As filed with the Securities and Exchange Commission on March 24,
1995
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
_______________
ALLIANCE GAMING CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 88-0104066
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
4380 Boulder Highway
Las Vegas, Nevada 89121
(702) 435-4200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
offices)
John W. Alderfer
Chief Financial Officer
4380 Boulder Highway
Las Vegas, Nevada 89121
(702) 435-4200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
Howard A. Sobel, Esq.
Kramer, Levin, Naftalis,
Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10022
(212) 715-9100
_______________
Approximate date of commencement of proposed sale to the
public: From time to time after this Registration Statement
becomes effective.
If the only securities being registered on this form are
being offered pursuant to dividend 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.
_______________
CALCULATION OF REGISTRATION FEE
Title of Proposed
Each Class of Proposed Maximum
Securities Amount Maximum Aggregate Amount of
to be to be Offering Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
Common Stock,
par value
$0.10 per
share 250,000 $5.8125 $1,453,125 $502.00
(1) Estimated solely for the purpose of calculating the
registration fee. The proposed Maximum Aggregate
Offering Price was calculated pursuant to Rule 457(c)
under the Securities Act of 1933, as amended, based on
the average of the high and low price per share of
Common Stock reported on the Nasdaq National Market on
March 23, 1995.
<PAGE>
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 Securities and
Exchange Commission, acting pursuant to said section 8(a), may
determine.
<PAGE>
Subject to Completion,
PROSPECTUS Preliminary Prospectus dated March 24, 1995
250,000 Shares
ALLIANCE GAMING CORPORATION
COMMON STOCK
(Par Value $.10 per Share)
_______________
All of the shares of Common Stock, par value $.10 per share
(the "Common Stock"), of Alliance Gaming Corporation (formerly
United Gaming, Inc.), a Nevada corporation (the "Company"),
offered hereby (the "Shares") are being offered by Steve
Greathouse, the Chairman of the Board, President and Chief
Executive Officer of the Company (the "Selling Stockholder"), as
described more fully herein. The Company will not receive any of
the proceeds from the sale of the Shares offered hereby. See
"Use of Proceeds," "Selling Stockholder" and "Plan of
Distribution."
The Common Stock is traded on the Nasdaq National Market
under the symbol "ALLY." On March 23, 1995, the last reported
sale price of the Common Stock on the Nasdaq National Market was
$57/8 per share.
_______________
Prospective investors should carefully consider the factors
set forth under the caption "Risk Factors."
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION 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 NOR THE NEVADA STATE
GAMING CONTROL BOARD HAS PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS OR THE INVESTMENT MERITS
OF THE SECURITIES OFFERED HEREBY
_______________
This Prospectus relates to the public offering of up to
250,000 shares of Common Stock, which will be issued as of the
date of effectiveness of the Registration Statement of which this
Prospectus is a part. The Selling Stockholder, directly, through
agents designated from time to time, or through dealers or
underwriters also to be designated, may sell the Shares from time
to time on terms to be determined at the time of sale. To the
<PAGE>
extent required, the specific shares to be sold, public offering
price, the names of any such agent, dealer or underwriter and any
applicable commission or discount with respect to a particular
offer will be set forth in an accompanying Prospectus Supplement.
See "Selling Stockholder" and "Plan of Distribution."
The date of this Prospectus is March , 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, files
reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference
facilities of the Commission located at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at the New York
Regional Office of the Commission, Seven World Trade Center,
Suite 1300, New York, New York 10048, and at the Chicago Regional
Office of the Commission, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60621. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such reports and other information may also be inspected at the
offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration
Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the registration of the Common Stock offered hereby.
This Prospectus omits certain of the information contained in the
Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the
Registration Statement and related exhibits for further
information with respect to the Company and the Common Stock.
Statements contained herein concerning the provisions of any
contract or document are not necessarily complete and, in each
instance, where a copy of such document has been filed as an
exhibit to the Registration Statement or otherwise has been filed
with the Commission, reference is made to the copy of the
applicable document so filed. Each such statement is qualified
in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the
Company with the Commission, are incorporated herein by
reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1994 and Amendment No. 1 and No. 2
thereto on Form 10-K/A; (ii) the Company's Current Reports on
Form 8-K dated June 25, 1993, September 21, 1993, July 14, 1994
and August 11, 1994 and its Information Statement dated June 24,
1994; (iii) the Company's Quarterly Reports on Form 10-Q for the
fiscal quarters ended September 30, 1994 and December 31, 1994;
(iv) the Company's Proxy Statement dated November 15, 1994
related to the Annual Meeting of Stockholders held on December
<PAGE>
15, 1994; and (v) the Company's Form 10-C dated December 20,
1994. In addition, each document filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to
termination of the offering of the Shares shall be deemed to be
incorporated by reference into this Prospectus and to be a part
hereof from the date such document is filed with the Commission.
Any statement contained herein, or any document, all or a
portion of which is incorporated or deemed to be incorporated by
reference herein, shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to
the extent that a statement contained herein, or in any
subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute
part of the Registration Statement or this Prospectus. All
information appearing in this Prospectus is qualified in its
entirety by the information and financial statements (including
notes thereto) appearing in the documents incorporated herein by
reference. This Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. These
documents (other than exhibits thereto) are available without
charge, upon written or oral request by any person to whom this
Prospectus has been delivered, from John W. Alderfer, Chief
Financial Officer, Alliance Gaming Corporation, 4380 Boulder
Highway, Las Vegas, Nevada 89121, telephone number (702)
435-4200.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the
more detailed information and financial statements appearing
elsewhere, or incorporated by reference, in this Prospectus.
The Company
Alliance Gaming Corporation (formerly United Gaming, Inc.),
a Nevada corporation (the "Company"), is a diversified gaming
company which (at February 28, 1995) operated approximately 6,777
gaming devices (primarily video poker devices and slot machines).
The Company is the largest private gaming device route operator
in Nevada and one of the largest in the United States. In its
Nevada gaming device route operations, the Company selects, owns,
installs, manages and services gaming devices (approximately
5,223 as of February 28, 1995) in third-party owned local
establishments such as taverns, restaurants, supermarkets, drug
stores and convenience stores (approximately 540 locations as of
February 28, 1995). Also in Nevada, the Company owns and operates
one full service casino and leases and operates one small casino,
one casino-hotel and three taverns which collectively have
approximately 790 gaming devices and 9 table games. As described
in the Company's Form 10-K for the fiscal year ended June 30,
1994, the Company is presently in the process of closing or
selling certain of these operations and has recently entered into
certain agreements in respect thereof. During the fiscal year
ended June 30, 1992, the Company expanded its gaming device route
operations to Louisiana, where it is the operator of
approximately 764 video poker devices at the only racetrack and
associated off-track betting parlors ("OTBs") in the greater Long
Bow Orleans area. In August 1994, the Company completed its
acquisition of a 45% interest in the Rainbow Casino - Vicksburg
Partnership, L.P. ("RCVP"). RCVP owns a dockside casino in
Vicksburg, Mississippi which contains approximately 573 gaming
devices and 28 table games. Additionally, the Company manages
the casino. The Company also designs and manufactures gaming
devices which are used only in its Nevada operations.
The Company's strategy is to build its gaming business in
existing markets, such as Nevada and Louisiana, as well as in
emerging markets nationally. The Company intends to use its
diversified gaming expertise, strengthened executive management,
business partners and investment community relationships to
pursue new casino operations as well as dockside, riverboat and
Native American operations and the design, supply and management
of gaming devices.
In August 1994, the Company hired Mr. Steve Greathouse as
President and Chief Executive Officer. Mr. Greathouse, who has
held various positions in the gaming industry since 1974, most
recently served as the President of the Harrah's Casino Hotels
<PAGE>
Division of The Promus Companies, Inc. Mr. Greathouse was
appointed to the Company's Board of Directors in October 1994 and
was appointed Chairman of the Board in March 1995.
With regard to certain additional developments concerning
the Company, see "Recent Developments."
The Company was incorporated in Nevada in 1968 and is a
holding company which conducts its gaming operations through
directly and indirectly owned subsidiaries. On December 15, 1994,
stockholders approved the change of the Company's name from
"United Gaming, Inc." to "Alliance Gaming Corporation." All of
the Company's significant subsidiaries are, directly or
indirectly, wholly-owned, except for (i) Kansas Financial
Partners, LLC and Kansas Gaming Partners, LLC, each a Kansas
limited liability company (each 50% owned); (ii) Native American
Investments, Inc., a Delaware corporation (90% owned); (iii)
RCVP, a Mississippi limited partnership (45% limited partnership
interest, as well as certain non-voting special limited
partnership interests); and (iv) Video Services, Inc. (49% owned,
but the Company controls 100% of the voting rights and 71% of the
rights to receive dividends). See "Recent Developments." The
term "Company" as used herein refers to Alliance Gaming
Corporation and its subsidiaries unless the context otherwise
requires. The Company's principal executive offices are located
at 4380 Boulder Highway, Las Vegas, Nevada 89121; telephone (702)
435-4200.
The Offering
Common Stock Offered by the
Selling Stockholder. . . . . . . . . . . . . . . . 250,000 shares
Shares of the Common Stock Outstanding. . . 11,629,650 shares (1)
Nasdaq National Market Common Stock Symbol. . . . . . . . . .ALLY
_________
(1) Includes the 250,000 shares of Common Stock to be issued in
this Offering. Excludes up to (i) 8,500,000 shares of
Common Stock issuable upon conversion of the Company's
Convertible Debentures (as defined herein); (ii) 5,000,000
shares of Common Stock issuable under the Company's 1991
Stock Option Plan and the Company's 1984 Stock Option Plan,
of which options covering 2,852,334 shares were outstanding
and options covering 978,100 shares were exercisable as of
March 22, 1995; (iii) 2,000,000 shares of Common Stock
issuable upon exercise of warrants held by Alfred H. Wilms,
a principal stockholder and a director of the Company; (iv)
2,750,000 shares of Common Stock issuable upon exercise of
the Investment Warrants (as defined herein) held by
Kirkland-Ft. Worth Investments Partners, L.P. ("Kirkland");
<PAGE>
(v) 1,250,000 shares of Common Stock issuable upon exercise
of the Incentive Warrants (as defined below) held by Gaming
Systems Advisors, L.P. ("GSA") and up to 2,500,000 shares of
Common Stock issuable upon exercise of additional Incentive
Warrants held by GSA; (vi) 780,000 shares of Common Stock
issuable upon exercise of the Institutional Warrants (as
defined herein) held by the initial purchasers of the
Company's Convertible Debentures and up to 250,000 shares of
Common Stock potentially issuable upon exercise of
additional Institutional Warrants which may be issued in the
future; (vii) up to 168,889 shares of Common Stock issuable
in connection with the acquisition of Native American
Investments, Inc.; (viii) 250,000 shares of Common Stock
issuable upon exercise of warrants (having economic terms
identical to the Incentive Warrants) of Mr. Greathouse;
and (ix) 250,000 shares of Common Stock issuable upon
exercise of warrants (having economic terms identical to the
Incentive Warrants) held by Dr. Craig Fields, Vice Chairman
of the Board of Directors of the Company. See "Risk Factors
Effect of Outstanding Warrants, Options, and Convertible
Debentures," "Recent Developments" and Executive
Compensation incorporated by reference to this Prospectus.
RISK FACTORS
In addition to the other information contained or
incorporated by reference in this Prospectus, prospective
investors should consider carefully the following factors before
purchasing any of the Shares offered hereby.
Operating History - Recent Losses
The Company incurred net losses of approximately $4,680,000,
$3,650,000 and $13,128,000 during the fiscal years ended June 30,
1992, 1993 and 1994, respectively, and approximately $5,017,000
during the six months ended December 31, 1994. There can be no
assurance that the Company will operate profitably in the future.
See Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Consolidated Financial
Statements and notes thereto, incorporated by reference in this
Prospectus.
Uncertainty of Change in Operating Strategy
The Company is actively seeking to expand its operations
into jurisdictions that have recently legalized or are
anticipated to legalize gaming in the future. Certain recently
implemented changes in management and business strategy are
intended to improve the results of operations from the Company's
existing business. The prospects for substantial improvement in
operating performance and profitability, however, will be
dependent, in large part, on the development of new gaming
<PAGE>
opportunities. There can be no assurance that the Company will
be able successfully to identify or acquire such new gaming
opportunities or operate profitably in the future. The Company's
ability to expand to additional jurisdictions will be dependent
upon a number of factors, including negotiating acceptable
terms; securing required state and local licenses, permits and
approvals, which in some jurisdictions are limited in number for
gaming operations; securing adequate financing on acceptable
terms; identifying and securing suitable locations, which
management expects will be limited; and addressing political
factors. Most of these factors are beyond the control of
the Company. The Company has experienced and expects to continue
to experience significant competition in its search for suitable
new gaming opportunities. In addition, in order to develop new
growth opportunities, the Company will be required to add, train,
and retain additional management and other personnel. As a
result, there can be no assurance that the Company will be able
to expand to additional locations or, if any such expansion
occurs, that it will be successful. In addition, the Company's
existing and future operations are dependent in large part on
certain key members of management, including its Chairman of the
Board, President and Chief Executive Officer, Steve Greathouse,
who joined the Company in August 1994, and other members of
management who have joined the Company during the past 12 months,
including Dr. Fields and Messrs. Kirschbaum and DiCesare. The
ability to retain qualified management personnel could have a
material adverse effect on the Company's results of operations.
Leverage and Debt Service; Need for Additional Financing
As of December 31, 1994, the Company had outstanding
long-term debt of approximately $88.1 million and a long-term
debt to equity ratio of 6.33 to 1. The Company has substantial
annual fixed debt service requirements attributable to the $85
million aggregate principal amount of 7 1/2% Convertible
Subordinated Debentures due 2003 of the Company issued in
September 1993 (the "Convertible Debentures") and other operating
expenses. During the fiscal years ended June 30, 1992, 1993 and
1994 and the six months ended December 31, 1994, earnings before
income taxes, interest on indebtedness, imputed interest on
capital lease obligations and that portion of rent expense
estimated to represent interest were inadequate to cover fixed
charges, which include interest on indebtedness and imputed
interest on capital lease obligations, by $4,680,000, $3,650,000,
$12,887,000 and $4,727,000, respectively. See Management's
Discussion and Analysis of Financial Condition and Results of
Operations and the Consolidated Financial Statements and notes
thereto, incorporated by reference in this Prospectus.
At December 31, 1994, the Company had cash and cash
equivalents and securities available for sale of approximately
$40.8 million, of which approximately $7 million is generally
<PAGE>
required to fund ongoing gaming operations in the ordinary
course. It remains a part of the Company's business strategy to
seek complementary gaming opportunities, including opportunities
in less mature markets to which its route and casino experience
may be applicable. As part of its business activities, the
Company is regularly involved in the identification, investiga-
tion and development of such opportunities. Accordingly, in
order to support such activities, the Company may in the future
elect to issue additional debt or equity securities if and when
appropriate opportunities become available on terms satisfactory
to it. Due to the Company's operating results over the past
three fiscal years and leverage and coverage ratios, there can be
no assurance that additional funds would be available, or
available on terms satisfactory to the Company. Any such
additional financing would result in dilution to existing equity
holders. See Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital
Resources, incorporated by reference in this Prospectus.
Competition
The gaming industry is highly competitive and many of the
Company's competitors have more experience, are larger and have
significantly greater financial and other resources than the
Company. The recent and continuing expansion of legalized casino
gaming and gaming devices to new jurisdictions throughout the
United States has created dynamic industry and market conditions
that will affect and likely intensify the competitive conditions
faced by the Company, particularly in jurisdictions in which
gaming licenses are limited. The Company believes that
competition for existing and future gaming, gaming systems and
related opportunities, sites and acquisitions will continue to be
intense. There can be no assurance that the Company will be
successful in maintaining or expanding its existing gaming
activities or in expanding its activities into or making
investments in other projects, areas or jurisdictions.
Maturity of Nevada Gaming Device Route Business
The competition for obtaining and renewing gaming device
routes in Nevada is high and continues to intensify. Such
competition has, over time, reduced the Company's profit margins
for such operations. In addition, such competition has required
the Company to provide substantial financial incentives and incur
financial obligations to retain or obtain certain gaming device
route locations. Such incentives include long-term lease
commitments, guarantees of leases in favor of owners of local
establishments, substantial advance deposits, payments of lease
rentals in advance and loans for building and tenant-improvement
costs. Historically, substantial losses have been incurred in
connection with such transactions. Notwithstanding the change in
its business strategy to one emphasizing profitability rather
<PAGE>
than market share, to some extent the future success of the
Company's gaming device route business will continue to be
dependent on its ability and willingness to provide such
financial inducements. Although the Company has historically
generated sufficient new gaming device route contracts to offset
the loss of old gaming device route contracts, as a result of
increased competition, the increased sophistication and
bargaining power of customers and other factors, there can be no
assurance that the Company will be able to obtain new gaming
device route contracts or renew or extend its current space
leases or revenue-sharing arrangements upon their expiration or
termination, or that, if renewed or extended, the terms will be
as favorable to the Company. See "-- Uncertainty of Change in
Operating Strategy."
