<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
ALLIANCE GAMING CORPORATION
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(Name of Issuer)
Common Stock, $.10 par value
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(Title of Class of Securities)
364654 10
---------------------------------------------------
(CUSIP Number)
Craig Fields
Joel Kirschbaum
David Robbins
c/o Kirkland Investment Corporation
9 West 57th Street
New York, New York 10019
Attention: Joel Kirschbaum, President
(212) 888-2399
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: David Robbins, Esq.
(212) 408-2400
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
September 20, 1995
---------------------------------------------------
(Date of Event which Requires Filing of this Statement)
<PAGE>
SCHEDULE 13D
CUSIP NO. 364654 10 PAGE 2 OF 9 PAGES
----------------------- --- ---
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Craig Fields
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) x
See Item 5 (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
Not applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e).
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
125,000 See Items 4 and 5
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 125,000 See Items 4 and 5
WITH ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
125,000 See Items 4 and 5
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES.
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1% (See Item 13 of Page 3)
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14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP NO. 364654 10 PAGE 3 OF 9 PAGES
----------------------- --- ---
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Joel Kirschbaum
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) x
See Item 5 (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e).
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
1,422,222 See Items 4 and 5
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,422,222 See Items 4 and 5
WITH ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,422,222 See Items 4 and 5
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES.
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.9% (based on 11,654,150 outstanding shares of common stock, 1,333,333
outstanding shares of special stock and an aggregate of 100,000 shares to
be issued in the transactions described herein)
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14 TYPE OF REPORTING PERSON
IN
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<PAGE>
SCHEDULE 13D
CUSIP NO. 364654 10 PAGE 4 OF 9 PAGES
----------------------- --- ---
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David Robbins
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
See Item 5 (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e). [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
31,111 See Items 4 and 5
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 31,111 See Items 4 and 5
WITH ------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,111 See Items 4 and 5
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES. [_]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1%
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14 TYPE OF REPORTING PERSON
IN
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<PAGE>
SCHEDULE 13D
INTRODUCTION
This Statement filed by Dr. Craig Fields, Mr. Joel Kirschbaum and Mr.
David Robbins amends and restates the Schedule 13D, dated June 23, 1994, filed
by Mr. Kirschbaum, Kirkland Investment Corporation, a Delaware corporation,
Kirkland-Ft. Worth Investment Partners, L.P., a Delaware limited partnership,
and Gaming Systems Advisors, L.P., a Delaware limited partnership, as amended by
Amendment No. 1 filed by such persons and Dr. Craig Fields, Mr. Jay R. Gottlieb
and Mr. Robbins, with respect to the common stock, par value $.10 per share (the
"Common Stock"), of Alliance Gaming Corporation, a Nevada corporation (formerly
United Gaming, Inc.) (the "Company").
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 2 to Schedule 13D relates to the Common Stock of the
Company. The address of the Company's principal executive office is 4380
Boulder Highway, Las Vegas, Nevada 89121.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Amendment is being filed by Messrs. Fields, Kirschbaum and
Robbins in respect of the transactions describd herein.
The business address of Messrs. Fields and Kirschbaum is as previously
reported. The business address of Mr. Robbins is c/o O'Sullivan Graev &
Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112.
(d)-(e) During the last five years, none of the Reporting Persons has
been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended by adding the following text to the end thereof:
The source of funds for the investment described herein is personal funds
of Mr. Kirschbaum and Mr. Robbins, respectively.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is amended by adding the following text to the end thereof:
Pursuant to Dr. Fields' existing agreement with the Company, options for
an additional 62,500 shares (in addition to the 62,500 shares for which Dr.
Fields has exercisable options) will become exercisable within the next 60 days.
As of September 15, 1995, Mr. Kirschbaum and Mr. Robbins each signed a
letter agreement with the Company and on September 20, 1995, Mr. Kirschbaum and
Mr. Robbins and certain other unaffiliated investors each signed a purchase
agreement with the Company (collectively, the "Agreements"), providing that Mr.
Kirschbaum will invest $400,000 and Mr. Robbins will invest $50,000 to purchase
shares of Common Stock at a price of $4.50 per share, effective only upon
consummation of the Company's existing tender offer for shares of Bally Gaming
International, Inc., a Delaware corporation. In connection therewith, each of
Mr. Kirschbaum and Mr. Robbins shall receive a commitment fee from the Company
initially equal to 1.5% of such person's aggregate commitment and thereafter, if
such commitment is extended beyond six weeks, an additional commitment fee of
.25% per week for a maximum of six additional weeks. Such investment and
commitment fees are on the same terms and conditions as commitments
simultaneously received from the Company from certain unaffiliated investors.
<PAGE>
Other than as described above in Item 4, none of the Reporting Persons
have any plans or proposals relating to any of the items described in items (a)
through (j) of Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5, as it relates to Messrs. Fields, Kirschbaum and Robbins is
amended as follows:
(a) Mr. Kirschbaum may be deemed to own beneficially 1,422,222 shares of
Common Stock issuable upon conversion of shares of special stock held by KFW,
constituting approximately 10.9% of the shares of Common Stock deemed
outstanding. Dr. Fields may be deemed to own beneficially 125,000 shares of
Common Stock issuable upon exercise of presently exercisable options,
constituting less than 1% of the Common Stock outstanding. Mr. Robbins may be
deemed to own beneficially 31,111 shares of Common Stock, representing less than
1% of the Common Stock outstanding, that he may acquire upon exercise of an
option to acquire Special Stock, which option is exercisable within 60 days, and
in connection with the transactions described herein.
(b) Other than as described in Item 4 or Item 6, no person other than the
Reporting Persons at present has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
Common Stock deemed to be beneficially owned by them.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
The Agreements provide for, among other things, the purchase of Common
Stock as described in Item 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 -- Form of Joint Filing Agreement
Exhibit 2 -- Form of Letter Agreement between the Company and each of Mr.
Kirschbaum and Mr. Robbins.
