale or otherwise or at negotiated or fixed prices, in
each case as determined by the selling shareholder or by agreement between the
selling shareholder and underwriters, brokers, dealers, or agents, or
purchasers. If the selling shareholder effects such transactions by selling
shares to or through underwriters, brokers, dealers or agents, such
underwriters, brokers, dealers, or agents may receive compensation in the form
of customary or other discounts, concessions or commissions from the selling
shareholder or commissions from purchasers of the shares for whom they may act
as agent The selling shareholder and any brokers, dealers or agents that
participate in the distribution of the shares may be deemed to be underwriters,
and any profit on the sale of shares by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
Under the securities laws of certain states, the shares may be sold in such
states only through registered or licensed brokers or dealers.
SGI will pay all of the expenses incident to the registration, offering and
sale of the shares to the public hereunder other than commissions, fees and
discounts of underwriters, brokers, dealers and agents. SGI has agreed to
indemnify the selling shareholder and any underwriters against certain
liabilities, including liabilities under the Securities Act. SGI will not
receive any of the proceeds from the sale of any of the shares by the selling
shareholder.
SGI has agreed to use its best efforts to keep the registration statement,
of which this prospectus constitutes a part, effective until the longer of
twenty-four months following the date such registration statement is declared
effective by the SEC or if the holder of the shares is an Affiliate of SGI, the
date which is three months after the date on which such holder ceases to be an
Affiliate of SGI, provided that SGI first provides such holder with an opinion
of counsel to such effect.
6
<PAGE>
USE OF PROCEEDS
SGI will not receive any proceeds from the sale of the shares by the
selling shareholder.
LEGAL MATTERS
The legality of the Shares is being passed upon by Gray Cary Ware &
Freidenrich LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K as of December 31, 1997
and 1996 and for the years ended December 31, 1997 and 1996 for the nine months
ended December 31, 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and has been incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
7
<PAGE>
<TABLE>
<S> <C>
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- --------------------------------------------
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A
STATEMENT THAT DIFFERS FROM WHAT IS IN THIS PROSPECTUS
PROSPECTUS. IF ANY PERSON DOES MAKE A
STATEMENT THAT DIFFERS FROM WHAT IS IN THIS
PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS
PROSPECTUS IS NOT AN OFFER TO SELL, NOR IS ------------------------
IT SEEKING AN OFFER TO BUY, THESE SECURITIES
IN ANY STATE IN WHICH THE OFFER OR SALE IS
NOT PERMITTED. THE INFORMATION IN THIS
PROSPECTUS IS COMPLETE AND ACCURATE AS OF
ITS DATE, BUT THE INFORMATION MAY CHANGE
AFTER THAT DATE.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information..... 2
The Company............................. 3
Ratio Of Earnings To Fixed Charges...... 4 250,000 Shares of
Selling Shareholder..................... 5 COMMON STOCK
Plan Of Distribution.................... 6
Use Of Proceeds......................... 7
Legal Matters........................... 7
Experts................................. 7 SILICON GAMING, INC.
December ___, 1998
------------------------
- -------------------------------------------- --------------------------------------------
- -------------------------------------------- --------------------------------------------
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees and Nasdaq
filing fee.
<TABLE>
<CAPTION>
To be Paid
By The Registrant
----------------------
<S> <C>
SEC Registration Fee...................................................... $ 4, 878
Nasdaq Listing Fee........................................................ $ 5,000
Accounting fees and expenses.............................................. $ 10,000
Printing.................................................................. $ 10,000
Legal fees and expenses................................................... $ 20,000
Miscellaneous expenses.................................................... $ 122
Total.............................................................. $ 50,000
========
</TABLE>
The Company will pay all expenses of registration, issuance and
distribution of the shares being sold by the Selling Shareholder, excluding fees
and expenses of counsel to the Selling Shareholder and any underwriting
commissions and discounts, filing fees and transfer or other taxes, which shall
be borne by the Selling Shareholder.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 204(a) of the California Corporation Law, the
Company's Articles of Incorporation eliminate a director's personal liability to
the Registrant for monetary damages, except for liability arising under Sections
310 and 316 of the California General Corporation Law or liability for (i) acts
or omissions that involve intentional misconduct or knowing and culpable
violation of law, (ii) acts or omissions that a director believes to be contrary
to the best interests of the Company or its shareholders or that involve the
absence of good faith on the part of the director, (iii) any transaction from
which a director derived an improper personal benefit, (iv) acts or omissions
that show a reckless disregard for the director's duty to the Company or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the Company or its shareholders and (v) acts or omissions
that constitute an unexercised patter of inattention that amounts to an
abdication of the director's duty to the Company or its shareholders. This
provision does not eliminate the directors' duty of care, and in appropriate
circumstances equitable remedies such as injunctive relief or other forms of
non-monetary relief would remain available under California law.