Gaming Taxes
The Company believes that the prospect of significant tax
revenue is one of the primary reasons that many jurisdictions
have legalized various forms of gaming. As a result, gaming
operators are typically subject to significant taxes and fees in
addition to corporate income taxes, and such taxes and fees are
subject to increase at any time. Any material increase in these
taxes or fees, which could occur prospectively or retroactively,
would adversely affect the Company. The Company pays and expects
to continue to pay substantial taxes and fees in Nevada,
Louisiana and Mississippi and expects to pay substantial taxes
and fees in any other jurisdiction in which it conducts gaming
operations.
Control by Principal Stockholders
Alfred H. Wilms, the Company's principal stockholder, holds
approximately 43.3% of the Company's outstanding shares of Common
Stock (47.0% assuming the exercise of warrants held by Mr. Wilms
and the conversion of the Company's outstanding shares of Non-
Voting Junior Convertible Special Stock (the "Convertible Special
Stock")) as of March 22, 1995. Pursuant to the terms of the
Stockholders Agreement, dated as of September 21, 1993, as
amended, among the Company, Mr. Wilms, Kirkland, Kirkland
Investment Corporation ("KIC") and GSA (the "Stockholders
Agreement"), Mr. Wilms is obligated to vote his shares of Common
Stock in favor of the four designees of KIC to the Company's
seven-member Board of Directors. On July 14, 1994, as
contemplated by the Stockholders Agreement, the Company's Board
of Directors was reconfigured to consist of four persons
designated by KIC (initially Messrs. Kirschbaum, DiCesare,
Gottlieb and Robbins) and three persons designated by Mr. Wilms
(initially Messrs. Wilms and Sosin and Dr. Scheinman). On
October 20, 1994, the Stockholders Agreement was amended to
reconfigure the Board of Directors to consist of four persons
designated by KIC (initially,Messrs. Kirschbaum, DiCesare,
<PAGE>
Gottlieb and Robbins), one person designated by Mr. Wilms (Mr.
Wilms) and two new directors designated by a majority of the
Board of Directors. Accordingly, on October 20, 1994, Mr.
Greathouse and Dr. Fields were appointed to the Board to fill
vacancies created upon the resignation of Dr. Scheinman and Mr.
Sosin. As amended, the Stockholders Agreement also provides that
Mr. Wilms may designate two persons (initially Dr. Scheinman and
Mr. Sosin) (the "Advisors") who shall be observers of, and
advisors to, the Board of Directors and who will be entitled to
attend all of the Company's Board of Directors' meetings and
receive all information furnished to members of the Board. Mr.
Wilms and/or at least one Advisor will be entitled to attend all
meetings of the committees of the Company and its subsidiaries.
See "Recent Developments -- Recent Transactions -- Certain
Additional Appointments."
The October 20, 1994 amendment to the Stockholders Agreement
also provides that the voting agreements between Mr. Wilms on the
one hand, and KIC on the other hand, will terminate upon the
earlier of (i) September 21, 1997 and (ii) the date that both (a)
KIC and its permitted transferees and (b) Mr. Wilms and his
permitted transferees each own in the aggregate Company
securities representing less than 5% of the Company's fully
diluted Common Stock (with outstanding Convertible Special Stock
and underlying warrant shares counted as Common Stock); provided,
that, in the event the average closing price of a share of Common
Stock (as traded on the Nasdaq National Market System or other
principal exchange or trading market on which the Common Stock is
then traded or listed) for any thirty consecutive trading day
period during the 15-month period prior to the earlier of the
dates described in clauses (i) and (ii) above shall not have
equaled or exceeded $15 (as appropriately adjusted to give effect
to stock splits, recapitalizations, mergers, reorganizations or
similar transactions) then, in no event as soon as practicable
after September 21, 1997, KIC and its permitted transferees will
use their best efforts to cause the Board of Directors to be in a
ratio of four designees of KIC to three designees of Mr. Wilms
(rather than as described above). The Stockholders Agreement, as
amended, and related transactions are more fully described in the
Company's Forms 8-K dated June 25, 1993, September 21, 1993 and
July 14, 1994 and in its Information Statement dated June 29,
1994.
Importance of Louisiana Contract; Competition in Louisiana
Market
Since the Company currently operates in Louisiana under a
single 10-year operating agreement with Fairgrounds Corporation,
Jefferson Downs Corporation and Finish Line Management Corp.
expiring in May 2002, subject to extension under certain
circumstances, the loss of such agreement for any reason would
have a material adverse effect on the Company. The Company has
no reason to believe that the agreement will be prematurely
<PAGE>
terminated. From time to time, legislators and other politicians
recommend or introduce measures to limit or repeal the Louisiana
Video Draw Poker Devices Control Law and the Rules and
Regulations promulgated thereunder by the Department of Public
Safety and Corrections, Office of State Police, Gaming
Enforcement Section, Video Gaming Division (the "Louisiana Act").
See "-- Regulatory Matters -- Louisiana." Although the Company
has no reason to believe such measures will be successful, the
repeal of such Act would have a material adverse effect on the
Company.
In addition, there can also be no assurance that the
Company's Louisiana operations will not be materially adversely
affected by other competitive gaming activities in and around the
New Orleans area. Among other things, the Company is facing
significantly increased competition from docked riverboats which,
under Louisiana law, are not limited in the number of gaming
devices (including slot machines) offered or the jackpots paid.
In contrast, the Company's OTB parlors are only permitted to
offer video poker devices and are subject to limits on jackpots.
Docked riverboats have had a significant adverse impact on those
Company OTB parlors located near such riverboats, and this trend
is expected to continue. See "-- Regulatory Matters --
Louisiana."
Uncertainty of the Emerging Video Gaming Market
Certain jurisdictions in the United States and Canada have
approved various forms of video gaming operations. The Company
cannot predict if or when additional jurisdictions, if any, will
approve video gaming, which approval is not within the control of
the Company. In addition, there is no assurance that if
additional jurisdictions approve video gaming that such approvals
will result in business opportunities for private operators such
as the Company or that the Company will be successful in
exploiting such opportunities.
Regulatory Matters -- Nevada
The ownership and operation of casino gaming facilities, the
operation of gaming device routes and the manufacture and
distribution of gaming devices in Nevada are subject to the
Nevada Gaming Control Act (the "Nevada Act") and to licensing and
regulatory control by the Nevada State Gaming Control Board (the
"Nevada Board"), the Nevada Gaming Commission (the "Nevada
Commission") and various local, city and county regulatory
agencies (collectively, the "Nevada Gaming Authorities").
The Nevada Gaming Authorities may investigate any individual
who has a material relationship to, or material involvement with,
a publicly traded corporation registered with the Nevada
Commission (a "Registered Corporation"), such as the Company, or
which holds a license in order to determine whether such
<PAGE>
individual is suitable or should be licensed as a business
associate of a Registered Corporation or a gaming licensee.
No person may become a controlling stockholder of the
Company without the prior approval of the Nevada Commission,
although any beneficial owner of the Company's voting
securities, regardless of the number of shares owned,
may be required to file applications, be investigated,
and have his suitability determined if the Nevada
Commission has reason to believe that such ownership may be
inconsistent with the declared policies of the State of
Nevada.
The Nevada Act provides that persons who acquire beneficial
ownership of more than 5% of the voting securities of a
Registered Corporation must report the acquisition to the Nevada
Commission. The Nevada Act also requires that beneficial owners
of more than 10% of the voting securities of a Registered
Corporation must apply to the Nevada Commission for a finding of
suitability within 30 days after the Nevada Board Chairman mails
the written notice requiring such filing. An "institutional
investor" (as such term is defined in the Nevada Commission's
regulations) which acquires beneficial ownership of more than
10%, but not more than 15%, of the Company's voting securities
may apply to the Nevada Commission for a waiver of such finding
of suitability if such institutional investor holds the voting
securities for investment purposes only (as determined in
accordance with the provisions of the Nevada Commission's
regulations). The Nevada Commission may, in its discretion,
apply the rules and regulations of the Commission in determining
whether, and to what extent, the beneficial owner of equity
securities, such as the Common Stock or Convertible Debentures,
is the beneficial owner of voting securities for purposes of
determining whether a holder must apply for a finding of
suitability. Further, the Nevada Commission may, in its
discretion, require the holder of any security of a Registered
Corporation, such as the Company, including the Common Stock or
Convertible Debentures, to file applications, be investigated and
be found suitable to own a security of the Registered
Corporation. The applicant for licensing or a finding of
suitability must pay all the costs of the investigation.
Historically, the costs incurred by the Company in connection
with investigations have varied widely depending upon, among
other things, the complexity of the financial history of the
person being investigated, the position of the proposed licensee
and the nature and scope of the investigatory activity which the
regulatory authority elects to undertake. The Company incurred
investigative costs aggregating approximately $255,000 in the
fiscal year ended June 30, 1994 (of which approximately $135,000
related to the licensing of KIC in respect of the investment by
Kirkland in the Company and the change in composition of the
Company's Board of Directors contemplated by the Stockholders
Agreement). Amounts incurred by other proposed investors in
<PAGE>
gaming companies, such as the Company, could be materially
greater or less than such amount. Additionally, the Company
maintains with the Nevada Board a revolving fund of $15,000
to cover minor investigations incurred in the ordinary course of
conducting its Nevada gaming operations. Theoretically, there is
no limit to the amount of investigative fees which can be charged
to the Company or a proposed investor by gaming authorities.
The Company will continue to incur licensing and investigative
costs in the future.
The Nevada Act prohibits the Company from making a public
offering of its securities without the approval of the Nevada
Commission if the securities or any part of the proceeds of the
offering is to be used to finance the construction, acquisition
or operation of gaming facilities in Nevada, or to retire or
extend obligations incurred for one or more such purposes.
On February 23, 1995, the Nevada Commission granted the Company
prior approval to make public equity offerings for a period of
one year, limited to the registration and sale of common stock,
from time to time, upon the exercise of certain designated
securities and warrants subject to certain conditions ("Shelf
Approval"). However, the Shelf Approval may be rescinded for good
cause without prior notice upon the issuance of an interlocutory
stop order by the Chairman of the Nevada Board and must be
reviewed annually. The Shelf Approval, or any approval of a
public offering, if granted, does not constitute a finding,
recommendation or approval by the Nevada Commission or by the
Nevada Board as to the accuracy or adequacy of the prospectus
or the investment merits of the securities offered. Any
representation to the contrary is unlawful. The Nevada
Commission has also imposed a requirement on the Company
that it must receive the prior administrative approval of the
Nevada Board Chairman for any offer for the sale of an equity
security in a private transaction.
The loss or restriction of the Company's gaming licenses in
Nevada would have a material adverse effect on its business and
could require the Company to cease gaming operations in Nevada.
Mandatory Disposition Pursuant to Gaming Laws
If a holder or a beneficial holder of Convertible Debentures
or Common Stock is required by the Nevada Commission to be found
suitable, the holder shall apply for a finding of suitability
within 30 days after being ordered to do so by the Nevada Board
Chairman or the Nevada Commission's request. The applicant for a
finding of suitability must pay all costs of the
investigation for such finding of suitability. If a holder or a
beneficial owner is required to be found suitable and is not
found suitable by the Nevada Commission, (i) the holder shall,
upon request of the Company, dispose of his Convertible
Debentures and Common Stock within 30 days or within that time
<PAGE>
prescribed by the Nevada Commission, whichever is earlier, or
(ii) the Company may, at its option, redeem the holder's
Convertible Debentures in cash at the lesser of (w) the principal
amount thereof or (x) the price at which the Convertible
Debentures were acquired by the holder, together with, in either
case, accrued interest to the date of the finding of
unsuitability by the Nevada Commission and repurchase
the holder's Common Stock at the lesser of (y) the market price
thereof on the date of the finding of unsuitability or (z) the
price at which such Common Stock was acquired by the holder.
Such mandatory disposition could be required at a time when
market conditions are not favorable to the affected holders or at
a time or at costs which are otherwise unfavorable to such
holders.
Regulatory Matters -- Louisiana
The manufacture, distribution, servicing and operation of
video draw poker gaming devices ("Devices") in Louisiana is
subject to the Louisiana Act. Licensing and regulatory control
is provided by the Video Gaming Division of the Gaming
Enforcement Section of the Office of State Police within the
Department of Public Safety and Corrections (the "Division").
The laws and regulations of the Division are based upon a primary
consideration of maintaining the health, welfare and safety of
the general public and upon a policy which is concerned with
protecting the video gaming industry from elements of organized
crime, illegal gambling activities and other harmful elements,
and protection of the public from illegal and unscrupulous gaming
to ensure the fair play of video gaming Devices.
Two of the Company's indirect operating subsidiaries
involved with its gaming operations in Louisiana have each been
granted a license as a Device owner by the Division. Another
indirect subsidiary of the Company has been granted a license as
a distributor of Devices by the Division. These gaming
subsidiaries are licensees under the terms of the Louisiana Act
(collectively, the "Louisiana Licensees" and individually, a
"Louisiana Licensee"). The licenses held by the Louisiana
Licensees expire at midnight on June 30 of each year and must be
renewed annually through payment of certain fees. All license
fees must be paid on or before May 15 in each year licenses are
renewable.
The Division may deny, impose a condition or fine, suspend
or revoke any license, renewal or application for a license for
violation of any rules and regulations of the Division or any
violations of the Louisiana Act. Fines for violations of gaming
laws or regulations may be levied against the licensees and the
persons involved. In addition, the licensees could be subject to
separate fines for each violation of the gaming laws. The
Louisiana Act states that a license issued by the Division is a
<PAGE>
pure and absolute privilege. The issuance, condition, denial,
suspension or revocation of a license is at the discretion of the
Division in accordance with the provisions of the Louisiana Act.
A license is not property or a protected interest under the
constitution of either the United States or the State of
Louisiana. Suspension or revocation of any of the licenses of the
Louisiana Licensees could have a material adverse effect on the
business of the Company.
The Division has the authority to conduct overt and covert
investigations of any person, entity, applicant or participant
involved directly or indirectly in the video gaming industry in
Louisiana. This investigation may extend beyond the information
provided in the formal application, including information with
regard to the licensee's immediate family and relatives and their
affiliations with certain groups, organizations, corporations,
firms or other business entities. The investigation may also
extend to every person who has or controls more than a 5%
ownership, income or profit interest in an entity which applies
for a license in accordance with the Louisiana Act, or who is a
key employee or who has the ability to exercise significant
influence over the licensee. All persons or entities
investigated must meet all suitability requirements and
qualifications for a licensee. The Division may deny an
application for licensing for any cause which it may deem
reasonable. The applicant for licensing must pay
a filing fee which also covers the cost of investigation.
In order for a corporation to be licensed by the Division,
it must be demonstrated that a majority of the stock of the
corporation is owned by persons who have been domiciled in
Louisiana for a period of at least two years prior to the date of
the application.
Devices must meet strict specifications established by the
Division. The number of Devices is limited depending on the type
of location at which the Devices are located. Fees payable to
the Division include an application fee, which is non-refundable,
an annual fee, based upon a percentage of the net revenues from
the operation of each Device, a Device owner's fee, a Device
operations fee, a license establishment fee and a Device owner's
franchise fee. All fees are payable in either quarterly or
annual installments depending on the fee being paid.
The loss or restriction of the Company's gaming licenses in
Louisiana would have a material adverse effect on its business
and could require the Company to cease gaming operations in
Louisiana. Any expansion of the Company's Louisiana gaming
operations (other than the addition of video poker devices in
existing locations) could subject the Company to additional
regulation in Louisiana.
<PAGE>
Regulatory Matters -- Mississippi
The ownership and operation of gaming devices in Mississippi
is subject to extensive state and local laws and regulations,
including the Mississippi Gaming Control Act (the "Mississippi
Act") and the regulations (the "Mississippi Regulations")
promulgated thereunder. The Mississippi Gaming Commission (the
"Mississippi Commission") oversees licensing and regulatory
compliance. Gaming in Mississippi can be legally conducted only
on vessels of a certain minimum size in navigable waters of the
Mississippi River or in waters of the State of Mississippi which
Lie adjacent and to the south (principally in the Gulf of Mexico)
of the counties of Hancock, Harrison and Jackson, and only in
counties in Mississippi in which the registered voters have not
voted to prohibit such activities. The underlying policy of the
Mississippi Act is to ensure that gaming operations in
Mississippi are conducted (i) honestly and competitively, (ii)
free of criminal and corruptive influences and (iii) in a manner
which protects the rights of the creditors of gaming operations.
The Mississippi Act requires that a person (including any
corporation or other entity) must be licensed to conduct gaming
activities in Mississippi. A license will be issued only for a
specified location which has been approved as a gaming site by
the Mississippi Commission. The Company, through its interest in
RCVP, obtained a license on June 30, 1994 that is valid for two
years. The Company must apply for renewal of such license, which
renewal cannot be assured. The Mississippi Act also requires
that certain officers or directors of a gaming licensee, any
person that owns more than 10% of a licensee, or any other
person who exercises a significant influence over the licensee,
either directly or indirectly, must be found suitable by the
Mississippi Commission. In addition, any employee of the licensee
which is directly involved in gaming, must obtain a work permit
from the Mississippi Commission. The Mississippi Commission will
not issue a license or make a finding of suitability unless it is
satisfied, only after an extensive investigation paid for by the
applicant, that the persons associated with the gaming licensee
or applicant for a license are of good character, honesty and
integrity, with no relevant or material criminal record. In
addition, the Mississippi Commission will not issue a license
unless it is satisfied that the licensee is adequately financed
or has a reasonable plan to finance its proposed operations from
acceptable sources, and that persons associated with the
applicant have sufficient business probity, competence and
experience to engage in the proposed gaming enterprise. The
Mississippi Commission has the power to deny, limit, condition,
revoke and suspend any license, finding of suitability or
registration, or fine any person, as it deems reasonable and in
the public interest, subject to any opportunity for a hearing.