Exhibit 3 -- Form of Purchase Agreement between the Company and each of
Mr. Kirschbaum and Mr. Robbins and other purchasers.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, each of the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: September 26, 1995
-------------------------------------
Joel Kirschbaum
-------------------------------------
Craig Fields
-------------------------------------
David Robbins
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
<S> <C> <C>
Exhibit 1 Form of Joint Filing
Agreement
Exhibit 2 Form of Letter
Agreement between the
Company and each of Mr.
Kirschbaum and Mr.
Robbins
Exhibit 3 Form of Purchase
Agreement between the
Company and each of Mr.
Kirschbaum and Mr.
Robbins and other
purchasers
</TABLE>
<PAGE>
EXHIBIT 1
AGREEMENT OF JOINT FILING
Pursuant to Rule 13d-1(f) promulgated under the Securities Exchange Act
of 1934, the undersigned persons hereby agree to file with the Securities and
Exchange Commission the Statement on Schedule 13D (the "Statement") to which
this Agreement is attached as an exhibit, and agree that such Statement, as so
filed, is filed on behalf of each of them.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
Dated: September 26, 1995
---------------------------------
Joel Kirschbaum
---------------------------------
Craig Fields
---------------------------------
David Robbins
<PAGE>
EXHIBIT 2
September 15, 1995
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Gentlemen:
The undersigned purchaser hereby commits, subject to the conditions
described below, to purchase the number of shares of Special Stock (the
"Shares") of Alliance Gaming Corporation (the "Company") specified on the
signature page hereof at a purchase price per share of $4.50 per share.
A summary of the proposed terms of the Offering is attached hereto.
The undersigned's commitment to purchase the Shares is subject to the
following:
(i) The execution and delivery by the Company and the undersigned of a
definitive Stock Purchase Agreement;
(ii) The execution and delivery by the Company, the undersigned and
the Bank of New York ("BONY"), as Escrow Agent, of an Escrow
Agreement providing for the payment of funds to BONY to be held in
escrow pending the closing of the transaction;
(iii) Completion and delivery by the undersigned to Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") of the Investors'
Questionnaire to be furnished to the undersigned; and
(iv) Satisfaction of the conditions to closing set forth in the Stock
Purchase Agreement, including but not limited to the consummation
of the tender offer by the Company for shares of Bally Gaming
Corporation on or before December 15, 1995.
<PAGE>
Alliance Gaming Corporation
Page 2 September 15, 1995
The undersigned affirms that it has received a copy of the Private
Placement Memorandum dated September 1995 and has had the opportunity to review
such Private Placement Memorandum prior to making this commitment to purchase
the Shares.
Very truly yours,
By:
--------------------------
Name:
Title:
Address:
Phone Number:
No. of Shares ------------
Attachment
<PAGE>
REVISED SUMMARY OF TERMS OF THE OFFERING
ISSUER: Alliance Gaming Corporation (the "Company")
ISSUE: Up to _____ Shares of Special Stock (the "Offering")
ISSUE PRICE: $4.50
AMOUNT: Up to $30 million
SHARES OF
COMMON STOCK
OUTSTANDING: 12,987,000
COMMON STOCK
NASDAQ SYMBOL: ALLY
CONVERSION: Each share of Special Stock will be convertible into one share
of Common Stock subject to approval by a shareholder vote to
occur within six months from closing. If the shareholder vote is
not held to approve the conversion within six months from
closing, shareholders will have the right to require the Company
to repurchase the Special Stock at a per share price, payable in
cash, equal to the higher of (i) a 25% premium to the issue
price or (ii) the current market price of the Common Stock.
LOCK-UP PERIOD: Six months from the closing of the Offering.
REGISTRATION
RIGHTS: The Purchasers will be entitled to (i) unlimited prorated
piggyback registration rights and (ii) commencing six months
from closing, three demand registrations upon demand from
holders of a minimum of 10% of the Special Stock.
CLOSING
CONDITIONS: Closing of the Offering is conditioned upon the acceptance of
the Bally shares for purchase in the Company's cash tender offer
such that, when added to the number of Bally shares owned by the
Company on the date thereof, the total shares would equal at
least a majority of total Bally common shares outstanding.
COMMITMENT
FEES: 1.5% upon commitment for the First Commitment Period (6 weeks)
0.25% per week thereafter for a six Week period
COMMITMENT
MATURITY: Initially, November 2, 1995, extendible to December 15, 1995 at
the option of the Company.
TIMING:
. PRICING September 15, 1995
. CLOSING OF
COMMITMENTS September 20, 1995
USE OF
PROCEEDS: The proceeds of the Offering will be used by the Company to
increase the number of Bally shares included in its cash tender
offer and for working capital purposes. Upon completion of the
Tender Offer, the Company shall own a majority of the
outstanding shares of Bally.
<PAGE>
EXHIBIT 3
ALLIANCE GAMING CORPORATION
---------------------------
STOCK PURCHASE AGREEMENT
------------------------
AGREEMENT, dated as of September 15, 1995, by and among ALLIANCE GAMING
CORPORATION, a Nevada corporation (the "Company"), and each of the persons
identified on the signature pages hereof. The persons identified on the
signature pages hereof are sometimes hereinafter collectively referred to as the
"Purchasers" and individually as a "Purchaser."
WHEREAS, the Company desires to issue and sell, and the Purchasers
desire to purchase, shares of Non-Voting Junior Convertible Special Stock,
Series B (the "Special Stock"), of the Company, subject to the terms and
conditions herein;
NOW, THEREFORE, in reliance upon the representations and warranties
made herein and in consideration of the premises and the mutual covenants and
conditions herein contained, the Company and each Purchaser, severally and not
jointly, hereby agree as follows:
SECTION 1
SALE AND PURCHASE OF THE SHARES; FEES
-------------------------------------
1.1 Sale of Shares. At the Closing (as defined in Section 2.2 hereof),
--------------
and subject to the terms and conditions hereof, the Company will issue and sell
to the Purchasers and each Purchaser will purchase from the Company the number
of shares (the "Shares") of Special Stock set forth below its name on the
signature page hereof at a purchase price of $4.50 per share (the "Purchase
Price").