Sections 204(a) and 317 of the California General Corporation Law
authorize a corporation to indemnify its directors, officers, employees and
other agents in terms sufficiently broad to permit indemnification (including
reimbursement for expenses) under certain circumstances for liabilities arising
under the Securities Act of 1933, as amended (the "Securities Act"). The
Company's Articles of Incorporation and Bylaws contain provisions covering
indemnification of corporate directors, officers and other agents against
certain liabilities and expenses incurred as a result of proceedings involving
such persons in their capacities as directors, officers, employees or agents,
including proceedings under the Securities Act of the Exchange Act. The Company
has entered into Indemnification Agreements with its directors and executive
officers.
These indemnification provisions and the indemnification agreements
between the Company and its officers and directors may be sufficiently broad to
permit indemnification of the Company's officers and directors
II-1
<PAGE>
for liabilities (including reimbursement of expenses incurred) arising under the
Securities Act.
The Registration Rights Agreement (Exhibit 4.3) provides for
indemnification by the Selling Shareholder of the Company and its officers and
directors and indemnification by the Company of the Selling Shareholder and its
officers and directors for certain liabilities arising under the Securities Act.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Company in which
indemnification is being sought.
II-2
<PAGE>
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ----------------------- --------------------------------------------------------------------------------------
<C> <S>
4.1* Amendment No. 1 to Securities Purchase Agreement, dated as by and between the Company
and B III Capital Partners, L.P., a Delaware limited partnership dated as of July 8,
1998.
4.2* Form of Senior Discount Note (Series B) due September 30, 2002 dated as of July 8,
1998.
4.3* Registration Rights Agreement dated as of July 8, 1998, by and between the Company
and B III Capital Partners, L.P., a Delaware limited partnership.
4.4* Amended and Restated Warrant Agreement including form of Common Stock Purchase
Warrant Certificate No. W-2 dated as of July 8, 1998, by and between the Company and
B III Capital Partners, L.P., a Delaware limited partnership.
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich LLP
12.1 Statement regarding Computation of Ratios
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Gray Cary Ware & Freidenrich LLP. Reference is made to Exhibit 5.1
24.1 Power of Attorney (see signature page)
</TABLE>
__________________
* Incorporated by reference to the Company's Form 8-K filed with the Commission
on July 21, 1998.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
D. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
E. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palo Alto, State of
California on the 18th day of December, 1998.
SILICON GAMING, INC.
By: /s/ David Morse
--------------------------------------
David Morse
President, Chief Executive Officer and
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David Morse and Thomas E. Carlson, or
either of them, as his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form S-
3, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorney-
in-facts and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to
the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- -------------------------------------- -----------------
<S> <C> <C>
/s/ David Morse President, Chief Executive Officer and December 18, 1998
- --------------------------------- Chairman of the Board of Directors
David Morse (Principal Executive Officer)
/s/ Thomas E. Carlson Vice President, Finance and Chief December 18, 1998
- --------------------------------- Financial Officer (Principal Financial
Thomas E. Carlson Officer)
/s/ William Hart Director December 18, 1998
- ---------------------------------
William Hart
Director
- ---------------------------------
Kevin Harvey
Director
- ---------------------------------
Joseph Piemont
/s/ Andrew Pascal Director December 18, 1998
- ---------------------------------
Andrew Pascal
/s/ Thomas Volpe Director December 18, 1998
- ---------------------------------
Thomas Volpe
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. Description of Document
- ----------------- ----------------------------------------------------------------------------------
<C> <S>
4.1* Amendment No. 1 to Securities Purchase Agreement, dated as by and between the
Company and B III Capital Partners, L.P., a Delaware limited partnership dated
as of July 8, 1998.