<PAGE>
Under the Mississippi Regulations, a gaming licensee cannot
be publicly held, although an affiliated corporation, such as the
Company, may be publicly held so long as the Company registers
with and obtains the approval of the Mississippi Commission. In
addition, approval of any subsequent public offerings of the
securities of the Company must be obtained from the Mississippi
Commission if any part of the proceeds from that offering are
intended to be used to pay for or reduce debt used to pay for the
construction, acquisition or operation of any gaming facility in
Mississippi.
Under the Mississippi Regulations, a person is prohibited
from acquiring control of a licensee without the prior approval
of the Mississippi Commission. Any person who, directly or
indirectly, or in association with others, acquires beneficial
ownership of more than 5% of any licensee must notify the
Mississippi Commission of this acquisition. The Mississippi
Commission may require that a person be found suitable if that
person holds less than a 10% ownership position and must require
that a person be found suitable if that person owns more than 10%
of a licensee. Furthermore, regardless of the amount of
ownership, any person who acquires beneficial ownership may be
required to be found suitable if the Mississippi Commission has
reason to believe that the acquisition of such ownership would be
inconsistent with the declared policy of Mississippi. Any person
who is required to be found suitable must apply for a finding of
suitability from the Mississippi Commission within 30 days after
being requested to do so, and must deposit with the State Tax
Commission a sum of money which is adequate to pay the
anticipated investigatory costs associated with such finding.
Any person who is found not to be suitable by the Mississippi
Commission shall not be permitted to have any direct or indirect
ownership in the licensee. Any person who is required to apply
for a finding of suitability and fails to do so, or who fails
to dispose of his or her interest in the licensee if found
unsuitable, is guilty of a misdemeanor. If a finding of
suitability with respect to any person is not applied for where
required, or if it is denied or revoked by the Mississippi
Commission, the licensee is not permitted to pay such person for
services rendered, or to employ or enter into any contract with
such person.
The laws and regulations permitting and governing
Mississippi casino gaming were adopted during 1990 and 1991, and
the first casinos opened in August 1992. Consequently, the
interpretation and application of Mississippi law and regulations
may evolve over time, and any such changes may have an adverse
effect on Mississippi licensees. The loss or restriction of the
Company's gaming license in Mississippi could have a material
adverse effect on its business and could require the Company to
cease gaming operations in Mississippi.
<PAGE>
Regulatory Matters -- Additional Jurisdictions
The Company, in the ordinary course of its business,
routinely considers business opportunities to expand its gaming
operations into additional jurisdictions. Any such expansion
would subject the Company and, possibly, some or all of its
officers, directors, employees and securityholders, to regulatory
requirements in addition to those with which such parties are
presently obligated to comply. As the Company seeks to establish
gaming operations in additional jurisdictions, the Company
expects to continue to incur significant development costs,
including costs related to efforts to obtain gaming licenses and
other regulatory approvals in such jurisdictions.
Shares Eligible for Future Sale
The sale of a substantial number of shares of Common Stock
in the public market could materially adversely affect the market
price of Common Stock. Persons holding a substantial number of
shares of Common Stock and options and warrants to purchase
additional shares of Common Stock have rights, subject to certain
conditions, to require the Company to file registration
statements covering the shares they own or may acquire through
option or warrant exercises. These persons and others also have
rights, subject to certain limitations, to "piggyback"
registrations if the Company files a registration statement. The
Company filed a registration statement in December 1994 which
covered 600,000 shares of Common Stock of certain selling
stockholders in connection with the acquisition of the Company's
interest in the RCVP. See "-- Effect of Outstanding Warrants,
Options and Convertible Debentures."
Effect of Outstanding Warrants, Options and Convertible
Debentures
Giving effect to the warrants issued to Kirkland, GSA and
certain other investors in connection with the September 1993
investment by Kirkland (the "Kirkland Investment"), the warrants
issued to Mr. Wilms in connection with the completion of the
funding of a $6,500,000 loan to Video Services, Inc., a Louisiana
corporation ("VSI") (the outstanding principal balance of which
as of March 22, 1995 was approximately $4,365,000), and a
majority controlled subsidiary of the Company (the "Wilms
Warrants"), the warrants issued to the initial purchasers in
connection with the Convertible Debenture offering and the
warrants issued to Mr. Greathouse and Dr. Fields in connection
with their employment contracts, the Company has outstanding
warrants covering 7,280,000 shares of Common Stock. Of such
warrants, warrants which cover 2,750,000 shares of Common Stock
were issued to Kirkland and certain other investors on September
21, 1993 in connection with the Kirkland Investment (the
"Investment Warrants"), warrants which cover 1,250,000 shares of
<PAGE>
Common Stock were issued to GSA in connection with advisory
services (the "Incentive Warrants"), warrants which cover 780,000
shares of Common Stock were issued to the initial purchasers in
connection with the Convertible Debenture offering on September
21, 1993 (the "Initial Institutional Warrants") and warrants
which cover 250,000 shares of Common Stock were issued to each of
Mr. Greathouse and Dr. Fields in connection with their employment
contracts (all of which are vested in the case of Mr. Greathouse
and of which, as discussed below in the case of Dr. Fields,
62,500 are vested immediately and the remainder of which will
vest ratably in annual increments during the term of his three
year engagement agreement). Certain additional warrants (the
exact number of which has not been finally determined) are
issuable to GSA in respect of certain consummated transactions
and may be issuable in the future in the event that certain other
transactions are consummated. As of March 22, 1995, options
covering 2,852,334 shares of Common Stock had been granted and
were outstanding pursuant to the Company's 1984 Stock Option Plan
and the Company's 1991 Stock Option Plan, of which options
covering approximately 978,100 of such shares of Common Stock
were currently exercisable at prices ranging from $1.375 to $8.75
per share. See Note 5 of Notes to the Company's June 30, 1994
Consolidated Financial Statements, incorporated by reference in
this Prospectus. The Wilms Warrants, which cover 2,000,000
shares of Common Stock, are exercisable at a price of $2.50 per
share. The Investment Warrants and the Incentive Warrants will
be exercisable, at a price of $1.50 per share, only in the event
that the price of the Common Stock has traded for 15 consecutive
trading days at an average price equal to, or in excess of,
$11.00, $13.00 and $15.00 as to one-third of such Investment
Warrants and Investment Warrants, respectively. The Stockholders
Agreement provides that the Wilms Warrants and the Common Stock
owned by Mr. Wilms (together, the "Wilms Securities"), on the one
hand, and the Investment Warrants and Incentive Warrants, on the
other hand, entitle the holders thereof to four demand
registrations and unlimited "piggyback" registrations for
offerings by the Company for its own account, subject to
customary exceptions, at the Company's expense. Of such demand
registrations, holders of the Wilms Securities (i) may elect to
participate in two registrations demanded by holders of the
Investment Warrants and the Incentive Warrants and (ii) have
certain priority rights relative to such other holders with
respect to "piggyback" registration rights. In connection with
the employment of Mr. Greathouse by the Company, Mr. Greathouse
received 250,000 shares of restricted Common Stock, 250,000
warrants on economic terms identical to the Incentive Warrants
and 250,000 options exercisable at $5.75 per share under the 1991
Stock Option Plan. One-third of the warrants are exercisable and
the options vest and become exercisable on each anniversary of
August 15, 1994 (the initial date of Mr. Greathouse's
employment). In connection with his engagement agreement to acts
Vice Chairman of the Board of Directors, Dr. Fields received
<PAGE>
250,000 warrants on economic terms identical to the Incentive
Warrants and 250,000 options exercisable at $5.75 per share under
the 1991 Stock Option Plan. One-fourth of such warrants and
options vested and became exercisable on September 1, 1994 and
one-fourth will vest and become exercisable on each of August 31,
1995, 1996 and 1997. See Executive Compensation incorporated by
reference in this Prospectus.
On September 21, 1993, after receipt of the administrative
approval of the Chairman of the Nevada Board, the Company issued
the Initial Institutional Warrants to the initial purchasers in
connection with the Convertible Debenture offering and may issue
warrants which cover up to an additional 250,000 shares of Common
Stock (the "Additional Institutional Warrants," and together with
the Initial Institutional Warrants, the "Institutional Warrants")
to one of such initial purchasers in connection with future
advisory services to be provided to the Company by such initial
purchaser. The Initial Institutional Warrants vested upon the
issuance thereof and became exercisable on September 21, 1994.
The Additional Institutional Warrants, if issued, will vest and
become exercisable only after the Common Stock has traded at an
average price equal to, or in excess of, $13.00 for 15
consecutive trading days after the issuance thereof, subject to
adjustment under certain circumstances. All of the
Institutional Warrants will remain exercisable, to the extent
vested, for five years after first becoming exercisable, but in
no event longer than six years from the date of issuance. The
exercise price of the Institutional Warrants is $8.25 per share.
The holders of the Institutional Warrants are entitled to
one demand registration and unlimited "piggyback" registrations,
whether or not the proposed registration is for the Company's
account, subject to customary exceptions, at the Company's
expense.
The Company has outstanding $85 million principal amount of
the Convertible Debentures which are convertible at any time, or
from time to time, into Common Stock at a conversion price of $10
per share (i.e., for an aggregate of up to 8,500,000 shares of
Common Stock), subject to adjustment under certain circumstances.
Holders of the options, warrants and Convertible Debentures
described above are likely to exercise or convert them at times
when the Company could raise additional capital by issuing Common
Stock for greater consideration than could be obtained by the
exercise of the options and warrants or conversion of the
Convertible Debentures, thereby affecting the terms on which the
Company could obtain additional capital or its ability to do so.
See Management's Discussion and Analysis of Financial Condition
and Results of Operations, incorporated by reference in this
Prospectus.
<PAGE>
RECENT DEVELOPMENTS
Recent Transactions
Kirkland Transaction. On June 25, 1993, the Company and Mr.
Alfred H. Wilms, the principal stockholder and a director of the
Company (and then Chairman of the Board and Chief Executive
Officer), entered into agreements with Kirkland, KIC (the general
partner of Kirkland) and GSA, an affiliate of Kirkland. Pursuant
to these agreements, (i) KIC and certain of its affiliates
agreed, among other things, not to make investments in certain
gaming opportunities without first having offered them to the
Company on the same terms and conditions; and (ii) GSA agreed to
assist the Company in identifying potential investors, in
negotiating and obtaining financing, and in identifying
opportunities for acquisitions, dispositions, joint ventures and
other similar transactions. These agreements contained
provisions involving stock purchase rights involving the issuance
of shares of the Company's Convertible Special Stock and certain
warrants. In addition, these agreements provided that if at
least $20 million in capital infusion to the Company was
achieved, KIC, in its individual capacity, would acquire the
right, subject to the receipt of required regulatory and other
approvals, to nominate a majority of the seven members of the
Company's Board of Directors with the other members nominated by
Mr. Wilms. On September 21, 1993, the Company completed the
private placement of $85 million aggregate principal amount of
the Convertible Debentures. Concurrent with the closing of this
issuance, Kirkland invested $5,000,000 in the Company in exchange
for 1,333,333 shares of the Company's Convertible Special Stock
and Investment Warrants to acquire 2,750,000 shares of Common
Stock, and KIC delivered notice to the Company of its intent to
exercise it right to control the Company's Board of Directors.
On June 23, 1994, KIC received the required regulatory approvals
from the Nevada Commission and in July 1994 exercised its right
to take control of the Board of Directors. For a further
discussion concerning the changes in the Board of Directors as a
result of these transactions and certain subsequent changes to
the Board of Directors, see "Risk Factors -- Control by Principal
Stockholders."
Certain Additional Appointments. In August 1994, the
Company hired Mr. Steve Greathouse as President and Chief
Executive Officer. Mr. Greathouse, who has held various
positions in the gaming industry since 1974, most recently served
as the President of the Harrah's Casino Hotels Division of The
Promus Companies, Inc. Mr. Greathouse was appointed to the
Company's Board of Directors in October 1994. Consistent with the
continuing development and implementation of the business
strategy of the Company, Mr. Greathouse succeeded Mr. Kirschbaum
as Chairman of the Board in March 1995. Mr. Kirschbaum will
<PAGE>
continue to serve as a Director and remains actively involved in
the business of the Company, particularly in its development
efforts. In conjunction with such actions, Dr. Fields has
replaced Mr. Greathouse as Chairman of the Executive Committee of
the Board.
In March 1995, David Johnson joined the Company as
Secretary, Senior Vice President and General Counsel. He also
serves as Secretary of each of the subsidiaries of the Company.
Mr. Johnson has approximately 17 years of experience in legal and
regulatory matters. He was formerly a senior partner in the
Nevada law firm, Schreck, Jones, Bernhard, Woloson & Godfrey,
Chartered. In addition, Alfred H. Wilms was elected a director
of each of the subsidiaries of the Company.
Native American Investments, Inc. On March 7, 1994, the
Company acquired 90% of the common stock and all of the shares of
a newly established class of preferred stock of USA Gaming of
Native America, Inc., which subsequently changed its name to
Native American Investments, Inc. ("NAI"). As consideration for
the common stock and as its initial contribution to NAI, the
Company agreed, through a subsidiary and subject to certain
conditions, to issue 224,444 shares of Common Stock of the
Company and pay $960,000 in cash. As of March 22, 1995, 168,333
of such shares had been issued and delivered. The Company also
agreed, upon adoption of a non-qualified stock bonus plan by NAI,
to fund such plan with up to 168,889 shares of the Company's
common stock at the discretion of the Company. NAI has contracts
to develop Class II and Class III gaming opportunities with
several Indian tribes in California and Oklahoma.
All of the contracts presently held by NAI are in the
development and non-operational stages and are subject to
negotiations resulting in satisfactory compacts with the states
in which the projects are located and approval of the contracts
by the National Indian Gaming Commission (the "NIGC").
Therefore, the Company has realized no revenues through its
ownership of NAI. Subsequent to initial approval, gaming
contracts entered into with Indian tribes are subject to periodic
review by the NIGC as well as the gaming commission of the tribe
party to the contract. Such reviews typically occur annually,
but may be undertaken at any time. Each of NAI's gaming
contracts, if initially approved, will be subject to such
periodic review and, therefore, will be subject to revocation by
gaming authorities from time to time prior to the date such
contract expires by its terms. Such contracts may additionally
be restricted by, or obligations may be imposed under, the
tribal-state compact under which such contract is operated.
Moreover, any contract with an Indian tribe relating to land is
subject to approval by the Bureau of Indian Affairs of the United
States Department of Interior.
<PAGE>
All Indian tribes, including the Indian tribes with which
NAI has contracted, possess sovereign immunity from contract
suit unless a tribe unequivocally expresses a clear waiver from
such immunity. The gaming contracts NAI has entered into with
Indian tribes provide for such waivers.
The Governor of California has to date refused to negotiate
a compact (other than compacts for pari-mutuel wagering on horse
racing) covering Indian gaming in California and is currently
engaged in related litigation with certain Indian tribes. In
Rumsey Indian Rancheria vs. Wilson the Ninth Circuit Court of
Appeals ruled in November 1994 that, with the possible exception
of "slot machines" in the form of video lottery terminals, the
State of California has no obligation to negotiate with the
plaintiff tribes on the gaming activities at issue in that
litigation. That court remanded the case back to the trial court
to make certain determinations in respect of "slot machines"
under California law. Given the requirement that the trial court
make additional determinations and the likely prospect of further
appeals in this case, the Company cannot predict if or when the
State of California will enter into any compact covering Class
III gaming in California.
There can be no assurance as to the successful completion or
operation of any part of the NAI's contracts.
Greater Dubuque Riverboat Entertainment Company. On June 2,
1994, the Company, as plaintiff (along with its subsidiary,
United Gaming of Iowa, Inc.) filed a lawsuit in the United States
District Court, Northern District of Iowa, alleging, among other
things, a breach of fiduciary duty by defendants Greater Dubuque
Riverboat Entertainment Company, L.C., an Iowa limited liability
company organized to operate a riverboat casino in Dubuque, Iowa
("GDREC"), and Joseph P. Zwack. The defendants in that lawsuit
filed a counterclaim alleging, among other things, that the
Company tortiously interfered with the business of GDREC and
sought unspecified compensatory and exemplary damages and costs
of the action. In December 1994, the parities to such litigation
entered into a Settlement Agreement pursuant to which such
litigation will be dismissed with prejudice without any payment
by any party thereto. Also in connection with such settlement,
GDREC permitted the Company to conduct a due diligence
investigation of its business. At the conclusion of such
investigation, the Company had the option, in its sole and
unfettered discretion, either to elect to proceed with an offer
to acquire GDREC as set forth in the settlement or,
alternatively, not to proceed and cease all efforts
to acquire, in any manner, any interest in GDREC, certain related
parties or the Dubuque, Iowa riverboat license. On December 16,
1994, the Company advised GDREC that it elected not to proceed
with such offer.