1.2 Issue of Special Stock. On or before the Closing, the Company will
----------------------
have authorized the issuance of up to 6,666,667 shares of Special Stock pursuant
to a Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Special Stock and Qualifications,
Limitations and Restrictions thereof of Special Stock in the form attached
hereto as Annex A (the "Certificate") which will be filed with the appropriate
officials of the State of Nevada on or before the Closing Date; and the Company
will have authorized, subject to stockholder approval as provided herein, the
issuance of 6,666,667 shares of Common Stock, par value $0.10 per share (the
"Common Stock"), subject to adjustment as provided in the Certificate, to be
issued upon the conversion of the Shares in accordance with the Certificate.
<PAGE>
The Special Stock will automatically convert, upon the approval of the
Company's stockholders, into shares of Common Stock.
Pursuant to the Certificate, if the approval for conversion shall not
have occurred within six months following the Closing Date, the Company shall
immediately make an offer to each holder of the Shares by registered mail to
redeem, out of funds legally available therefor, on a date specified in such
offer (which shall not be less than 30 nor more than 60 days after the date of
such notice), all such holder's Shares at a cash price equal to the greater of
(i) the Quoted Price (as defined in the Certificate) of the Common Stock on the
date notice is sent or (ii) 125% of the original issue price of the Shares, upon
the acceptance of such offer received by the Company at least 10 days prior to
the redemption date specified in the Company's offer. If the holder of any
Share shall accept such offer, such Shares shall be redeemed on the specified
redemption date, and on surrender of the certificates evidencing the Shares will
receive payment of the redemption price.
1.3 Commitment Fees. Each Purchaser shall be paid a commitment fee (the
---------------
"First Commitment Fee") on September 19, 1995 equal to 1.5% of its total
committed purchase amount for the period from the date hereof to November 2,
1995 (the "First Commitment Period"). In addition, if at the option of the
Company the First Commitment Period is extended by notice to each Purchaser on
or before November 2, 1995, each Purchaser shall be paid on the earlier of (i)
the Closing Date, (ii) the termination of the Tender Offer or (iii) December 15,
1995, an additional commitment fee equal to 0.25% of such Purchaser's total
committed purchase amount for each week after November 2, 1995, until such time
as any of the events specified in clauses (i) through (iii) above shall have
occurred (the "Second Commitment Fee", and together with the First Commitment
Fee, the "Commitment Fees"). The Commitment Fees shall be payable in immediately
available funds by wire transfer (to the extent wire transfer instructions have
been provided to Donaldson, Lufkin & Jenrette Securities Corporation (the
"Placement Agent") by such Purchaser) or by check sent by first class mail to
the address of such Purchaser listed on the signature page hereof.
SECTION 2
CLOSING, PAYMENT AND DELIVERY
-----------------------------
2.1 Closing Date and Place of Closing. The closing of the purchase and
---------------------------------
sale of the Shares hereunder (the "Closing") shall be held at the offices of
Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York at
10:00 a.m. Eastern Time on the Closing Date, as set forth in Section 2.2.
2
<PAGE>
2.2 Payment; Closing. Upon the satisfaction of the conditions set forth
----------------
in Section 2.3 hereof, and subject to obtaining Nevada gaming authority approval
for issuance of the Shares, the Company shall notify each Purchaser of the date
(the "Closing Date"), place and time of the closing (the "Closing"), which shall
in no event be later than 10 business days after the time that all of the
conditions set forth in Section 2.3 have been satisfied, at which time each
Purchaser shall pay to the Company, by wire transfer of immediately available
funds to the account specified by the Company in such notice of Closing or such
other form of payment as shall be mutually agreed upon by the Company and the
Purchaser, the Purchase Price, and the Company shall deliver to the Purchaser a
certificate or certificates representing the number of Shares purchased as set
forth below such Purchaser's name on the signature page hereof appropriately
legended to reflect the restrictions of this Agreement and the Securities Act of
1933, as amended (the "Securities Act").
2.3 Conditions to Closing. The several obligations of the Purchasers to
---------------------
purchase the Shares on the Closing Date hereunder are subject to the following
conditions:
(a) the tender offer by the Company's subsidiary, BGII
Acquisition Corp., a Delaware corporation ("BGII"), for 4.4 million shares
of Common Stock, $.01 par value, of Bally Gaming International, Inc., a
Delaware corporation ("Bally"), as the same may be amended from time to
time (the "Tender Offer"), shall have been consummated on or before
December 15, 1995;
(b) the representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects on and
as of the Closing Date as though made on and as of such date (except for
those made as of a specified date, which shall be true and correct as of
such date) and the Company shall have performed in all material respects
its obligations hereunder required to be performed on or before the Closing
Date and the Placement Agent shall have received an Officers' Certificate
addressed to the Purchasers and signed by the Chief Executive Officer and
the Chief Financial Officer to the effect of the foregoing;
(c) the Purchasers shall have received a legal opinion or
opinions covering the matters set forth in Annex B; and
(d) no injunction, writ, restraining order or other order of any
nature arising out of the Tender Offer or the purchase of the Shares
hereunder shall have been issued by any governmental or judicial authority
and remain in force against such Purchaser preventing such Purchaser from
3
<PAGE>
purchasing Shares or against the Company preventing the Company from
issuing the Shares and the Placement Agent shall have received an Officers'
Certificate addressed to the Purchasers and signed by the Chief Executive
Officer and the Chief Financial Officer to the effect of the foregoing
insofar as the foregoing relates to the Company.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to each Purchaser as
follows:
3.1 Due Organization and Qualification. The Company is duly organized
----------------------------------
and existing and in good standing under the laws of the State of Nevada and
qualified and licensed to do business in, and in good standing in, any state
where the failure to be so licensed or qualified could reasonably be expected to
have a material adverse effect on the business, operations, condition (financial
or otherwise), finances, or prospects of the Company.