4.2* Form of Senior Discount Note (Series B) due September 30, 2002 dated as of July 8,
1998.
4.3* Registration Rights Agreement dated as of July 8, 1998, by and between the Company
and B III Capital Partners, L.P., a Delaware limited partnership.
4.4* Amended and Restated Warrant Agreement including form of Common Stock Purchase
Warrant Certificate No. W-2 dated as of July 8, 1998, by and between the Company
and B III Capital Partners, L.P., a Delaware limited partnership.
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich LLP
12.1 Statement regarding Computation of Ratios
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Gray Cary Ware & Freidenrich LLP. Reference is made to Exhibit 5.1
24.1 Power of Attorney (see signature page)
</TABLE>
____________________________
* Incorporated by reference to the Company's Form 8-K filed with the Commission
on July 21, 1998.
II-7
<PAGE>
EXHIBIT 5.1
-----------
[LETTERHEAD OF GRAY CARY WARE & FREIDENRICH LLP APPEARS HERE]
December 21, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Silicon Gaming, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
As legal counsel for Silicon Gaming, Inc., a California corporation (the
"Company"), we are rendering this opinion in connection with the preparation and
filing of a registration statement on Form S-3 (the "Registration Statement")
relating to the registration under the Securities Act of 1933, as amended, of
250,000 shares of Common Stock, par value $0.001 per share (the "Common Stock"),
issuable by the Company to the Selling Shareholder upon exercise of a warrant
issued in connection with that certain Warrant Agreement by and between Silicon
Gaming, Inc. and B III Capital Partners, L.P., a Delaware limited partnership,
dated July 8, 1998.
We have examined such instruments, documents and records as we deemed relevant
and necessary for the basis of our opinion hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that the 250,000 shares of
Common Stock of the Company being registered pursuant to the Registration
Statement and to be sold by the Selling Stockholder are duly authorized shares
of Common Stock and, when sold, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears in said Registration Statement.
This opinion is to be used only in connection with the issuance of the Common
Stock while the Registration Statement is in effect.
Respectfully submitted,
/s/ Gray Cary Ware & Freidenrich LLP
------------------------------------
GRAY CARY WARE & FREIDENRICH LLP
<PAGE>
EXHIBIT 12.1
------------
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Period from
inception Nine Nine
(July 27, Year Nine-months Year Year Months Months
1993) to ended ended ended ended ended ended
March 31, March 31, December 31, December December September September
1994 1995 1995 31, 1996 31, 1997 30, 1997 30, 1998
----------- --------- ------------ -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss)
before income taxes...... $(140) $(1,866) $(3,974) (13,364) $(22,986) (16,943) (26,895)
Fixed charges (1)........ -- 22 -- 77 1,240 82 4,288
Total earnings plus
fixed charges............ (140) (1,844) (3,974) (13,557) (21,746) (16,861) (22,607)
Fixed charges (1)........ -- 22 -- 77 1,240 82 4,288
Ratio of earnings to
fixed charges (2)........ -- -- -- -- -- -- --
</TABLE>
(1) Fixed charges consist of interest expense incurred and the portion of
rental expense under operating leases deemed by the Company to be representative
of the interest factor.
(2) Earnings were inadequate to cover fixed charges by $1,844,000, $13,557,000,
$21,746,000, $16,861,000 and $22,607,000 for the year ended March 31, 1995,
December 31, 1996 and 1997, and for the nine months ended September 30, 1997 and
1998, respectively. The Company had no fixed charges during the period from
inception (July 27, 1993) through March 31, 1994 and the nine months ended
December 31, 1995.
<PAGE>
EXHIBIT 23.1
------------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Silicon Gaming, Inc. on Form S-3 of our report dated January 27, 1998,
incorporated by reference in the Annual Report on Form 10-K of Silicon Gaming,
Inc. for the year ended December 31, 1997 and to the reference to us under the
heading "Experts" in the prospectus, which is part of this Registration
Statement.
DELOITTE & TOUCHE LLP
San Jose, California
December 18, 1998