<PAGE>
Camptown Greyhound Racing, Inc. In September 1994, Kansas
Gaming Partners, LLC and Kansas Financial Partners, LLC (the
"Kansas Partners"), each Kansas limited liability companies,
whose members include wholly owned subsidiaries of the Company
and Casino Magic Corporation, announced that the Kansas Racing
Commission approved a financing proposal submitted by Camptown
Greyhound Racing, Inc. ("Camptown") that would facilitate the
completion of construction of a greyhound racing facility located
near Frontenac, Kansas. In November 1994, Camptown closed a
$3,205,000 loan commitment which is guaranteed by the Kansas
Partners. Additionally, Camptown has entered into an option
agreement with the Kansas Partners whereby the Kansas Partners
have been granted the exclusive right to operate casino-type
gaming at Camptown's facility if and when such gaming is enacted
in Kansas. In the event casino gaming is enacted in Kansas, it
is presently contemplated that the Kansas Partners will construct
a casino, hotel, recreational vehicle park, theme park and
restaurants on the 320-acre site. A referendum to amend the
Kansas constitution to permit casino gaming exclusively at three
existing pari-mutuel facilities (including Camptown) could be put
to the voters of Kansas following action by the Kansas State
Legislature which could come as early as Spring 1995. There can
be no assurance as to the successful completion or operation of
any part of this project.
Pine Hills Joint Venture. In July 1994, the Company
executed a joint venture agreement with Lone Star Casino
Corporation (the "Joint Venture") to develop the Pine Hills
Casino resort site ("Pine Hills") in Bay St. Louis, Mississippi.
Pine Hills is anticipated to consist of 60,000 square feet of
gaming, restaurant and back office facilities, and an 18-hole
golf course and clubhouse. The Company has agreed, upon certain
conditions described below, to make initial advances of up to
$1,900,000 to defray certain preliminary expenses to be incurred
in connection with the project in accordance with an approved
budget. The Company's obligation to make the initial advance
payments was contingent upon, among other things, obtaining the
landlord's consent to Lone Star's assignment of the ground lease
for the project site to the Joint Venture and related financing,
the completion of definitive joint venture documents and the
satisfactory completion of the Company's due diligence. In
addition, the Company agreed, upon certain conditions, to make an
equity investment of up to $15,000,000 (including the initial
$1,900,000 contribution) for a 50% equity interest in the Joint
Venture, plus the separate right to receive management fees and
royalties aggregating 10% of the Joint Venture's gross revenues,
as defined. The Company's obligation to make its $15,000,000
equity investment was contingent upon, among other things,
obtaining the landlord's consent to Lone Star's assignment of the
ground lease for the project site to the Joint Venture and
related financing, obtaining satisfactory debt financing for the
project, the receipt of all necessary governmental approvals, the
<PAGE>
satisfactory resolution of certain litigation relating to the
project site currently pending in the Mississippi Supreme Court,
as well as the satisfactory completion of the Company's due
diligence. Certain of the conditions to the funding of the
$1,900,000 and $15,000,000 amounts referenced above have not been
met and the Company has advised Lone Star that, accordingly, the
Company has no further obligations in respect thereof. The
Company is continuing discussions with the parties to determine
whether an agreement can be reached regarding an acceptable
transaction. There can be no assurance as to whether such an
agreement can be reached or, if so, as to the future successful
completion or operation of this project.
Annual Meeting of Stockholders. At the Company's 1994
Annual Meeting of Stockholders, (i) all present directors were
re-elected as nominated and (ii) stockholders approved a proposal
to change the Company's name from "United Gaming, Inc." to
"Alliance Gaming Corporation."
<PAGE>
USE OF PROCEEDS
All of the shares of Common Stock offered hereby are being
offered by the Selling Stockholder. The Company will not receive
any of the proceeds from the sale of the shares.
SELLING STOCKHOLDER
As of the effective date of the Registration Statement of
which this Prospectus is a part, the Selling Stockholder will own
250,000 shares of Common Stock (2.1% of the Common Stock
outstanding). Assuming that the Selling Stockholder sells all
250,000 Shares offered hereby, he will no longer own beneficially
any shares of Common Stock.
The Selling Stockholder was engaged by the Company to act as
President and Chief Executive Officer in August 1994. He was
appointed to the Company's Board of Directors in October 1994 and
was appointed Chairman of the Board in March 1995.
In connection with the issuance of the 250,000 shares of
Common Stock to the Selling Stockholder, the Company agreed to
file and cause to be declared effective the Registration
Statement of which this Prospectus is a part. The Company has
also agreed to maintain the Registration Statement effective
until the latter to occur of (i) the first anniversary of the
date the Selling Stockholder ceases to be an employee of the
Company and (ii) the date on which the Selling Stockholder may
sell, freely and without restriction, his shares unregistered in
compliance with federal securities laws.
DESCRIPTION OF CAPITAL STOCK
The Company's Articles of Incorporation, as amended,
authorize the issuance of 185,000,000 shares of capital stock, of
which 175,000,000 shares are designated as Common Stock, par
value $0.10 per share, and 10,000,000 shares are designated as
Special Stock, par value $0.10 per share. As of March 22, 1995,
11,629,650 shares of Common Stock were issued and outstanding and
1,333,333 shares of Convertible Special Stock were issued and
outstanding.
Common Stock
Holders of Common Stock are entitled to cast one vote per
share on all matters on which the Company's stockholders are
entitled to vote. The number of votes required to take any
action by the Company's stockholders are as provided in the
Nevada General Corporation law. Holders of Common Stock are not
entitled to cumulate their votes. Holders of Common Stock are
<PAGE>
entitled to receive dividends when and as declared by the
Company's Board of Directors out of funds legally available for
the payment thereof. The Company's Articles of Incorporation
provide that once the subscription price or par value of any
share of Common Stock has been paid in, such share shall be
non-assessable and shall not be subject to assessment to pay the
debts of the Company. Subject to any preferential rights which
may be granted to holders of certain series of Special Stock,
holders of Common Stock are entitled to share ratably in all
assets of the Company that are legally available for distribution
to its stockholders in the event of its liquidation or
dissolution. Holders of Common Stock have no preemptive rights
nor are there any subscription, redemption or conversion
privileges associated with the Common Stock.
Special Stock
The Articles of Incorporation provide that the Special Stock
may be issued from time to time upon such terms and conditions
and for such consideration as may be provided by the Company's
Board of Directors. The Special Stock may be issued in one or
more series, each series having such designations, rights,
preferences and privileges as may be determined by the Board of
Directors of the Company at the time of issuance. The Board has
designated an initial series of Special Stock as "Non-Voting
Junior Convertible Special Stock," which series consists of
1,333,333 shares of Convertible Special Stock. All of the shares
of Convertible Stock were issued to Kirkland on September 21,
1993. The Company's Articles of Incorporation provide that the
shares of Convertible Special Stock are intended to have the same
rights as the Common Stock and, subject to regulatory compliance,
are convertible on a share-for-share basis into shares of Common
Stock, except that the shares of Convertible Special Stock have
no voting rights and have a $.01 per share liquidation
preference.
Provisions Applicable to Certain Holders
The Nevada General Corporation Law contains a control share
provision with respect to the acquisition of more than 20% of the
voting shares of a Nevada corporation. The Company, however, has
opted out of this provision in accordance with Nevada law by
adopting an amendment to its By-laws to such effect.
PLAN OF DISTRIBUTION
Any or all of the shares of Common Stock may be offered and
sold to purchasers directly by or on behalf of the Selling
Stockholder from time to time in the over-the-counter market, in
privately negotiated transactions, in the Nasdaq National Market
or otherwise at prices prevailing in such market or exchange or
<PAGE>
as may be negotiated at the time of sale. The shares of Common
Stock may also be publicly offered through agents, underwriters
or dealers. In such event, the Selling Stockholder may enter into
agreements with respect to any such offering. Such underwriters,
dealers or agents may receive compensation in the form of
underwriting discounts, concessions or commissions from the
Selling Stockholder and/or the purchasers of shares of Common
Stock. The Selling Stockholder and any such underwriters,
dealers or agents that participate in the distribution of shares
of Common Stock may be deemed to be underwriters, and any profit
on the sale of the shares of Common Stock by them and any
discounts, commissions or concessions received by them may be
deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriters, dealers and agents may
engage in transactions with, and perform services for, the
Company and affiliates of the Company. At the time a particular
offer of Shares is made, to the extent required, a Prospectus
Supplement will be distributed which will set forth the aggregate
number of Shares being offered and the terms of the offering,
including the name or names of any underwriters, dealers or
agents, any discounts, concessions or commissions and other items
constituting compensation from the Selling Stockholder and any
discounts, commissions, or concessions allowed or reallowed or
paid to dealers.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby
has been passed upon for the Company by Schreck, Jones,
Bernhard, Woloson & Godfrey, Chartered, Las Vegas, Nevada.
EXPERTS
The consolidated financial statements and schedules of
Alliance Gaming Corporation (formerly United Gaming, Inc.), and
its subsidiaries as of June 30, 1994 and 1993, and for each of
the years in the three-year period ended June 30, 1994, have been
incorporated by reference herein and in the Registration
Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by
reference herein upon the authority of said firm as experts in
accounting and auditing.
<PAGE>
No dealer, salesperson or other person
has been authorized to give any information
or to make any representations other than
those contained in this Prospectus and, 250,000 SHARES
if given or made, such information or
representations in connection with
this offering must be relied upon as
having been authorized by the Company
or by the Selling Stockholder. This
Prospectus does not constitute an
offer to sell or a solicitation of an
offer to buy any of the securities
offered hereby by anyone in any
jurisdiction in which such offer or
solicitation is not authorized or in
which the person making such offer or
solicitation is not qualified to do so ALLIANCE GAMING
or to any person to whom it is unlawful CORPORATION
to make such offer or solicitation.
Neither the delivery of this Prospectus
nor any sale made hereunder shall,
under any circumstances, create an
implication that the information COMMON STOCK
contained herein is correct as of any (Par Value $.10
share time subsequent to the date per Share)
of this Prospectus.
TABLE OF CONTENTS
Page
Available Information . . . . . . 2
Incorporation of Certain
Documents by Reference. . . . . . 2
Prospectus Summary. . . . . . . . 3 PROSPECTUS
Risk Factors. . . . . . . . . . . 5
Recent Developments . . . . . . .14
Use of Proceeds . . . . . . . . .17
Selling Stockholder . . . . . . .17
Description of Capital Stock. . .17
Plan of Distribution. . . . . . .18
Legal Matters . . . . . . . . . .18
Experts . . . . . . . . . . . . .18 March , 1995
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the fees and expenses in
connection with the issuance and distribution of the securities
being registered hereunder. Except for the SEC registration fee,
all amounts are estimates.
SEC Registration Fee . . . . . . . . . . . . . . . . . . $ 502
NASD Filing Fee. . . . . . . . . . . . . . . . . . . . . -
Printing and Engraving Expenses. . . . . . . . . . . . . 5,000
Legal Fees and Expenses. . . . . . . . . . . . . . . . .15,000
Accounting Fees and Expenses . . . . . . . . . . . . . . 3,000
Registrar and Transfer Agent Fees and Expenses . . . . . 1,000
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . 3,000
Miscellaneous Expenses . . . . . . . . . . . . . . . . . 2,498
Total. . . . . . . . . . . . . . . . . . . . .$30,000
All of the costs identified above will be paid by the
Company.
Item 15. Indemnification of Directors and Officers.
Article VI of the Company's Articles of Incorporation limits
the liability of the Company's directors and officers. It
provides that a director or officer of the Company shall not be
personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director or officer,
except for liability (i) for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or
(ii) for the payment of dividends in violation of Section 78.300
of the Nevada General Corporation Law. It also provides that any
repeal or modification of the foregoing provision of the
stockholders of the Company shall be prospective only, and shall
not adversely affect any limitation on the personal liability of
a director or officer of the Company existing at the time of such
repeal or modification.
Section 78.300 of the Nevada General Corporation Law
provides:
1. The directors of a corporation shall not make
dividends or other distributions to stockholders except as
provided by such section.
2. In case of any willful or grossly negligent
violation of the provisions of such section, the directors
under whose administration the violation occurred, except
<PAGE>
those who caused their dissent to be entered upon the
minutes of the meeting of the directors at the time, or who
not then being present caused their dissent to be entered on
learning of such action, are jointly and severally liable,
at any time within 3 years after each violation, to the
corporation, and, in the event of its dissolution or
insolvency, to its creditors at the time of the violation,
or any of them, to the lesser of the full amount of the
dividend made or of any loss sustained by the corporation by
reason of the dividend or other distribution to
stockholders.
However, Section 78.751 of the Nevada General Corporation Law
permits the Registrant to indemnify its directors and officers as
follows:
1. A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, has no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, does not,
of itself, create a presumption that the person did not act
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action
or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
2. A corporation may indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
<PAGE>
venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him in connection with
the defense or settlement of the action or suit if he acted
in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim,
issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable to the corporation or
for amounts paid in settlement to the corporation, unless
and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction
determines, upon application, that in view of all the
circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such expenses as
the court deems proper.
3. To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in subsections 1 and 2, or in defense of any
claim, issue or matter herein, he must be indemnified by the
corporation against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with
the defense.
4. Any indemnification under subsections 1 and 2,
unless offered by a court or advanced pursuant to
subsection 5, must be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent
is proper in the circumstances. The determination must be
made:
(a) By the stockholders;
(b) By the board of directors by majority
vote of a quorum consisting of directors who were not
parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of
directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel in a
written opinion; or
(d) If a quorum of directors who were not parties
to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion.
5. The articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses
<PAGE>
of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any
rights to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any
contract or otherwise by law.
Item 16. Exhibits and Financial Statement Schedules.
Exhibit No. Description of Exhibit
4.1 Form of Employment Agreement, dated as of August 15,
1994, by and between the Company and Steve Greathouse.
4.2 Form of Warrant Agreement, dated as of August 15, 1994,
by and between the Company and Steve Greathouse and
Warrant Certificates issued pursuant thereto.
4.3 Form of Agreement, dated as of September 1, 1994, by
and between the Company and Craig Fields.
4.4 Form of Warrant Agreement, dated as of September 1,
1994, by and between the Company and Craig Fields and
form of Warrant Certificates issued pursuant thereto.
4.5 Form of Amendment Agreement, dated as of October 20,
1994, by and among the Company, Kirkland Investment
Corporation, Gaming System Advisors, L.P., Kirkland-Ft.
Worth Investment Partners, L.P. and Alfred H. Wilms.
4.6 Form of Agreement, dated as of March 20, 1995, by and
form of between the Company and Joel Kirschbaum.
4.7 Form of Selling Stockholder Letter Agreement dated
March 20, 1995.
5.1 Opinion of Schreck, Jones, Bernhard, Woloson & Godfrey,
Chartered.
23.1 Consent of Schreck, Jones, Bernhard, Woloson & Godfrey,
Chartered (included in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included on Page II-5).
<PAGE>
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described under Item 15 above, 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 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 of 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 of 1933 and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to 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.
The undersigned registrant hereby undertakes:
(1) 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;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, 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.
<PAGE>
(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.
The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, 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 of 1933 shall be deemed to be
part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized in the
City of Las Vegas, State of Nevada, as of the 24th day of March,
1995.
ALLIANCE GAMING CORPORATION
By: /s/ STEVEN GREATHOUSE
Steven Greathouse
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints David Robbins
and John W. Alderfer, and each of them, with full power to act
without the other, such person's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign this Registration Statement, and any
and all amendments thereto (including post-effective amendments)
and to file the same, with exhibits and schedules 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 necessary or desirable to be
done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any 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 as of the dates indicated:
Signatures Title Date
/s/ STEVEN GREATHOUSE Chairman of the Board of March 24, 1995
Steven Greathouse Directors, President and
Chief Executive Officer
(Principal Executive Officer)
<PAGE>
/s/ JOHN W. ALDERFER Senior Vice President, March 24, 1995
John W. Alderfer Treasurer and Chief
Financial Officer
(Principal Financial
and Accounting Officer)
/s/ JOEL KIRSCHBAUM Director March 24, 1995
Joel Kirschbaum
/s/ ANTHONY L. DICESARE Director March 24, 1995
Anthony L. DiCesare
/s/ CRAIG FIELDS Director March 24, 1995
Craig Fields
Director March 24, 1995
Jay R. Gottlieb
/s/ DAVID ROBBINS Director March 24, 1995
David Robbins
/s/ ALFRED H. WILMS Director March 24, 1995
Alfred H. Wilms
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page No.
4.1 Form of Employment Agreement, dated as of
August 15, 1994, by and between the
Company and Steven Greathouse.
4.2 Form of Warrant Agreement, dated as of August
15, 1994, by and between the Company
and Steven Greathouse and form of Warrant
Certificates issued pursuant thereto.
4.3 Form of Agreement, dated as of September 1,
1994, by and between the Company and
Craig Fields.