3.2 Due Authorization; No Conflict. The execution, delivery and
------------------------------
performance of this Agreement is within the Company's corporate powers, has been
duly authorized, and is not in conflict with nor constitutes a breach of any
provision contained in the Company's Articles or Certificate of Incorporation or
By-laws, nor will it constitute an event of default under any material agreement
to which the Company is a party or by which its properties or assets may be
bound, nor will it violate the requirements of all applicable laws, rules,
regulations, and orders of any governmental authority, including any Gaming
Authority, other than laws, rules, regulations and orders the non-compliance
with which, individually or in the aggregate, would not have and could not
reasonably be expected to have a material adverse effect on the business,
operations, condition (financial or otherwise), finances, or prospects of the
Company. "Gaming Authorities" as used herein means all regulatory authorities
and other bodies regulating or having jurisdiction over the gaming activities of
the Company or any of its subsidiaries (or any entity under the control of the
Company or any of its subsidiaries), including, without limitation, the Nevada
Gaming Commission.
3.3 Litigation. There are no actions or proceedings pending by or
----------
against the Company before any court or administrative agency and the Company
does not have knowledge or belief of any pending, threatened, or imminent
litigation, governmental investigations, or claims, complaints, actions, or
prosecutions involving the Company, except for: (a) ongoing collection matters
in which the Company is the plaintiff; and (b)
4
<PAGE>
matters that would not reasonably be expected in the Company's good faith
judgment to have a materially adverse effect on the condition (financial or
otherwise), finances, results of operations or prospects of the Company
3.4 Capitalization. As of September 14, 1995, the Company's authorized
--------------
capital stock consists of 175,000,000 shares of Common Stock and 10,000,000, of
which as of July 31, 1995 11,654,150 shares of Common Stock and 1,333,333 shares
of Special Stock were issued and outstanding. As of the date hereof, the Company
had reserved 18,454,834 shares of Common Stock for issuance upon the exercise of
outstanding convertible debentures, options and warrants. All of the issued and
outstanding shares of Common Stock are validly issued, fully paid and non-
assessable. All of the Shares being issued to the Purchasers pursuant to this
Agreement, and (subject to stockholder approval as contemplated hereby) all of
the shares of Common Stock issuable upon conversion of the Shares (the
"Conversion Shares"), upon issuance will be validly issued, fully paid and non-
assessable shares of Special Stock and Common Stock respectively. Except for
the foregoing and as disclosed in the Company's Reports (as hereinafter
defined), as of the date hereof there are no outstanding options, warrants or
other rights of any kind to acquire any additional shares of capital stock of
the Company or securities convertible into or exchangeable for, or which
otherwise confer on the holder thereof any right to acquire, any such additional
shares, nor is the Company committed to issue any such option, warrant, right or
security.
3.5 No Restrictive Agreements. The issuance and delivery of the Shares
-------------------------
to the Purchasers, and the issuance and delivery of the Conversion Shares upon
conversion of the Shares, is not and will not be subject to any preemptive
rights.
3.6 Valid Agreement. This Agreement constitutes a valid and binding
---------------
agreement of the Company enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity.
3.7 Financial Information. The financial statements included in the
---------------------
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1994
together with the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1994, December 31, 1994 and March 31, 1995
(collectively, the "Exchange Act Documents") present fairly in all material
respects in accordance with generally accepted accounting principles
consistently followed (except as disclosed therein) the financial position and
results of operations of the Company at the dates and for the periods to which
they relate
5
<PAGE>
(subject, in the case of the unaudited financial statements, to normal year-end
adjustments).
3.8 Consents. Except for those consents and filings contemplated by
--------
Section 5 hereof and such approvals as at the time of the Closing will have been
obtained, no consent, approval, qualification, order or authorization of, or
filing with any governmental authority is required in connection with the
Company's execution, delivery or performance of this Agreement or the offer,
sale or issuance of the Shares by the Company other than as required under "Blue
Sky" laws.
3.9 Company Reports; Private Placement Memorandum. Since June 30, 1994,
---------------------------------------------
all reports, proxy statements, registration statements and other filings
required to be filed by the Company with the Securities and Exchange Commission
(the "SEC") pursuant to the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including without limitation the
Company's Schedule 14D-1 and Schedule 13D, each as amended, have been duly filed
with the SEC, and none of such documents and the Private Placement Memorandum,
dated September 1995, when taken together with such documents as a whole
(collectively, the "Company Reports"), contained as of their respective dates
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein, or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
- -------- -------
any projections or other forward-looking information or statements contained in
the Private Placement Memorandum except that such projections or forward-looking
information or statements were made in good faith based upon reasonable
assumptions and provided further that no representation or warranty is made with
respect to information concerning any person other than the Company and its
affiliates on the date hereof.
SECTION 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASERS
-------------------------------------------------------
Each Purchaser represents and warrants to the Company and agrees,
severally and not jointly, and only as to itself, as follows:
4.1 Experience. It is experienced in evaluating and investing in
----------
companies such as the Company, and has such knowledge and experience in
evaluating the merits and risks of its investment, and has the ability to bear
the economic risks of its investment. It is an "accredited investor," as such
term is defined in Regulation D under the Securities Act. It has completed and
delivered to the Placement Agent an investor's
6
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questionnaire, and all information set forth therein is true and correct as of
the date hereof. It acknowledges that it has received all information relating
to the Company reasonably requested by it and that it has had an opportunity to
ask questions and receive answers concerning the investment contemplated hereby.
4.2 Investment. It is acquiring the Shares for investment for its own
----------
account and not with the view to, or for resale in connection with, any
distribution thereof (subject to the provisions of Sections 5.2 and 5.3 hereof).
It understands that the Shares have not been registered under the Securities Act
by reason of exemption from the registration provisions of the Securities Act
which depends upon, among other things, the bona fide nature of its investment
intent as expressed herein. It acknowledges that the Company may place
restrictive legends on, and stop transfer orders against, the certificates
representing the Shares being acquired by it.
4.3 Rule 144. It acknowledges that the Shares must be held indefinitely
--------
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. It agrees that it will not sell, transfer
or assign the Shares or the Conversion Shares for a period of six (6) months
after the Closing and thereafter without furnishing an opinion of counsel
reasonably satisfactory to the Company to the effect that such sale will not
violate the Securities Act. It has been advised or is aware of the provisions of
Rule 144 promulgated under the Securities Act, which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions and that such Rule may not become available for resale of the Shares.
4.4 Authority. It has full power and authority under all applicable
---------
laws to enter into this Agreement and to consummate the transactions herein and
has taken all action necessary to authorize its execution and performance of
this Agreement. This Agreement when executed and delivered will be duly executed
and will constitute a legal, valid and binding obligation of each of the
Purchasers, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors, rights generally and general
principles of equity. Its source of funds is not an employee benefit plan.
7
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SECTION 5
COVENANTS OF THE COMPANY
------------------------
5.1 Future Reports; Stockholders Meeting.
------------------------------------
(a) Until the earlier of the termination of the Purchaser's
commitment to purchase the Shares and the Closing Date and thereafter for a
period of two (2) years from the Closing Date for so long as the Purchaser is a
holder of Shares or Conversion Shares, the Company will furnish to the Purchaser
(i) all annual, quarterly and periodic reports and proxy statements filed by the
Company with the SEC pursuant to the Exchange Act, (ii) all registration
statements filed by the Company under the Securities Act, within five (5) days
after filing such report or registration statement with the SEC and (iii) all
amendments to the Company's offer to purchase Bally. Until the Closing Date and
for so long after the Closing Date as any Purchaser holds any Shares or
Conversion Shares, the Company will file all reports required to be filed by it
under the Exchange Act and will take such further action as any Purchaser may
reasonably request, all to the extent required to enable such Purchaser to sell
pursuant to Rule 144 adopted by the SEC under the Securities Act. Until the
Closing Date and thereafter for so long as the Purchaser is a holder of Shares
or Conversion Shares, the Company will also promptly furnish to the Purchasers
copies of all reports or other material information relating to the Company
which it furnishes to stockholders (as such) of the Company generally.
(b) The Company shall cause a meeting of its stockholders (the
"Stockholders Meeting"), to be duly called and held within six months of the
Closing Date for the purpose of approving the conversion of the Shares into
shares of Common Stock. The Board of Directors of the Company shall recommend to
its stockholders the approval of such conversion and shall use all reasonable
efforts to obtain the approval of such stockholders; provided, however, that
-------- -------
nothing herein shall require the Board of Directors of the Company to act, or
refrain from acting, in any manner that it may deem, after consultation with its
outside counsel, to be necessary to the proper discharge of the Directors'
fiduciary duties to their stockholders. In connection with the Stockholders
Meeting, the Company shall prepare and file a preliminary proxy statement
relating to the conversion of Shares (the "Preliminary Proxy Statement") with
the SEC, and the Company shall use its best efforts to respond to the comments
of the SEC and to cause a definitive proxy statement (the "Definitive Proxy
Statement") to be mailed to its stockholders. The Definitive Proxy Statement,
as of the date of the mailing of the Definitive Proxy Statement by the Company
to its stockholders and as of the date of the Stockholders Meeting, (i) will
comply in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder and
8
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(ii) will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made not
misleading.
5.2 Piggyback Registration.
----------------------
(a) Right to Include Shares. Whenever the Company proposes to
-----------------------
register under the Securities Act an offering of the Common Stock on any form
for the registration of securities under such Act, whether or not for its own
account (other than by (i) a registration statement on Form S-4 or S-8 or any
successor or similar forms, (ii) any registration statement to be used
exclusively in the offering and sale of the Company's securities acquired by any
of its subsidiaries' employees, directors or consultants pursuant to any
employee compensation, option, restricted stock or similar plan arrangement or
agreement, (iii) a registration statement filed exclusively in connection with
an exchange offer or an offering of securities solely to the securityholders of
the Company, or (iv) any registration statement filed exclusively in connection
with a rights offering) (a "Piggyback Registration"), it shall give written
notice to all Purchasers of its intention to do so no later than twenty (20)
days prior to the proposed date of filing such registration statement. Such
rights are referred to hereinafter as "Piggyback Registration Rights." Upon the
written request of any such Purchaser made within ten (10) days after receipt of
any such notice (which request shall specify the Registrable Securities (as
defined below) intended to be disposed of by such Purchaser), the Company shall,
subject to Section 5.2(e) hereof, include in the registration statement the
Registrable Securities which the Company has been so requested to register by
the Purchasers thereof (such requesting Purchasers hereinafter the "Holders")
and the Company shall keep such registration statement (the "Registration
Statement") in effect and maintain compliance with each Federal and state law or
regulation for the period necessary for such Holder to effect the proposed sale
or other disposition (but in no event for a period greater than 120 days).
"Registrable Securities" shall mean any shares of Common Stock issued to a
Purchaser and/or its permitted designees or transferees on conversion of Shares
and/or other securities that may be or are issued by the Company upon conversion
of any Shares, including those which may thereafter be issued by the Company in
respect of any such securities by means of any stock splits, stock dividends,
recapitalizations, reclassifications or the like, and as adjusted pursuant to
the Certificate; provided, however, that as to any particular securities
-------- -------
contained in Registrable Securities such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such Registration
Statement; or (ii) they shall have been sold to the public pursuant to Rule
9
<PAGE>
144 (or any successor provision) under the Securities Act or are eligible for
sale to the public under Rule 144(k) (or any successor provision) under the
Securities Act.