4.4 Form of Warrant Agreement, dated as of September
1, 1994, by and between the Company and
Craig Fields and form of Warrant Certificates
issued pursuant thereto.
4.5 Form of Amendment Agreement, dated as of October
20, 1994, by and among the Company, Kirkland
Investment Corporation, Gaming Systems
Advisors, L.P., Kirkland-Ft. Worth Investment
Partners, L.P. and Alfred H. Wilms.
4.6 Form of Agreement, dated as of March 20, 1995, by
and between the Company and Joel Kirschbaum.
4.7 Form of Selling Stockholder Letter Agreement
dated March 20, 1995.
5.1 Opinion of Schreck, Jones, Bernhard, Woloson &
Godfrey, Chartered.
23.1 Consent of Schreck, Jones, Bernhard, Woloson &
Godfrey, Chartered (included in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included on Page II-5).
Exhibit 4.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of August 15, 1994 by and
between Alliance Gaming Corporation, a Nevada corporation (the
"Company"), and Steven Greathouse, an individual (the
"Executive").
R E C I T A L S :
A. The Company considers it important and in its
best interest and the best interest of its stockholders to foster
the employment of key management personnel, and desires to retain
the services of the Executive, on the terms and subject to the
conditions provided in this Agreement.
B. The Executive desires to accept employment by
the Company and to render services to the Company, on the terms
and subject to the conditions provided in this Agreement.
A G R E E M E N T :
The parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ
and retain the Executive, and the Executive agrees to be employed
and retained by the Company, to render services to the Company
for the period, at the rate of compensation and upon the other
terms and conditions set forth in this Agreement.
2. Term. The term of the Executive's employment
under this Agreement (the "Term") shall commence on the date
hereof and shall continue through and including August 14, 1997,
unless earlier terminated as provided in this Agreement (the date
of any termination of this Agreement or the expiration of the
Term, as provided herein, the "Termination Date").
3. Position and Duties.
(a) Position. The Executive shall serve as
President and Chief Executive Officer of the Company. During his
employment hereunder, the Executive shall report directly to the
board of directors of the Company (the "Board"). The Executive
shall, if so elected by the stockholders of the Company, also
<PAGE>
serve on the Board from time to time, for successive periods of
such election(s) and for such period as shall be agreed to by the
Executive, subject, in each case, to the continued election
thereto by the Company's stockholders. In the event that the
Executive's employment by the Company shall be terminated, for
any reason, the Executive shall be deemed to have immediately
resigned from the Board, such resignation being effective on the
Termination Date.
(b) Duties. In accordance with the by-laws of the
Company, during the Term, the Executive shall have and exercise
the full power and authority of President and Chief Executive
Officer, including without limitation, that of hiring, retaining
and discharging personnel, subject to the full and customary
approval, oversight and supervision of the Board. During the
Term, the Executive shall perform the duties contemplated by such
title and such other duties, consistent with his experience and
abilities, as may be assigned to the Executive by the Board. The
Executive shall devote his full time and efforts to the business
and affairs of the Company, use his best efforts to further the
interests of the Company and at all times conduct himself in a
manner which reflects credit upon the Company. It is
contemplated that the Executive shall render services to the
Company from the Company's principal place of business; however,
the parties acknowledge and agree that the Executive may be
required to travel extensively during the Term in fulfilling his
duties hereunder.
4. Compensation and Reimbursement of
Expenses.
(a) Salary. For purposes of this Agreement, each
consecutive 12-month period during the Term ending on each August
14th during the Term shall be referred to as an "Employment
Year." For services rendered by the Executive under this
Agreement, the Company shall pay to the Executive as compensation
during each Employment Year during the Term, a base salary (the
"Base Salary") at an annual rate of $400,000 per year (prorated
for any partial Employment Years). Increases in the Base Salary
shall be considered by the Board no less frequently than
annually, commencing at the end of the first Employment Year
hereunder and will be based upon criteria applicable to other
senior executives of the Company; it being understood, however,
that the award of any such increase shall be in the sole
discretion of the Board (with the Executive not voting on such
determination). The Base Salary shall be payable in equal
bi-weekly installments, commencing with the end of the pay period
which next follows the commencement of the Term, and shall be
subject to customary payroll deductions (i.e., for social
security, federal, state and local taxes and other amounts
<PAGE>
customarily withheld from the salaries of employees of the
Company).
(b) Bonus. The Executive shall be eligible to receive
from the Company, within 120 days of the end of each Employment
Year, a cash bonus in respect of such Employment Year (the
"Annual Bonus"), which shall be based upon all relevant criteria,
including without limitation, (i) the performance of the Company
during such Employment Year based upon customary financial and
other criteria, such as but not limited to, return on the
Company's consolidated stockholders' equity and total capital
(i.e., stockholders' equity and total debt), performance of the
Company's Common Stock, par value $.10 per share (the "Common
Stock"), and the Company's absolute and relative amounts of
consolidated cash flow, operating income and net income, and the
comparison of such results with the Company's budgets and
projections therefor, and (ii) the performance of the Executive
in rendering services to the Company. It is contemplated but not
certain that the Annual Bonus shall be between 50% and 100% of
the Base Salary for each applicable Employment Year; it being
understood, however, that the Company shall not be obligated to
pay to the Executive any Annual Bonus and the payment, if any,
and amount thereof shall be solely within the discretion of the
Board (with the Executive not voting on such determination). It
is also contemplated that the Compensation Committee of the Board
shall formulate specific criteria and performance targets for the
determination of the Annual Bonus, if any. The Annual Bonus
shall be subject to customary payroll deductions (i.e., for
social security, federal, state and local taxes and other amounts
customarily withheld from the salaries of employees of the
Company).
(c) Stock, Warrants and Options. (1) Effective as
of commencement of the Executive's employment with the Company,
which the parties acknowledge is August 15, 1994 (the "Initial
Employment Date"), in order to induce the Executive to accept
employment with the Company, the Company shall issue to the
Executive, in certificate form, 250,000 shares of restricted
Common Stock (the "Employment Stock"). The Executive shall not
sell, transfer, hypothecate, assign or otherwise transfer the
Employment Stock (except by operation of law in the event of the
Executive's death) prior to January 1, 1995. The Employee
acknowledges that such Employment Stock has not been registered
for sale under the Securities Act of 1933 (the "Securities Act")
or applicable state "blue sky" laws and that such Employment
Stock may be sold only pursuant to such registration or
applicable exemptions therefrom. The Executive confirms that he
is an accredited investor (as defined under the Securities Act)
and has been afforded the opportunity to ask questions of and
receive information from management and other representatives of
the Company in connection with the receipt of the Employment
<PAGE>
Stock and the Incentive Warrants (as defined below). The
Executive agrees that in connection with his receipt and
ownership of the Employment Stock and, as applicable, any other
securities of the Company issued or delivered to the Executive in
connection with his employment by the Company, he shall file in a
timely manner any and all applicable forms or filings required
under the Securities Act or the Securities Exchange Act of 1934,
including without limitation, Forms 3, 4 and/or 5. The Company
shall use its commercially reasonable efforts to cause to be
registered under the Securities Act the Employment Stock on such
form of registration statement for a shelf registration that the
Company may designate as soon as practicable after March 1, 1995,
so long as the Executive shall have furnished such affidavits and
instruments in connection therewith relating to the Executive and
his ownership of the Employment Stock and other relevant matters
that shall be customary and reasonably requested by the Company.
Other than as set forth above in this clause (1), the Executive
shall be free to transfer or dispose of the Employment Stock.
(2) Effective as of the Initial Employment Date, in
order to induce the Executive to accept employment with the
Company, the Company shall issue to the Executive warrants to
acquire 250,000 shares of common stock of the Company (the
"Incentive Warrants") pursuant to a warrant agreement and warrant
in the form attached hereto as Exhibit A. The Executive
acknowledges that neither such Incentive Warrants nor the Common
Stock underlying them have been registered for sale under the
Securities Act or applicable state "blue sky" laws and that such
Incentive Warrants may be sold only pursuant to such registration
or applicable exemptions therefrom.
(3) Effective as of the Initial Employment Date, in
order to induce the Executive to accept employment with the
Company, the Company shall issue to the Executive options
(pursuant to the Company's 1991 Incentive Stock Option Plan (the
"Plan")) to acquire 250,000 shares of Common Stock of the Company
(the "Employment Options"). The Employment Options shall (A)
have an exercise price of $5 3/4 per share, (B) expire on August
14, 1999 and (C) vest and become exercisable at the end of each
Employment Year as follows:
August 14, 1995 - 84,000 shares
August 14, 1996 - 83,000 shares
August 14, 1997 - 83,000 shares
Prior to each such applicable date, such Employment
Options shall not be vested or exercisable.
(d) Reimbursement of Expenses. Consistent with
established policies of the Company as in effect from time to
time, the Company shall pay to or reimburse the Executive for all
<PAGE>
reasonable and actual out-of-pocket expenses, including without
limitation, travel, hotel and similar expenses, incurred by the
Executive from time to time in performing his obligations under
this Agreement.
5. Benefits.
(a) Benefit Plans. The payments provided in
Section 4 above are in addition to any benefits to which the
Executive may be, or may become, entitled under any of the
Company's employee benefit plans or programs for which key
executives are or shall become eligible, including without
limitation, retirement, life, health and disability benefits. In
addition, the Executive shall be eligible to receive during the
Term benefits and emoluments which are consistent with the
benefits and emoluments provided to all senior officers or
executives of the Company.
(b) Vacation. The Executive shall be entitled to
three weeks annual paid vacation time. The Executive's
entitlement to such vacation time for each Employment Year shall
vest and accrue on the first day of each such Employment Year.
In the event any of such vacation days are not used by the
Executive in any Employment Year, the Executive shall have the
right to accumulate and carry forward such number of days from
year to year as shall be consistent with the Company's policy
therefor for senior executives, as in effect from time to time.
The Executive shall also be entitled to reasonable periods of
sick leave with compensation and all paid holidays given by the
Company to its senior executive officers.
(c) Club Membership. During the Employment Term,
the Company shall pay the cost of membership for the Executive
and his family in the Las Vegas Country Club.
(d) No Reduction. There shall be no material
reduction or diminution of the benefits provided in this Section
5 during the Term unless (i) the Executive shall have provided
his consent to such reduction or diminution, (ii) an equitable
arrangement (embodied in an ongoing substitute or alternative
benefit or plan) has been made with respect to such benefit or
plan or (iii) such reduction is part of a program of
across-the-board benefit reductions similarly affecting the
senior executive officers of the Company.
6. Benefits Payable Upon Disability.
(a) Disability Benefits. During any period of
Disability (as defined below) occurring during the Term, the
Company shall continue to pay to the Executive the Base Salary as
<PAGE>
provided herein and continue to extend to him the benefits
described in Sections 4 and 5 hereof; it being understood that if
disability benefits are provided under any disability insurance
or similar policy maintained by the Company (or maintained by the
Executive, the cost of which is reimbursed or paid by the
Company), payments under such policy shall be considered as
payments by the Company and shall offset any Base Salary payable
to the Executive under this Agreement. As used in this
Agreement, "Disability" shall mean the inability (as determined
by a majority of the remaining members of the Board (other than
the Executive) voting for such determination) of the Executive to
render services to the Company, as provided herein, as a result
of physical or mental infirmity or disability.
(b) Services During Disability. During the Term,
notwithstanding any Disability, the Executive shall, to the
extent that he is physically and mentally able to do so, furnish
information, assistance and services to the Company, and, upon
the reasonable request in writing on behalf of the Board (as
determined by a majority of the remaining members of the Board
(other than the Executive) voting for such determination), from
time to time, he shall make himself available to the Company to
undertake reasonable assignments and fulfill his duties
hereunder, consistent with his current position with the Company
and his physical and mental health.
7. Termination. This Agreement shall be
terminated in accordance with the provisions of this Section 7,
in which case the provision of Section 8 below shall be
applicable.
(a) Upon Expiration of the Term. This Agreement shall
terminate in accordance with Section 2 above.
(b) By The Company. In addition to the provisions of
Section 7(a) above, this Agreement is subject to earlier
termination by the Company, as follows:
(i) Death of Executive. If the Executive dies, this
Agreement shall terminate, the Termination Date being the date of
the Executive's death.
(ii) Disability. If the Executive has been absent
from service to the Company, as required in this Agreement, for a
period of 90 days or more as a result of Disability during any
consecutive 180-day period during the Term, the Company shall
terminate this Agreement (such Disability being determined by a
majority of the remaining members of the Board (other than the
<PAGE>
Executive) voting for such determination), the Termination Date
being 15 days after notice thereof is provided to the Executive.
(iii) Termination by Company for Cause. The Company
shall have the right to terminate the Executive's employment
under this Agreement for Cause (as defined below), such
termination to be effective immediately upon notice thereof from
the Company to the Executive. For purposes of this Agreement,
"Cause" shall mean the Executive's (A) conviction of any
misdemeanor involving moral turpitude, or any felony, (B)
misappropriation or embezzlement from the Company, (C) denial or
rejection of any gaming license or permit or commission of any
act which could reasonably be expected to result in such denial
or rejection, (D) any breach during the Term of Sections 10 or 11
below or (E) the persistent failure or refusal after notice to
comply with the Executive's duties or obligations hereunder.
(iv) Termination by the Company Without Cause. The
Company shall have the right to terminate the Executive's
employment hereunder for any other reason not set forth in
clauses (i), (ii) or (iii) of this Section 7(b), the Termination
Date being 15 days after notice from the Company to the
Executive.
(c) By The Executive. In addition to the provisions
of Section 7(a) above, this Agreement is subject to earlier
termination by the Executive, as follows:
(i) Termination by the Executive for Just Cause. The
Executive shall have the right to terminate his employment under
this Agreement upon the occurrence of a material breach of this
Agreement by the Company, which the parties agree shall be
limited to (A) a reduction by the Company in the Base Salary
below the minimum Base Salary specified in Section 4(a) above or
the failure of the Company to pay to the Executive any portion of
the Base Salary within 30 days of the time that any such amount
is due and payable hereunder or (B) the assignment to the
Executive of duties and responsibilities that are materially
inconsistent with those of a president and chief executive
officer of the Company, in each case, in the cases of clauses (A)
and (B), which has not been cured by the Company after 30 days'
written notice from the Executive to the Company; provided, that
in the case of three such material breaches (and notice thereof),
the Executive shall thereafter have the right to terminate this
Agreement immediately upon notice to the Company in the case of a
subsequent material breach. In the event that the Executive
elects to terminate this Agreement as a result of the events
described in clauses (A) or (B) above, the Executive shall
exercise such right within 10 days after the lapsing of the
30-day period referred to above in this clause (i) (assuming that
<PAGE>
the Company shall have failed to cure such material breach within
such period), or, as applicable, within 10 days of any additional
material breach giving rise to an immediate right of termination;
thereafter, such right to terminate shall no longer be
exercisable. The Termination Date shall be a date specified by
the Executive, which shall be between 30 and 45 days after the
date of such default notice by the Executive.
(ii) Termination by Executive upon Change in Key
Participant. The Executive shall have the right to terminate his
employment under this Agreement: (A) if any Key Participant (as
defined below) sells in whole (but not in part) to any
unaffiliated third party (an affiliated third party being any
family member or trust for the benefit of such family member) or
otherwise liquidates his investment in the Company (in whole but
not in part) and the Executive reasonably and in good faith
determines that such sale or liquidation materially impairs the
ability of the Company successfully to achieve its growth
strategy as stated in the Company's Prospectus dated March 21,
1994, or (B) if there shall have occurred a material breach or
default of Section 3.4 of the Stockholders Agreement among the
Company and certain other parties dated September 21, 1993 by any
of the Key Participants. For purposes of this clause (ii), "Key
Participants" means the stockholders of Kirkland Investment
Corporation, a Delaware corporation, the limited partners in
Kirkland-Ft. Worth Investment Partners, L.P., a Delaware limited
partnership, such limited partners' general partners, and any
person controlling such persons, each as of September 14, 1993.
In the event that the Executive elects to terminate this
Agreement as a result of the events described in clauses (A) or
(B) above, the Executive shall provide 30 days' notice thereof to
the Company, during which time the event or circumstance giving
rise to such right of termination may be cured. In the event
that the Executive elects to terminate this Agreement as a result
of the events described in clauses (A) or (B) above, the
Executive shall exercise such right within 10 days after the
lapsing of the 30-day period referred to above in this clause
(ii)(assuming that such event or circumstance shall not have been
cured) upon written notice to the Company (the date of such
notice, the "Section 7(c)(ii) Notice Date"); thereafter, such
right to terminate shall no longer be exercisable. The
Termination Date shall be a date specified by the Executive,
which shall be between 30 and 45 days after the Section 7(c)(ii)
Notice Date; thereafter, such right to terminate shall no longer
be exercisable.
(iii) Termination by the Executive Without Just Cause.
The Executive shall have the right to terminate the Executive's
employment under this Agreement for any other reason not set
<PAGE>
forth in clauses (i) or (ii) of this Section 7(c), the
Termination Date being 15 days after notice thereof from the
Executive to the Company.
8. Effect of Termination. The following provisions
shall be applicable in the event of the termination of this
Agreement as provided in Section 7 above.