(b) Withdrawal of Piggyback Registration by Company. If, at any
-----------------------------------------------
time after giving written notice of its intention to register any securities in
a Piggyback Registration but prior to he effective date of the related
Registration Statement, the Company shall determine for any reason not to
register such securities, the Company shall give notice of such determination to
each Holder and, thereupon, shall be relieved of its obligations to register any
Registrable Securities in connection with such Piggyback Registration. All best
efforts obligations of the Company pursuant to Section 5.4 hereof shall cease if
the Company determines to terminate prior to such effective date any
registration where Registrable Securities are being registered pursuant to this
Section 5.2
(c) Piggyback Registration of Underwritten Public Offerings. If a
-------------------------------------------------------
Piggyback Registration involves an offering by or through underwriters, then (i)
all Holders requesting to have their Registrable Securities included in the
Company's Registration Statement must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling stockholders and (ii) any Holder requesting to have his or its
Registrable Securities included in such Registration Statement may elect in
writing, not later than three (3) Business Days prior to the filing of the
Registration Statement filed in connection with such registration, not to have
his or its Registrable Securities so included in connection with such
registration.
(d) Payment of Registration Expenses for Piggyback Registration.
-----------------------------------------------------------
The Company shall pay all expenses (including any and all fees, disbursements
and expenses incurred in connection with any registration or action incident to
performance of or compliance by the Company with Section 5 hereof, including,
without limitation, (i) all SEC, national securities exchange and NASD
registration and filing fees, all listing fees and all transfer agent fees; (ii)
all fees and expenses of complying with state securities or blue sky laws
(including the fees and disbursements of counsel of the underwriters in
connection with blue sky qualifications of the Registrable Securities); (iii)
all printing, mailing, messenger and delivery expenses; (iv) all fees and
disbursements of counsel for the Company and of its accountants, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, and all reasonable fees and
disbursements of one counsel for the holders of Shares; and (v) any
disbursements of underwriters of their counsel in connection with the
preparation of a customary blue sky and legal investment survey, but excluding
underwriting discounts and commissions, brokerage fees and transfer taxes, if
any (all of such expenses
10
<PAGE>
hereinafter referred to as "Registration Expenses") in connection with each
registration of Registrable Securities requested pursuant to a Piggyback
Registration Right contained in this Section 5.2.
(e) Priority in Piggyback Registration. If a Piggyback Registration
----------------------------------
involves an offering by or through underwriters, the Company, except as
otherwise provided herein, shall not be required to include Registrable
Securities therein if and to the extent the underwriter managing the offering
reasonably believes in good faith and advises the Company that such inclusion
would materially adversely affect such offering; provided that any reduction or
elimination of the Registrable Securities shall occur (i) first, to the extent
necessary to permit the sale of all of the shares of Common Stock to be sold by
the Company or the other stockholders with demand registration rights requesting
a registration and (ii) second, pro rata among persons having piggyback
registration rights, based on the number of shares requested to be registered by
all such stockholders.
If the Piggyback Registration does not involve an offering by or
through underwriters, the Company shall not be required to include Registrable
Securities therein if and to the extent the Company reasonably believes such
inclusion would adversely affect such offering; provided, however, that a
-------- -------
reduction or elimination in the Registrable Securities included in such
registration shall be applied according to the priorities set forth above for an
underwritten offering.
5.3 Demand Registration.
-------------------
(a) Request for Registration. If, at any time after a period of six
------------------------
months from the Closing Date, one or more Holders holding in the aggregate at
least 10% of the outstanding Registrable Securities request that the Company
file a registration statement under the Securities Act with respect to the
Registrable Securities held by such Holder or Holders (a "Demand Registration"),
as soon as practicable thereafter the Company shall use its best efforts to file
a registration statement with respect to all Registrable Securities that it has
been so requested to include and obtain the effectiveness thereof, and to take
all other action necessary under any Federal or state law or regulation to
permit the Registrable Securities that are specified in the notices of the
Holders or holders thereof to be sold or otherwise disposed of, and the Company
shall maintain such compliance with each such Federal and state law and
regulation for the period necessary for such Holders or Holders to effect the
proposed sale or other disposition; provided, however, the Company shall be
-------- -------
entitled to defer such registration for a period of (i) up to ninety (90) days
if and to the extent that its Board of Directors shall determine that such
registration would interfere with a pending corporate transaction or (ii) up to
120 days following the effective date of any
11
<PAGE>
registration statement previously filed by the Company under the Securities Act,
other than registration statement of the type described in clauses (i) through
(iv) of Section 5.2(a) hereof. The Company shall promptly give written notice to
the Holders of any Registrable Securities who or that have not made a request to
the Company pursuant to the provisions of this Section 5.3(a) of its intention
to effect any required registration or qualification, and shall use its best
efforts to effect as expeditiously as possible such registration or
qualification of all such other Registrable Securities that are then held, the
Holder or Holders of which have requested such registration or qualification,
within fifteen (15) days after such notice has been given by the Company, as
provided in the preceding sentence. The Company shall be required to effect a
registration or qualification pursuant to this Section 5.3(a) in the aggregate
on three occasions only.
(b) Payment of Expenses for Demand Registration. The Company shall
-------------------------------------------
pay all Registration Expenses in connection with the Demand Registration.
(c) Selection of Underwriters. If any Demand Registration is
-------------------------
requested to be in the form of an underwritten offering, the managing
underwriter shall be selected by the Company and reasonably acceptable to the
holders of a majority of the Registrable Securities included in such Demand
Registration, which acceptance will not be unreasonably withheld, and the
independent pricer required under the rules of the National Association of
Securities Dealers, Inc. ("NASD") (if any) shall be so selected and obtained by
the Company. All fees and expenses (other than expenses otherwise required to be
paid) of any managing underwriter, any co-manager or any independent underwriter
or other independent pricer required under the rules of the NASD shall be paid
for by such underwriters or by the Holders whose Registrable Securities are
being registered.
(d) Procedure for Requesting Demand Registration. Any request for a
--------------------------------------------
Demand Registration shall specify the aggregate number of the Registrable
Securities proposed to be sold and the intended method of disposition. Within
ten (10) days after receipt of such a request, the Company will given written
notice of such registration request to all Holders, and, subject to the
limitations of Section 5.3(b) hereof, the Company will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within five (5) business days
after the date on which such notice is given. Each such request will also
specify the aggregate number of Registrable Securities to be registered and the
intended method of disposition thereof.
5.4 Registration Procedures. If and whenever the Company is required to
-----------------------
use its best efforts to take action pursuant to any Federal or state law or
regulation to permit the
12
<PAGE>
sale or other disposition of any Registrable Securities in order to effect or
cause the registration of any Registrable Securities under the Securities Act as
provided in this Article 5, the Company shall, as expeditiously as practicable:
(a) prepare and file with the SEC, as soon as practicable within
ninety (90) days after the end of the period within which requests for
registration may be given to the Company under Section 5.3 hereof (but subject
to the provision for deferral contained in Section 5.3(a) hereof) a Registration
Statement or Registration Statements relating to the registration on any
appropriate form under the Securities Act, which form shall be selected by the
Company and available for the sale of the Registrable Securities in accordance
with the intended method or methods of distribution thereof, subject to Section
5.2(e) hereof, and use its best efforts to cause such Registration Statements to
become effective; provided that before filing a Registration Statement or
prospectus or any amendment or supplements thereto, including documents
incorporated by reference after the initial filing of any Registration
Statement, the Company will furnish to the Holders of the Registrable Securities
covered by such Registration Statement and the underwriters, if any, copies of
all such documents provided to be filed, which documents will be subject to the
review of such Holders and underwriters;
(b) prepare and file with the SEC such amendments and post-
effective amendments to a Registration Statement as may be necessary to keep
such Registration Statement effective for a reasonable period not to exceed the
shorter of the completion of distribution of the registered securities and 120
days; cause the related prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement or
supplement to such prospectus;
(c) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such person)
confirm such advice in writing, (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (m) below
13
<PAGE>
cease to be true and correct in all material respects; (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and (vi) of the
happening of any event that makes any statement of a material fact made in the
Registration Statement, the prospectus or any document incorporated therein by
reference untrue or which requires the making of any changes in the Registration
Statement or prospectus so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriters,
immediately incorporate in a prospectus supplement or post-effective amendment
such information as the underwriters believe (on advice of counsel) should be
included therein as required by applicable law relating to the sale of
Registrable Securities, including, without limitation, information with respect
to the purchase price being paid for the Registrable Securities by such
underwriters and with respect to any other terms of the underwritten (or "best-
efforts" underwritten) offering; and make all required filing of such prospectus
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(f) furnish to each selling Holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder of Registrable Securities and
the underwriters, if any, without charge, as many copies of the prospectus or
prospectuses (including each preliminary prospectus) any amendment or supplement
thereto as such persons may reasonably request; the Company consents to the use
of such prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by such
prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
cooperate with the selling Holders of Registrable Securities, the underwriters,
if any, and their respective
14
<PAGE>
counsel in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United states as any selling Holder or underwriter
reasonably requests in writing, keep each such registration or qualification
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; provided that the Company will
not be required to qualify to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject the Company or any
of its subsidiaries to general service of process in any jurisdiction where it
is not at the time so subject;
(i) cooperate with the selling Holders of Registrable Securities
and the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(j) use its best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities;
(k) upon the occurrence of any event contemplated in Section
5.4(c)(vi) above, prepare a supplement or post-effective amendment to the
applicable Registration Statement or related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchaser of the Registrable Securities being
sold thereunder, such prospectus will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(l) with respect to each issue or class of Registrable Securities,
use its best efforts to cause all Registrable Securities covered by the
Registration Statements to be listed on each securities exchange, if any, on
which securities of the same class issued by the Company are then listed if
requested by the holders of a majority of such issue or class Registrable
Securities;
(m) enter into such agreements (including an underwriting
agreement) and take all such other action consistent
15
<PAGE>
with its obligations hereunder and reasonably required in connection therewith
in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, if the registration is in connection with an
underwritten offering, (i) make such representations and warranties to the
underwriters, in such form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions in form, scope and substance shall be
reasonably satisfactory to the underwriters) addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings; (iii) obtain "cold comfort" letters and updates thereof from the
Company's accountants addressed to the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with underwritten offerings; (iv)
set forth in full in any underwriting agreement entered into the indemnification
provisions and procedures of Section 5.5 hereof with respect to all parties to
be indemnified pursuant to said Section; and (v) deliver such documents and
certificates as may be reasonably requested by the underwriters to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the company; the
above shall be done at each closing under such underwriting or similar agreement
or as to the extent required hereunder;
(n) make available for inspection upon reasonable notice by one or
more representatives of the Holders of Registrable Securities being sold, any
underwriter participating in any disposition pursuant to such registration, and
any attorney or accountant retained by such Holders or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representatives at reasonable
times, in connection with such; and
(o) otherwise use its best efforts to comply with all applicable
Federal and state regulations; and take such other action as may be reasonably
necessary to or advisable to enable each such Holder and each such underwriter
to consummate the sale or disposition in such jurisdiction or jurisdictions in
which any such Holder or underwriter shall have requested that the Registrable
Securities be sold.
Except as otherwise provided in this Agreement, the Company shall have
sole control in connection with the preparation, filing, withdrawal, amendment
or supplementing of each Registration Statement, the selection of underwriters,
and the distribution of any preliminary prospectus included in the
16
<PAGE>
Registration Statement, and may include within the coverage thereof additional
shares of Common Stock or other securities for its own account or the account of
one or more of its other security holders.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the company such
information regarding the distribution of such securities and such other
information as may otherwise be required by the Securities Act to be included in
such Registration Statement.
5.5 Indemnification
---------------
(a) Indemnification by Company. In connection with each
--------------------------
Registration Statement relating to disposition of Registrable Securities, the
Company shall indemnify and hold harmless each Holder and each underwriter of
Registrable Securities and each person, if any, who controls such Holder or
underwriter (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) (collectively, "Holder Indemnified Parties") against any
and all losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that such indemnity shall not inure
-------- -------
to the benefit of any Holder or underwriter (or any person controlling such
Holder or underwriter within the meaning of Section 1 of the Securities Act or
Section 20 of the Exchange Act) on account of any losses, claims, damages or
liabilities arising from the sale of the Registrable Securities if such untrue
statement or omission or alleged untrue statement or omission was made in such
Registration Statement, prospectus or preliminary prospectus, or such amendment
or supplement, in reliance upon and in conformity with information furnished in
writing to the Company by the Holder or underwriter specifically for use
therein. This indemnity agreement shall be in addition to any liability which
the Company may otherwise have.