(a) Expiration of Term. Upon termination of this
Agreement as provided in Section 7(a) above, this Agreement shall
terminate and be of no further force and effect, except as
provided in Sections 11, 12 and 13(b) below, which shall survive
such termination, and no additional payments, liabilities or
obligations shall be due and owing from either party to the
other.
(b) Death. Upon the termination of this Agreement as
provided in Section 7(b)(i) above, the Company shall pay to
the Executive's estate (i) an amount equal to the sum of
(A) $1,850,000, payable within 180 days after the Termination
Date (but not earlier than any recovery of insurance proceeds in
respect thereof, as provided below), and (B) any Annual Bonus for
the Employment Year in which the Termination Date occurs that the
Board determines would otherwise have been payable had the
Executive not died, which Annual Bonus shall be reduced by
prorating it through the Termination Date, payable, in the case
of this clause (B), at the time such payment would otherwise be
due and payable hereunder, and (ii) expense reimbursement amounts
accrued through the Termination Date, at the time such payment
would otherwise be due and payable thereunder, and neither party
shall have any further liability or obligation to the other,
except as provided in Section 12 below, which shall survive the
Termination Date. Notwithstanding the provisions of clause (i)
above, the Company shall have the right to provide for either or
both of the payments described therein by purchasing life
insurance on the Executive's life itself or reimbursing to the
Executive the cost of the premiums in respect of such life
insurance which shall be purchased directly by the Executive; in
the event that either or both of such insurance coverages is
obtained, such payments shall be made solely from such insurance
coverages and not from the Company and shall constitute the
Executive's estate's or heirs' sole remedy in respect of such
payments.
An amount equal to 50% of any unvested Employment Options as
of the Termination Date shall vest and become exercisable by
virtue of any termination under Section 7(b)(i) and,
notwithstanding the provisions of the Company's Stock Option Plan
pursuant to which the Employment Options may have been granted,
<PAGE>
the Executive's estate shall have a period of two years from the
Termination Date to exercise the Employment Options.
(c) Disability. Upon the termination of this
Agreement as provided in Section 7(b)(ii) above, the Company
shall pay to the Executive (i) an amount equal to 60% of the
Executive's Base Salary in effect in the year in which the
Termination Date occurs, but not in excess of the rate of
$180,000 per year, from the Termination Date until such time as
the Executive shall attain the age of 65, and (ii) any Annual
Bonus for the Employment Year in which the Termination Date
occurs that the Board determines would otherwise have been
payable had the Executive not become Disabled, which Annual Bonus
shall be reduced by prorating it through the Termination Date, in
each case, payable at the times such payments would otherwise be
due and payable hereunder; provided, in the case of clauses (i)
and (ii) above, that the Executive continues to comply with his
covenants in Sections 10 (during the Term had such termination
under Section 7(b)(ii) above not occurred) and 11 below, as
provided therein, and (iii) expense reimbursement amounts accrued
through the Termination Date, at the time such payment would
otherwise be due and payable thereunder, and neither party shall
have any further liability or obligation to the other, except
that the provisions of Sections 10, 11, 12 and 13(b) below shall
survive the Termination Date, to the extent provided therein.
Notwithstanding the provisions of clauses (i) and (ii) above, the
Company shall have the right to provide for either or both of
such payments by either purchasing disability insurance itself in
respect of the Executive or reimbursing to the Executive the cost
of the premiums in respect of such disability insurance which
shall be purchased directly by the Executive; in the event that
either or both of such insurance coverages is obtained, such
payments shall be made solely from such insurance coverages and
not from the Company and shall constitute the Executive's sole
remedy in respect of such payments.
An amount equal to 50% of any unvested Employment Options as
of the Termination Date shall vest and become exercisable by
virtue of any termination under Section 7(b)(ii) and,
notwithstanding the provisions of the Company's Stock Option Plan
pursuant to which the Employment Options may have been granted,
the Executive shall have a period of two years from the
Termination Date to exercise such options.
(d) Termination by the Company For Cause. Upon the
termination of this Agreement as provided in Section 7(b)(iii)
above, the Company shall pay to the Executive (i) the accrued and
unpaid Base Salary, if any, through the Termination Date and (ii)
expense reimbursement amounts accrued through the Termination
Date, at the time such payments are otherwise due and payable
<PAGE>
thereunder, and neither party shall have any further liability or
obligation to the other, except that the provisions of Sections
10, 11, 12 and 13(b) below shall survive the Termination Date, to
the extent provided therein, with the provisions of such Section
10 surviving for the shorter of (A) 12 months from the
Termination Date and (B) the remainder of the Term had such
termination not occurred. No unvested Employment Options shall
vest or become exercisable by virtue of any termination under
Section 7(b)(iii) and any and all rights thereto then possessed
by the Executive shall be terminated and of no further force and
effect.
(e) Termination by the Company Without Cause. Upon
termination of this Agreement as provided in Section 7(b)(iv)
above, the Company shall pay to the Executive (i) the Base Salary
which would otherwise be payable hereunder in respect of the
remainder of the Term; provided, that the Executive continues to
comply with the covenants in Section 11 below, as provided
therein, and (ii) expense reimbursement amounts accrued through
the Termination Date, in each case, in the case of clauses (i)
and (ii) above, at the time such payments are otherwise due and
payable thereunder, and neither party shall have any further
liability or obligation to the other, except that the provisions
of Sections 11, 12 and 13(b) below shall survive the Termination
Date, to the extent provided therein; it being understood that
the covenants in Section 10 below shall be of no further force
and effect following the Termination Date. All unvested
Employment Options, if any, shall vest and become exercisable (in
accordance with the Plan) by virtue of any termination under
Section 7(b)(iv).
(f) Termination by the Executive for Just Cause. Upon
termination of this Agreement as provided in Section 7(c)(i)
above, the Company shall pay to the Executive (i) the Base Salary
which would otherwise be payable hereunder in respect of the
remainder of the Term; provided, that the Executive continues to
comply with the covenants in Section 11 below, as provided
therein, and (ii) expense reimbursement amounts accrued through
the Termination Date, in each case, in the case of clause (i) and
(ii) above, at the time such payments are otherwise due and
payable thereunder, and neither party shall have any further
liability or obligation to the other, except that the provisions
of Sections 11, 12 and 13(b) below shall survive the Termination
Date, to the extent provided therein; it being understood that
the covenants in Section 10 below shall be of no further force
and effect following the Termination Date. All unvested
Employment Options, if any, shall vest and become exercisable (in
accordance with the Plan) by virtue of any termination under
Section 7(c)(i).
(g) Termination by the Executive upon Change in Key
<PAGE>
Participant. Upon termination of this Agreement as provided in
Section 7(c)(ii) above, the Executive shall (x) not be bound by
the provisions of Section 10 below, which shall be of no further
force and effect, and (y) immediately have the one-time right
(exercisable for a period of 10 days following the Termination
Date, upon written notice to the Company) to convert or cause to
be exchanged, without restriction, any outstanding and
unexercised Incentive Warrants (whether or not vested) to vested
Employment Options; and the Company shall pay to the Executive
(i) an amount equal to the sum of (A) 100% of the Base Salary
which would otherwise be payable hereunder in respect of the
shorter of (I) the six-month period following the Section
7(c)(ii) Notice Date and (II) the remainder of the Term had such
termination not occurred and (B) any Annual Bonus for the
Employment Year in which the Termination Date occurs that the
Board determines would otherwise have been payable had such
termination not occurred, which Annual Bonus shall be reduced by
prorating it through the Termination Date, in each case, in the
case of clauses (A) and (B) above, payable at the times such
payments are otherwise due and payable hereunder; provided, in
each case, that the Executive continues to comply with the
covenants in Section 11 below, as provided therein, and (ii)
expense reimbursement amounts accrued through the Termination
Date, at the time such payment is otherwise due and payable
thereunder, and neither party shall have any obligation or
liability to the other, except that the provisions of Sections
11, 12 and 13(b) below shall survive the Termination Date, to the
extent provided therein, and the covenants in Section 10 below
shall be of no further force and effect following the Termination
Date. All unvested Employee Options, if any, shall vest and
become exercisable (in accordance with the Plan and as set forth
above) by virtue of any termination under Section 7(c)(ii).
(h) Termination by the Executive Without Just Cause.
Upon the termination of this Agreement as provided in Section
7(c)(iii) above, the Company shall pay to the Executive (i) the
accrued and unpaid Base Salary, if any, through the Termination
Date, (ii) expense reimbursement amounts accrued through the
Termination Date and (iii) Base Salary at a rate of $201,000 per
calendar year during the period that the provisions of Section 10
shall be in effect, as provided below, at the time such payments
are otherwise due and payable thereunder, and neither party shall
have any further liability or obligation to the other, except
that the provisions of Sections 10, 11, 12 and 13(b) below shall
survive the Termination Date, to the extent provided therein,
with the provisions of such Section 10 surviving for the shorter
of (A) 12 months from the Termination Date and (B) the remainder
of the Term had such termination not occurred. During such
period that the provisions of Section 10 are in effect, the
Executive shall continue to be eligible to receive the benefits
provided in Section 5 above. No unvested Employment Options
<PAGE>
shall vest or become exercisable by virtue of any termination
under Section 7(c)(iii) and any and all rights thereto then
possessed by the Executive shall be terminated and of no further
force and effect.
9. Federal Income Tax and Other Withholdings. The
Company shall withhold from any benefits payable pursuant to this
Agreement such Federal, State, City or other taxes and other
amounts as may be required to be withheld pursuant to any
applicable law or governmental regulations or ruling and shall
timely pay over to the appropriate governmental or other
authorities the amount withheld, together with any additional
amounts required to be paid by the Company in respect thereof.
10. Non-Competition. The Executive covenants and
agrees that he will not at any time during his employment with
the Company and, to the extent set forth in the applicable
subsections of Section 8 above, for a period of up to 12 months
after the Termination Date, directly or indirectly, whether as
employee, owner, partner, agent, director, officer, consultant,
advisor, stockholder (except as the beneficial owner of not more
than 5% of the outstanding shares of a corporation, any of the
capital stock of which is listed on any national or regional
securities exchange or quoted in the daily listing of
over-the-counter market securities and, in each case, in which
the Executive does not undertake any management or operational or
advisory role) or in any other capacity, for his own account or
for the benefit of any person or entity, establish, engage or be
connected with or in any manner any person or entity which is at
the time engaged in a business which is then in competition with
the business of the Company (or any of its subsidiaries or
affiliates); it being understood that for purposes of this
Section 10, participation in the business of owning, managing,
operating or financing casino or similar gaming in the United
States shall be deemed to be business in which the Company is
engaged.
11. Confidential Information and Non-Disparagement.
(a) In accordance with NRS 600A.010 et seq. (the so-called
Uniform Trade Secrets Act), the Executive shall hold in a
fiduciary capacity for the benefit of the Company and its
stockholders all secret, confidential or proprietary information,
knowledge or data relating to the Company (and any of its
subsidiaries or affiliates), which shall have been obtained by
the Executive during or by reason of his employment by the
Company. During and after the end of the Term, the Executive
shall not, without the prior written consent of the Company,
communicate or divulge any such information, knowledge or data to
any person or entity other than the Company (or such applicable
<PAGE>
subsidiaries or affiliates) and those designated by them which
would result in any misappropriation under and as defined in such
Act, except that, while employed by the Company, in furtherance
of the business and for the benefit of the Company, the Executive
may provide confidential information as appropriate to attorneys,
accountants, financial institutions or other persons or entities
engaged in business with the Company from time to time.
(b) Each of the parties agrees that from and after any
termination or expiration of the Term, neither shall, publicly or
privately, disparage or make any statements (written or oral)
that could impugn the integrity, acumen (business or otherwise),
ethics or business practices, of the other, except, in each case,
to the extent (but solely to the extent) necessary (i) in any
judicial or arbitral action to enforce the provisions of this
Agreement or (ii) in connection with any judicial or
administrative proceeding to the extent required by applicable
law.
12. Indemnification and Liability Insurance.
(a) Indemnification. The Company shall indemnify and
hold the Executive harmless, to the fullest extent legally
permitted by Section 78.751 of the Nevada Corporation Code (as
amended and in effect from time to time) against any and all
expenses, liabilities and losses (including without limitation,
reasonable attorneys' fees and disbursements of counsel
reasonably satisfactory to the Company), incurred or suffered by
him in connection with his service as a director or officer of
the Company during the Term, in each case, except to the extent
of the Executive's negligence or willful misconduct.
(b) Insurance. The Company shall maintain, for the
benefit of the Executive, a directors' and officers' liability
insurance policy insuring the Executive's service as a director
and/or officer of the Company (or any subsidiary of the Company)
during the Term in accordance with its customary practices as in
effect from time to time during the Term. The parties
acknowledge and agree that such policy may cover other officers
and directors of the Company in addition to the Executive.
13. General Provisions.
(a) Assignment. Neither this Agreement nor any right
or interest hereunder shall be assignable by the Executive or the
Company without the prior written consent of the other; provided,
that (i) in the event of the Executive's Death during the Term,
the Executive's estate and his heirs, executors, administrators,
legatees and distributees shall have the rights and obligations
set forth herein, as provided herein, and (ii) nothing contained
in this Agreement shall limit or restrict the Company's ability
<PAGE>
to merge or consolidate or effect any similar transaction with
any other entity, irrespective of whether the Company is the
surviving entity (including a split up, spin off or similar type
transaction); provided, that one or more of such surviving
entities shall continue to be bound by the provisions hereof
binding upon the Company.
(b) Material Inducements. The provisions of Sections
10 and 11 above are material inducements to the Company entering
into and performing this Agreement; accordingly, in the event of
any breach of the provisions of Sections 10 or 11(a) by the
Executive, in addition to all other remedies at law or in equity
possessed by the Company, (i) the Company shall have the right to
terminate and not pay any amounts payable to the Executive
hereunder, (ii) all Incentive Warrants and Employment Options
that are unexercised shall be immediately forfeited and returned
to the Company and (iii) the Executive shall immediately account
to the Company and return to the Company an amount in cash equal
to all profits or benefits obtained or realized by the Executive
by virtue of the ownership or disposition of the Incentive
Warrants and Employment Options.
(c) Binding Agreement. This Agreement shall be
binding upon, and inure to the benefit of, the Executive and the
Company and their respective heirs, executors, administrators,
legatees and distributees, successors and permitted assigns.
(d) Amendment of Agreement. This Agreement may not
be modified or amended except by an instrument in writing signed
by the parties hereto.
(e) Severability. If, for any reason, any
provision of this Agreement is determined to be invalid or
unenforceable, such invalidity or lack of enforceability shall
not affect any other provision of this Agreement not so
determined to be invalid or unenforceable, and each such other
provision shall, to the full extent consistent with applicable
law, continue in full force and effect, irrespective of such
invalid or unenforceable provision.
(f) Effect of Prior Agreements. This Agreement
contains the entire understanding between the parties hereto
respecting the Executive's employment by the Company, and
supersedes any prior employment agreement between the Company and
the Executive.
(g) Notices. For the purpose of this Agreement,
notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been
duly given (i) when delivered, if sent by telecopy or by hand,
<PAGE>
(ii) one business day after sending, if sent by reputable
overnight courier service, such as Federal Express, or (iii)
three business days after being mailed, if sent by United States
certified or registered mail, return receipt requested, postage
prepaid. Notices shall be sent by one of the methods described
above; provided, that any notice sent by telecopy shall also be
sent by any other method permitted above. Notices shall be sent,
if to the Executive, to 7140 Darby Avenue, Las Vegas, Nevada
89117, with a copy to Morris Brignone & Pickering, 300 S. Fourth
Street, Las Vegas, Nevada 90101; Attention: Andrew S. Brignone,
Esq.; and if to the Company, to Alliance Gaming Corporation, 4380
Boulder Highway, Las Vegas, Nevada 89121, directed to the
attention of the Board with copies to the Chairman and the
Assistant Secretary of the Company; or to such other address as
either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address
shall be effective only upon receipt.
(h) Counterparts. This Agreement may be executed
in several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
(i) Arbitration. In the event of a dispute or
controversy arising under or in connection with this Agreement
(except, at the option of the Company, Sections 10 and 11 above,
which may be adjudicated in a federal or state court sitting in
Las Vegas, Nevada), the Executive shall give the Company or the
Company shall give the Executive, as applicable, a written demand
for relief. If the dispute or controversy is not resolved, it
shall be settled exclusively by arbitration, conducted in Las
Vegas, Nevada, in accordance with the rules of the American
Arbitration Association (or if the such association does not then
conduct business in such city, another arbitral panel reasonably
satisfactory to each party) then in effect. Judgment may be
entered on the arbitrator's award in any court having
jurisdiction over the parties hereto.
(j) Indulgences, Etc. Neither the failure nor any
delay on the part of either party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise
of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege
with respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other
occurrence.
(k) Headings. The headings of sections and
<PAGE>
paragraphs herein are included solely for convenience of
reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
(l) Governing Law. This Agreement has been
executed and delivered in the State of Nevada, and its validity,
interpretation, performance, and enforcement shall be governed by
the laws of such State, without regard to principles of conflicts
of laws.
(m) Board Approval. This Agreement is subject to the
approval of the Board and shall be and become effective only upon
the approval thereof by the Board; prior to such time it shall
not have any force and effect.