(b) Indemnification by Holder. In connection with the Registration
-------------------------
Statement, each Holder shall indemnify, to the same extent as the
indemnification provided by the Company in Section 5.5(a) hereof, the Company,
its directors and each
17
<PAGE>
officer who signs the Registration Statement and each person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act) but only insofar as such losses, claims, damages and
liabilities arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in the Registration
Statement, the prospectus or preliminary prospectus or any amendment thereof or
supplement thereto, in reliance upon and in conformity with information
furnished in writing by such Holder to the Company specifically for use therein.
In no event shall the liability of any selling Holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above, with respect to information so furnished in writing by
such persons specifically for inclusion in any prospectus, registration
statement or preliminary prospectus or any amendment thereof or supplement
thereto.
(c) Conduct of Indemnifications Procedure. Any party that proposes
-------------------------------------
to assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against any indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 5.5(a) or 5.5(b) hereof shall be
available to any party who shall fail to give notice as provided in this Section
5.5(c) to the extent the party to whom notice was not given was prejudiced by
the failure to give such notice, but the omission to so notify such indemnifying
party of any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution otherwise
than under this Section. In case any such action, suit or proceeding shall be
brought against any indemnified party, it shall notify the indemnifying party of
the commencement thereof and the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnifying
party of such indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by
such indemnified party
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has been authorized in writing by the indemnifying parties, (ii) the indemnified
party shall have reasonably concluded that there may be a conflict of interest
between the indemnifying parties and the indemnified party in the conduct or the
defense of such action (in which case the indemnified parties shall not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnified parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. The indemnifying party shall not without
the prior written consent of each indemnified party affected thereby, effect any
settlement of any pending or threatened proceeding in which such indemnified
partly has sought indemnity hereunder, unless such settlement involvement an
unconditional release of such Indemnified Party from all liability arising out
of such action, claim, litigation or proceeding.
(d) Contribution. If the indemnification provided for in this
------------
Section 5.5 is unavailable to any party entitled to indemnification pursuant to
Section 5.5(a) or 5.5(b) hereof, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
judgments, liabilities and expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and each
Holder Indemnified Party on the other from the offering of the Registrable
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and each Holder Indemnified Party on the
other in connection with statements or omissions which resulted in such losses,
claims, damages, judgments, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and each Holder Indemnified Party on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by each Holder
Indemnified Party on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The company and each Holder Indemnified Party agree that it
would not be just and equitable if contributions pursuant to Section 5.5(d)
hereof were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in Section 5.5(d) hereof. The amount paid or payable by an Indemnified Party
as a result of the losses, claims, damages,
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liabilities, or expenses referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. No person
found guilty of fraudulent misrepresentation (within the meaning of section
11(f) of the Act) shall be entitled to contribution from any person who was
found guilty of such fraudulent representation.
5.6 Reservation of Shares. The Company hereby agrees that at all
---------------------
times there shall be reserved for issuance and delivery upon conversion of any
of the Shares such number of Conversion Shares as may be issuable upon
conversion of the Shares. All Conversion Shares shall be duly authorized, and
when issued upon such conversion, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, interests, charges and other
encumbrances or restrictions on sale and free and clear of all preemptive
rights.
SECTION 6
MISCELLANEOUS
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6.1 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without giving effect to
conflicts of law.
6.2 Survival. The representations and warranties made in Sections 3 and
--------
4 herein shall survive the Closing Date for a period of one (1) year.
6.3 Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of, and be binding upon, the parties hereto and their respective successors,
permitted assigns, heirs, executors and administrators. No Purchaser may assign
its obligations hereunder to be performed on or before the Closing.
6.4 Entire Agreement; Amendment. This Agreement and the documents
---------------------------
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Company and the Purchasers;
provided, however, that Purchasers holding a majority of the Shares together
- -------- -------
with the Company may by written instrument amend the provisions of Sections 5 or
6 (other than this Section 6.4) hereof.
6.5 Notices; Etc. All notices and other communications required or
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permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, or by express
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courier, or delivered either by hand or by messenger, addressed (a) if to a
Purchaser, as indicated on the signature page hereof, or at such other address
as such Purchaser shall have furnished to the Company in writing, or (b) if to
the Company, at 4380 Boulder Highway, Las Vegas, Nevada 89121, Attn: Chief
Financial Officer, or at such other address as the Company shall have furnished
to the Purchasers in writing.
6.6 Rights: Separability. Unless otherwise expressly provided herein,
--------------------
the rights of the Purchasers hereunder are several rights, not rights jointly
held with any of the other Purchasers. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.7 Information Confidential. Each Purchaser acknowledges that the
------------------------
information received by it pursuant to this Agreement may be confidential and is
for the Purchaser's use only. It will not use such confidential information in
violation of the Exchange Act or otherwise, or reproduce, disclose or
disseminate such information to any other person (other than its employees or
agents having a need to know the contents of such information, and its attorneys
and financial advisors), except in connection with the exercise of rights under
this Agreement, unless the Company has made such information available to the
public generally or such Purchaser is required to disclose such information by a
governmental body.
6.8 Expenses. The Company and the Purchasers shall bear their own
--------
expenses and legal fees incurred on their behalf with respect to this Agreement
and the transactions contemplated hereby.
6.9 Titles and Gender. The titles of the Sections and Subsections of
-----------------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. Whenever used herein, the singular
member includes the plural, the plural includes the singular, and the use of
either gender shall include both genders.
6.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be a original, but all of which together shall
constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective proper and duly authorized officers
as of the day and year first above written.
ALLIANCE GAMING CORPORATION
By:
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PURCHASER:
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By:
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Address:
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No. of Shares:
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