[The remainder of this page is left blank.]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer, and the
Executive has signed this Agreement, all as of the date first set
forth above.
Alliance Gaming Corporation
By:___________________________
Name:
Title:
______________________________
Steven Greathouse
<PAGE>
Exhibit 4.2
WARRANT AGREEMENT
This WARRANT AGREEMENT (this "Agreement") is dated as
of August 15, 1994 by and between ALLIANCE GAMING CORPORATION, a
Nevada corporation (the "Company"), and STEVE GREATHOUSE, an
individual (together with any successors or other holders of the
Warrants (as defined below) issued hereunder, the "Holder").
RECITALS
A. The Company proposes to issue to Holder common
stock purchase Warrants, as hereinafter defined, to purchase up
to an aggregate of 250,000 shares of common stock, par value $.10
per share (the "Common Stock"), of the Company (the Common Stock
issuable on exercise of the Warrants being referred to herein as
the "Warrant Shares"), pursuant to an Employment Agreement, dated
as of August 15, 1994 relating to the initial Holder's employment
by the Company (the "Employment Agreement").
B. The Warrants to be issued hereunder are to be
issued in three separate series, each such series to be
exercisable upon the attainment of certain market prices for the
Common Stock and the occurrence of other specified events, as
more fully set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
covenants and premises contained herein and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The Company shall
deliver to the initial Holder on the date hereof in accordance
with the provisions of the Employment Agreement (i) Warrants to
purchase up to 84,000 shares of Common Stock (the "Series A
Warrants") evidenced by a certificate substantially in the form
attached hereto as "Warrant Certificate A," (ii) Warrants to
purchase up to 83,000 shares of Common Stock (the "Series B
Warrants") evidenced by a certificate substantially in the form
attached hereto as "Warrant Certificate B," and (iii) Warrants to
purchase up to 83,000 shares of Common Stock (the "Series C
Warrants") evidenced by a certificate substantially in the form
attached hereto as "Warrant Certificate C", and together with
Warrant Certificate A and Warrant Certificate B, the "Warrant
<PAGE>
Certificates". The Series A Warrants, Series B Warrants and
Series C Warrants are herein collectively referred to as the
"Warrants." One third of each of the Series A Warrants, the
Series B Warrants and the Series C Warrants shall vest on each
anniversary of the date of initial employment of the initial
Holder under the Employment Agreement, as set forth in Section
4(c)(3) thereof. Prior to each applicable vesting date, no
unvested Warrants shall be exercisable.
SECTION 2. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its
Chairman of the Board or its President or a Vice President and by
its Secretary or an Assistant Secretary under its corporate seal.
Each such signature upon any Warrant Certificate may be in the
form of a facsimile signature of the present or any future
Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced
on the Warrant Certificates, and for that purpose the Company may
adopt and use the facsimile signature of any person who shall
have been Chairman of the Board, President, Vice President,
Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or
disposed of such person shall have ceased to hold such office.
The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced
on the Warrant Certificates.
In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such
officer before the Warrant Certificates so signed shall have been
delivered by the Company, such Warrant Certificates nevertheless
may be issued as though such person had not ceased to be such
officer of the Company; and any Warrant Certificate may be signed
on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate, although
at the date of the execution of this Warrant Agreement any such
person was not such officer.
SECTION 3. Registration. The Warrant Certificates to
be delivered pursuant to this Agreement shall be in registered
form only. The Company shall number and register the Warrant
Certificates in a register as they are issued. The Company may
deem and treat the registered holder(s) of the Warrant
Certificates as the absolute owner(s) thereof (notwithstanding
any notation of ownership or other writing thereon made by
anyone), for all purposes, and shall not be affected by any
notice to the contrary and shall not be bound to recognize any
equitable or other claim to or in the Warrant Certificates on the
part of any other person.
<PAGE>
SECTION 4. Registration of Transfers and Exchanges.
Subject to Section 6 hereof, the Company shall from time to time
register the transfer in whole or in part of any outstanding
Warrant Certificates in a Warrant register to be maintained by
the Company upon surrender thereof to the Company at the office
designated for such purpose (the address of which is set forth in
Section 13 hereof) accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the
Company, duly executed by the registered holder or holders
thereof or by the duly appointed legal representative thereof or
by a duly authorized attorney. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an
official copy thereof, duly certified, shall be deposited with
the Company. In case of transfer by executors, administrators,
guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion.
Upon any such registration of transfer, a new Warrant Certificate
of the appropriate series shall be issued to the transferee(s)
and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Company.
Each Holder, by its acceptance thereof, agrees that
prior to any proposed transfer of any Warrant as permitted by the
foregoing paragraph, if such transfer is not made pursuant to an
effective registration statement under the Securities Act of
1933, as amended (the "Act"), or pursuant to Rule 144 under the
Act, or pursuant to an opinion of counsel, reasonably
satisfactory in form and substance to the Company, that such
Warrant or Warrant Shares may be sold without registration under
the Act, the Holder will deliver to the Company:
(a) an investment representation from the proposed
transferee substantially to the effect that such securities are
being acquired in good faith for investment for the transferee's
own account and not with a view to a distribution or resale of
any of such securities in violation of any applicable securities
laws;
(b) an agreement by such transferee to the impression
of the restrictive legends set forth below on the Warrant or the
Warrant Shares, as the case may be;
(c) an agreement by such transferee that the Company
may place a notation in the stock books of the Company or a "stop
transfer order" with any transfer agent or registrar with respect
to the Warrant Shares; and
(d) an agreement by such transferee to be bound by the
<PAGE>
provisions of this Warrant Agreement, including, without
limitation, this Section 4 relating to the transfer of such
Warrant or Warrant Shares.
Subject to the foregoing provisions, a Holder shall
have the right to make estate planning transfers of all or any
part of his or her ownership interest in the Warrants. The term
"estate planning transfer" means a transfer of all or any part of
an ownership interest to a trust whose beneficiary or
beneficiaries are a Holder, and/or the spouse of a Holder, and/or
the descendants of a Holder. This Agreement will bind the
transferee of any estate planning transfer to the exact terms and
conditions of this Agreement.
The Warrants are subject to the terms and conditions of
the Agreement. The Holders agree that each certificate
representing Warrants or Warrant Shares will bear a legend
reading substantially as follows until such Warrants or Warrant
Shares have been sold pursuant to an effective registration
statement or Rule 144 under the Act or an opinion of counsel
reasonably satisfactory to the Company:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SAID
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF REGISTRATION UNDER SAID ACT AND
THE RULES AND REGULATIONS THEREUNDER AND ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS OR
AN EXEMPTION THEREFROM UNDER SAID ACT AND ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS."
Warrant Certificates may be exchanged at the option of
the Holder(s), when surrendered to the Company at the office
designated for such purpose (the address of which is set forth in
Section 13 hereof) for another Warrant Certificate or other
Warrant Certificates of like tenor and series and representing in
the aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange shall be cancelled by the Company.
SECTION 5. Warrants; Exercise of Warrants.
(a) General. Subject to the terms of this Agreement,
none of the Warrants may be exercised unless and until (x) each
of the "Initial Conditions" set forth in Section 5(b) hereof have
occurred, (y) in respect of the series of Warrants to be
exercised, the related "Series Condition" set forth in Section
5(c)(i), (ii) or (iii) hereof (as the case may be) has occurred,
and (z) the Warrants are exercised on or after one year from the
<PAGE>
date of issue but on or prior to 5:00 p.m. New York City time on
September 21, 2000 (the "Expiration Date"). In respect of any
particular Warrant issued hereunder, the Initial Conditions and
the Series Conditions are herein collectively referred to as the
"Exercise Conditions."
(b) Initial Conditions. No Warrants shall be
exercisable unless and until with respect to any Holder, either
(i) no gaming license, finding of suitability or similar approval
is required in respect of such Holder from the State of Nevada
(or any applicable agency or political subdivision thereof) or
any other jurisdiction in or from which the denial of a gaming
license, finding of suitability or similar approval could
materially adversely affect the Company's business, which
jurisdiction has indicated, generally (by statute, regulation or
otherwise) or as a matter of specific application to the Company
or the Holder, that issuance of such license, findings of
suitability or similar approval is required for exercise of the
Warrants, or (ii) the Licensing Date has occurred with respect to
such Holder relative to its acquisition of the shares of Common
Stock to be issued upon the exercise of such Warrants. For
purposes of this clause (b), the term "Licensing Date" shall have
the meaning provided in the Company's Certificate of
Designations, Preferences and Relative, Participating, Optional
and other Special Rights of Special Stock.
(c) Series Conditions. In addition to the
satisfaction of the Initial Conditions, no Warrants of a given
Series may be exercised unless:
(i) in respect of the Series A Warrants, the average
"Quoted Price" (as defined below) of the Common Stock for 15
consecutive trading days commencing on or after August 15, 1995
must have been equal to or greater than $11.00 per share;
(ii) in respect of the Series B Warrants, the average
Quoted Price of the Common Stock for 15 consecutive trading days
commencing on or after August 15, 1995 must have been equal to or
greater than $13.00 per share;
(iii) in respect of the Series C Warrants, the average
Quoted Price of the Common Stock for 15 consecutive trading days
commencing on or after August 15, 1995 must have been equal to or
greater than $15.00 per share;
in each case, on at least one occasion during the term of the
Warrants, irrespective of whether any of the Warrants are then
vested or exercisable. If the Series Conditions are satisfied
with respect to any Series of Warrants, at any time, the Warrants
in such Series shall, subject to satisfaction of the Initial
Conditions, thereafter be exercisable for the remainder of the
<PAGE>
term thereof irrespective of whether or not the Series Conditions
thereafter are satisfied. The prices referred to above in
clauses (i), (ii) and (iii) are referred to herein as the
"Vesting Prices."
(d) Expiration. Each Warrant not exercised prior to
5:00 p.m., New York City time, on the Expiration Date shall
become void and all rights and obligations thereunder and all
rights and obligations in respect thereof under this Agreement
shall cease as of such time.
(e) Exercise; Delivery of Warrant Shares. A Warrant
may be exercised in whole or in part from time to time upon
surrender to the Company at its office designated for such
purpose (the address of which is set forth in Section 13 hereof)
of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse
thereof duly filled in and signed and upon payment to the Company
of the exercise price (the "Exercise Price") which is set forth
in the form of Warrant Certificates attached hereto as Exhibits
A, B and C, as adjusted as herein provided, for the number of
Warrant Shares in respect of which such Warrants are then
exercised, as adjusted as herein provided. The Warrant shall be
deemed to have been exercised immediately prior to the close of
business on the date of its surrender and exercise and payment of
the purchase price as provided above, and the person entitled to
receive Warrant Shares issuable upon such exercise shall be
treated for such purpose as the holder of such shares of record
as of the close of business on such date. Payment of the
aggregate Exercise Price shall be made in cash or by certified or
official bank check to the order of the Company. Subject to the
provisions of Section 6 hereof, upon such surrender of Warrants,
payment of the Exercise Price and the delivery of all related
documentation, the Company shall issue and cause to be delivered
within five business days to or upon the written order of the
holder and in such name or names as the Warrant holder may
designate, a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise of such Warrants
together with cash as provided in Section 11 hereof; provided,
however, that if any consolidation, merger, sale, lease, transfer
or conveyance of assets is proposed to be effected by the Company
as described in subsection (i) of Section 10 hereof, or a tender
offer or an exchange offer for shares of Common Stock of the
Company shall be made, upon such surrender of Warrants and
payment of the Exercise Price as aforesaid, the Company shall, as
soon as possible, but in any event not later than two business
days thereafter, issue and cause to be delivered the full number
of Warrant Shares issuable upon the exercise of such Warrants in
the manner described in this sentence together with cash as
provided in Section 11 hereof. Such certificate or certificates
shall be deemed to have been issued and any person so designated
<PAGE>
to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of
such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of
the holders thereof, either in full or from time to time in part
and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate of the same tenor
evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section and of
Section 2 hereof.
(f) Miscellaneous. All Warrant Certificates
surrendered upon exercise of Warrants shall be cancelled and
disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder
available for inspection by the holders during normal business
hours at its office.
SECTION 6. Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of
Warrant Shares upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any registration or transfer
involved in the issue or delivery of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon
the exercise of a Warrant, and the Company shall not be required
to issue or deliver such Warrant Certificates or certificates for
Warrant Shares unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the reasonable satisfaction
of the Company that such tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates.
In case any of the Warrant Certificates shall be mutilated, lost,
stolen or destroyed, the Company shall, as soon as practicable
upon receiving notice of such event, issue, in exchange and
substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate
of like tenor and series and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of
such Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to it or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant
Certificate. Applicants for such substitute Warrant Certificates
<PAGE>
shall also comply with such other reasonable requests and pay
such other reasonable charges as the Company may prescribe.
SECTION 8. Reservation of Warrant Shares. The Company
will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but
unissued Common Stock or its authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy
any obligation to issue Warrant Shares upon exercise of Warrants,
the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for
the Common Stock (the "Transfer Agent") and every subsequent
transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights contained herein
will be irrevocably authorized and directed for so long as any
Warrants are outstanding to reserve such number of authorized
shares as shall be required for such purpose. The Company will
keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants. The Company will
furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder
pursuant to Section 12 hereof.
Before taking any action which would cause an
adjustment pursuant to Section 10 hereof to reduce the Exercise
Price below the then par value (if any) of the Warrant Shares,
the Company will take any corporate action which may, in the
opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may
be issued upon exercise of Warrants in accordance with this
Agreement will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and
security interests with respect to the issue thereof created by
or claiming through the Company.
SECTION 9. Obtaining Stock Exchange Listings. The
Company will from time to time take all action, if any, which may
be necessary so that the Warrant Shares, immediately upon their
issuance upon the exercise of Warrants in accordance with this
Agreement, will be listed on the principal securities exchanges
and markets within the United States of America, if any, on which
other shares of Common Stock are then listed.
<PAGE>
SECTION 10. Adjustment of Exercise Price, Vesting
Prices and Number of Warrant Shares Issuable. Whether or not the
Exercise Conditions have been met and whether or not the Warrants
have been issued, or are exercisable or exercised, the Exercise
Price, Vesting Prices and the number of Warrant Shares issuable
upon the exercise of each Warrant are subject to adjustment from
time to time until the exercise thereof upon the occurrence of
the events enumerated in this Section 10. In the event any
adjustment of the Exercise Price is required by this Section 10,
a similar and proportional adjustment shall be made in the
Vesting Prices. Such adjustment shall be made successively
whenever any event described or referred to below shall occur.
For purposes of this Section 10, "Common Stock" means shares now
or hereafter authorized of any class of common stock of the
Company.
(a) Adjustment for Changes in Capital Stock, etc. If
the Company:
(i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common
Stock into a greater number of shares;
(iii) combines its outstanding shares of Common Stock
into a smaller number of shares; or
(iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock or preferred
stock,
then the Exercise Price in effect immediately prior to such
action shall be proportionately adjusted so that the Holder of
any Warrant thereafter exercised may receive the aggregate number
and kind of shares of capital stock of the Company which he would
have owned immediately following such action if such Warrant had
been exercised immediately prior to such action, and the Vesting
Prices shall be proportionately adjusted.
The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and
immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a Holder upon exercise of any
Warrant may receive shares of two or more classes of capital
stock of the Company, the Board of Directors of the Company
shall, in good faith, determine the allocation of the adjusted
Exercise Price between the classes of capital stock. After such
<PAGE>
allocation, the exercise privilege and the Exercise Price and the
Vesting Prices, as applicable, of each class of capital stock
shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section.
(b) Adjustment for Rights Issue. If the Company
distributes any rights, options or warrants to the holders of its
Common Stock generally entitling them for a period expiring
within 60 days after the record date mentioned below to purchase
shares of Common Stock at a price per share less than the current
market price per share on that record date, the Exercise Price
shall be adjusted in accordance with the formula:
O + N x P
_______
E' = E x M
_______
O + N
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price (as it may have been
previously adjusted under this Section 10).
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock
offered.
P = the offering price per share of the additional shares.
M = the "Current Market Price" (as defined below) per share
of Common Stock on the record date.
and the Vesting Prices shall be proportionately adjusted.
The adjustment shall be made successively whenever any
such rights, options or warrants are issued and shall become
effective immediately after the record date for the determination
of stockholders entitled to receive the rights, options or
warrants. If at the end of the period during which such rights,
options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Exercise Price and the
Vesting Price shall be immediately readjusted to what it would
have been if "N" in the above formula had been the number of
shares actually issued.
<PAGE>
(c) Adjustment for Other Distributions. If the Company
distributes to the holders of its Common Stock generally any of
its assets (including but not limited to "ordinary" dividends
payable out of consolidated earnings or earned surplus of the
Company during the first three years from the date hereof, as set
forth below), debt securities, preferred stock, or any rights,
options or warrants to purchase assets, debt securities,
preferred stock, Common Stock, or other securities of the Company
(other than those rights, options and warrants covered Section
10(b)), the Exercise Price shall be adjusted in accordance with
the formula:
E' = E x M - F
_____
M
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price (as it may have been
previously adjusted under this Section 10).
M = the Current Market Price (as defined below) per share
of Common Stock on the record date mentioned below.
F = the fair market value on the record date of the assets
or securities applicable to one share of Common Stock
and distributed to the holders of Common Stock
generally. The fair market value shall be determined
in good faith by the disinterested members of the Board
of Directors of the Company (the "Board of Directors"
or the "Board"), or, if such Board members so elect, by
a nationally recognized investment banking or appraisal
firm selected by the disinterested members of the Board
of Directors.
and the Vesting Prices shall be proportionately adjusted.
The adjustment shall be made successively whenever any
such distribution is made and shall become effective immediately
after the record date for the determination of stockholders
entitled to receive the distribution.
This subsection (c) does not apply to (i) any
distributions referred to in subsection 10(a), (ii) any rights,
options or warrants referred to in subsection 10(b), or (iii) the
payment of "ordinary" dividends payable out of consolidated
earnings or earned surplus of the Company effected more than
three years after the date of this Agreement. "Ordinary"
<PAGE>
dividends refers to dividends made, or which the Company when
made intended to make, on a periodic and recurring basis.
(d) Purchase of Common Stock by the Company. If the
Company at any time while this Warrant is outstanding shall,
directly or indirectly through a subsidiary or otherwise,
purchase, redeem or otherwise acquire any shares of its Common
Stock at a price per share (the "Benchmark Price") greater than
the Quoted Price on the date such purchase, redemption or other
acquisition is effected, then the Exercise Price and Vesting
Prices upon each such purchase, redemption or acquisition shall
be adjusted to that price determined by multiplying such Exercise
Price and Vesting Prices by a fraction:
(i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such
purchase, redemption or acquisition minus the number of
shares of Common Stock which the aggregate consideration for
the total number of such shares of Common Stock so
purchased, redeemed or acquired would otherwise have
purchased at the Benchmark Price; and
(ii) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such
purchase, redemption or acquisition.
For purposes of this subsection (d), a purchase, redemption or
acquisition of a Common Stock equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation
herein required shall be made on the basis of the full exercise,
conversion or exchange of such Common Stock equivalent pursuant
to the terms thereof on the date as of which such computation is
required hereby to be made. Notwithstanding the foregoing,
however, for purposes of this subsection (d), the purchase,
payment, redemption or acquisition of any such Common Stock
equivalent of the Company at the lesser of (i) the fair market
value of such securities or (ii) the purchase or redemption price
set forth in the instrument governing such securities shall not
be deemed to be a purchase of the underlying Common Stock (and,
accordingly, no adjustment shall be made in the terms of exercise
of any Warrant), but any purchase, payment, redemption or
acquisition at a price in excess of the lesser of the fair market
value or the purchase or redemption price contained therein shall
be deemed to be a purchase of the underlying Common Stock for
purposes of this subsection (d), unless such purchase, payment,
redemption or acquisition at such price is mandatory under the
terms of such instrument. For purposes of the immediately prior
sentence, the fair market value of any securities shall be
determined in good faith by the disinterested members of the
Board of Directors or, if such Board members so elect, by a
<PAGE>
nationally recognized investment banking or appraisal firm
selected by the disinterested members of the Board.
(e) Current Market Price. In subsections (b), (c) and
(d) of this Section 10 the "Current Market Price" per share of
Common Stock on any date is the average of the Quoted Prices of
the Common Stock for 10 consecutive trading days commencing five
trading days before the date in question. The "Quoted Price" of
the Common Stock is the last reported sales price of the Common
Stock as reported by the NASDAQ National Market System, or if the
Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange which
shall be for consolidated trading if applicable to such exchange,
or if neither so reported or listed, the last reported bid price
of the Common Stock. In the absence of such quotations on one or
more such trading days, the Board of Directors shall determine
the Quoted Price for such trading days on the basis of such
quotations as it in good faith considers appropriate.
(f) When De Minimis Adjustment May Be Deferred or No
Adjustment Required. No adjustment in the Exercise Price or
Vesting Prices need be made unless the adjustment would require
an increase or decrease of at least 1% in the Exercise Price or
Vesting Prices. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent
adjustment.
All calculations under this Section 10 shall be made to
the nearest cent or to the nearest 1/100th of a share, as the
case may be.
No adjustment need be made for the issuance or exercise
of rights to purchase Common Stock pursuant to a Company plan for
reinvestment of dividends or interest in the event that no
adjustment need be made in respect of the underlying dividend.
No adjustment need be made for a change in the par
value of the Common Stock (including a change from par value to
no par value or from no par value to par value).
To the extent the Warrants become convertible into
cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
(g) Notice of Adjustment. Whenever the Exercise Price
or Vesting Prices are adjusted, the Company shall provide the
notices required by Section 12 hereof.
(h) Notice of Certain Transactions. If:
<PAGE>
(i) the Company takes any action that would require
an adjustment in the Exercise Price and Vesting Prices
pursuant to subsections (a), (b), (c) or (d) of this
Section 10;
(ii) the Company takes any action that would
require a supplemental Warrant Agreement pursuant to
subsection (i) of this Section 10; or
(iii) there is a liquidation, dissolution or winding
up of the Company;
the Company shall mail to Warrant holders a notice stating the
proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. The Company shall mail the notice at
least 15 days before such date. Failure to mail the notice or
any defect in it shall not affect the validity of the
transaction.
(i) Reorganization of Company. If the Company
consolidates or merges with or into, or sells, leases, transfers
or conveys all or substantially all its assets to, any person,
upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of
securities, cash or other assets which the holder of a Warrant
would have owned immediately after the consolidation, merger,
transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction.
Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or
merger, if other than the Company, or the person to which such
sale, lease, transfer or conveyance shall have been made, shall
enter into a supplemental Warrant Agreement so providing and
further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in
this Section 10. The successor Company shall mail to Warrant
holders a notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise
of Warrants under the supplemental Warrant Agreement is an
affiliate of the formed, surviving, transferee or lessee
corporation, that issuer shall join in the supplemental Warrant
Agreement.
If this subsection (i) applies, subsections (a), (b),
(c) and (d) of this Section 10 do not apply.
(j) Company Determination Final. Any good faith
determination that the Company, the Board of Directors or an
<PAGE>
investment banking or appraisal firm, as the case may be, makes
pursuant to this Section 10 shall be conclusive.
(k) When Issuance or Payment May Be Deferred. In any
case in which this Section 10 shall require that an adjustment in
the Exercise Price and the Vesting Prices be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the
holder of any Warrant exercised after such record date but prior
to the occurrence of such event the Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise
over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the
applicable Exercise Price and Vesting Prices and (ii) paying to
such holder any amount in cash in lieu of a fractional share
pursuant to Section 11; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional Warrant
Shares, other capital stock and cash upon the occurrence of the
event requiring such adjustment.
(l) Adjustment in Number of Shares. Upon each
adjustment of the Exercise Price and Vesting Prices pursuant to
this Section 10, each Warrant outstanding prior to the making of
the adjustment in the Exercise Price and Vesting Prices shall
thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock
(calculated to the nearest hundredth of a share) obtained from
the following formula:
N' = N x E
__
E'
where:
N = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
N = the number of Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price
(as the same may previously have been adjusted pursuant
to this Section 10).
E' = the adjusted Exercise Price.
E = the Exercise Price (as the same may previously have
been adjusted pursuant to this Section 10).
<PAGE>
If the Company shall be in default under any of its
agreements to issue Warrant Shares hereunder and/or if applicable
law prevents the issuance of any such shares at the Exercise
Price adjusted in accordance herewith, the adjustment of shares
provided in the foregoing sentence shall nonetheless be made and
the Holder of this Warrant shall be entitled to purchase such
greater number of shares at the price at which this Warrant may
be exercised when such shares are issued.
(m) Form of Warrants. Irrespective of any adjustments
in the Exercise Price or Vesting Prices or the number or kind of
shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement, it being
understood that all adjustments required by this Agreement shall
have been assumed to have been made.
(n) Adjustments Not Duplicative: Adjustments
Successive. The adjustments provided for by this Section 10 are
not intended to be duplicative, it being the intention of the
parties that only one of the foregoing adjustment provisions, if
any, shall apply to any particular transaction or event. In the
event an unforeseen transaction or event occurs which could be
construed to implicate more than one of such adjustment
provisions, the Board of Directors shall determine in good faith
the single adjustment provision contained in this Section 10
which it considers most appropriate in respect of the particular
transaction or event, which provision shall govern the
adjustment, if any, to be made in the Exercise Price, Vesting
Prices and/or number of Warrant Shares issuable. Any series of
adjustments described in Section 10 shall be made successively.
SECTION 11. Fractional Interests. The Company shall
not be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be
presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable
upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the
Warrants so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 11, be issuable on the
exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Quoted Price on
the day immediately preceding the date the Warrant is presented
for exercise, multiplied by such fraction.
SECTION 12. Notices to Warrant Holders. Upon any
adjustment of the Exercise Price or Vesting Prices pursuant to
Section 10, the Company shall promptly thereafter (i) cause to be
filed with the Company a certificate of a firm of independent
<PAGE>
public accountants of recognized standing selected by the Board
of Directors (who may be the regular auditors of the Company)
setting forth the Exercise Price and Vesting Prices after such
adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based
and setting forth the number of Warrant Shares (or portion
thereof) issuable after such adjustment in the Exercise Price,
upon exercise of a Warrant and payment of the adjusted Exercise
Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, and (ii) cause to
be given to each of the registered holders of the Warrant
Certificates at its address appearing on the Warrant register
written notice of such adjustments by first class mail, postage
prepaid. Where appropriate, such notice may be given in advance
and included as a part of the notice required to be mailed under
the other provisions of this Section 12.
In case:
(a) the Company shall authorize the issuance to the
holders of shares of Common Stock generally of rights, options or
warrants to subscribe for or purchase shares of Common Stock or
of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to
the holders of shares of Common Stock generally of evidences of
its indebtedness or assets (other than cash dividends payable out
of consolidated earnings or earned surplus or dividends payable
in shares of Common Stock or distributions referred to in
subsection (a) of Section 10 hereof); or
(c) the Company shall be party to any consolidation or
merger, dissolution, distribution or winding up or tender or
exchange offer for which approval of any stockholders of the
Company is required, or the sale, lease, transfer or conveyance
of the properties and assets of the Company substantially as an
entirety, or (any reclassification or change of Common Stock
issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of
Common Stock; or
(d) the Company proposes to take any action (other
than actions of the character described in Section 10(a)) which
would require an adjustment of the Exercise Price and Vesting
Prices pursuant to Section 10;
then the Company, in accordance with Section 13, shall cause to
be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register, at
<PAGE>
least 15 days prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there is
no record date, a written notice stating (i) the date as of which
the holders of record of shares of Common Stock to be entitled to
receive any such rights, options, warrants or distribution are to
be determined, or (ii) the initial expiration date set forth in
any tender offer or exchange offer for shares of Common Stock, or
(iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is
expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for cash,
securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, lease, conveyance,
transfer, dissolution, liquidation or winding up. The failure to
give the notice required by this Section 12 or any defect therein
shall not affect the legality or validity of any distribution,
right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote
upon any action.
SECTION 13. Notices to Company and Warrant Holders.
Any notice or demand authorized by this Agreement to be given or
made by the registered holder of any Warrant Certificate to or on
the Company shall be given or made in writing by hand delivery,
registered or certified first-class mail, telex, telecopier, or
air courier guaranteeing overnight delivery at the address
expressly designated by the Company as its office for purposes of
this Agreement (until the Warrant holders are otherwise notified
in accordance with this Section by the Company), as follows:
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Attention: Chairman
Telecopy number: 702/454-0478
Any notice pursuant to this Agreement to be given by
the Company to the registered holder(s) of any Warrant
Certificate shall be given in writing by hand delivery,
registered first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery at the address appearing on the
Warrant register of the Company (until the Company is otherwise
notified in accordance with this Section 13 by such holder).
All such notices and demands shall be deemed to have
been duly given: at the time delivered by hand, if personally
delivered; four business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged by addressee, if by telecopier transmission;
<PAGE>
and on the next business day if timely delivered to an air
courier guaranteeing overnight delivery.
SECTION 14. No Rights as Stockholders. Nothing
contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders' or transferees
thereof (in their respective capacity as holders or transferees
of Warrants) the right to vote for or to consent to, or to
receive notice as stockholders in respect of the meetings of
stockholders for, the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the
Company.
SECTION 15. Supplements and Amendments. The Company
may from time to time supplement or amend this Agreement without
the approval of holders of Warrant Certificates in order to cure
any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem
necessary or desirable and which shall not in any way adversely
affect the interests of the holders of Warrant Certificates. In
addition, the Company may from time to time supplement or amend
this Agreement with the consent of both (i) the holders of not
less than a majority of the Warrants and (ii) the Holder
originally named herein, if then a Holder; provided, however,
that no such amendment or supplement shall amend any of the
Exercise Conditions or change the Exercise Price or number of
Warrant Shares issuable upon exercise of Warrants (other than in
accordance with Section 10) without the consent of each holder of
Warrants adversely affected thereby.
SECTION 16. Successors. All the covenants and
provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, assigns and transferees of each
of the parties, including without limitation and without the need
for an express assignment, transferees of the Warrants.
SECTION 17. Termination. This Agreement shall
terminate at 5:00 p.m., New York City time on the Expiration
Date. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date if all Warrants have been
exercised.
SECTION 18. Governing Law. This Agreement and each
Warrant Certificate issued hereunder shall be construed,
interpreted and the rights of the parties determined in
accordance with the internal laws of the State of Nevada, without
regard to the conflict of law principles thereof.
<PAGE>
SECTION 19. Benefits of This Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company and the registered holders of
the Warrant Certificates any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company and the registered
holders of the Warrant Certificates.
SECTION 20. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
SECTION 21. HSR Act. Promptly after receipt of notice
from any holder of Warrants of its intention to exercise any
Warrants, the Company shall make all filings required to be made
by the Company under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), in connection with such
exercise. The applicable waiting period, including any extension
thereof, under the HSR Act shall have expired or been terminated
prior to the issuance of any Warrant Shares upon exercise of
Warrants.
SECTION 22. No Obligation to Exercise. Nothing
contained herein shall be construed to obligate any Holder to
exercise any Warrant issued pursuant to this Agreement.
SECTION 23. Board Approval. This Agreement and the
Warrants are subject to the approval of the Board and shall be
and become effective only upon the approval thereof by the Board;
prior to such time they shall not have any force and effect.
(Signature page(s) follow)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above
written.
ALLIANCE GAMING CORPORATION
By: ______________________________
Name:
Title:
Attest: ____________________
Secretary
______________________________
Steve Greathouse
Witness:
_________________________
<PAGE>
EXHIBIT A
[Form of Warrant Certificate A/B/C]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
No. SG- _____ Warrants
Warrant Certificate
SERIES [A][B][C]
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that STEVE
GREATHOUSE or registered assigns, is the registered holder of
Warrants ("Warrants") to purchase Common Stock, par value $.10
per share (the "Common Stock"), of ALLIANCE GAMING CORPORATION, a
Nevada corporation (the "Company"). Upon the terms and subject
to the conditions contained in that certain Warrant Agreement
referred to on the reverse side hereof including, without
limitation, Section 5 thereof, each Warrant entitles the holder
upon exercise to receive from the Company at any time after the
occurrence of the "Exercise Conditions" (as such term is defined
in the Warrant Agreement) one fully paid and nonassessable share
of Common Stock (a "Warrant Share") at the initial exercise price
(the "Exercise Price") of $1.50 payable in lawful money of the
United States of America upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of
the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be August 14, 2000.
<PAGE>
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Company.
IN WITNESS WHEREOF, ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its Chairman and
has caused its corporate seal to be affixed hereunto or imprinted
hereon.
Dated: August 15, 1994
ALLIANCE GAMING CORPORATION
By___________________________
Name:
Title:
[SEAL]
<PAGE>
[Form of Warrant Certificate A/B/C] [Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of August 15, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
certified or official bank check at the office of the Company
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
<PAGE>
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
series and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive
_____ shares of Common Stock and herewith tenders payment for
such shares to the order of United Gaming, Inc. in the amount of
$_________ in accordance with the terms hereof. The undersigned
requests that a certificate for such shares be registered in the
name of _________________, whose address is _________________ and
that such shares be delivered to ________________________ whose
address is ______________. If said number of shares is less
than all of the shares of Common Stock purchasable hereunder
after giving effect to any delivery of Warrants in payment of
the Exercise Price, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares
be registered in the name of ____________, whose address is
_______________, and that such Warrant Certificate be delivered
to ______________, whose address is ______________.
Signature: _______________________
Date:
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
No. SG-001 84,000 Warrants
Warrant Certificate
SERIES A
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that STEVE
GREATHOUSE, or registered assigns, is the registered holder of
Warrants ("Warrants") to purchase Common Stock, par value $.10
per share (the "Common Stock"), of ALLIANCE GAMING CORPORATION, a
Nevada corporation (the "Company"). Upon the terms and subject
to the conditions contained in that certain Warrant Agreement
referred to on the reverse side hereof including, without
limitation, Section 5 thereof, each Warrant entitles the holder
upon exercise to receive from the Company at any time after the
occurrence of the "Exercise Conditions" (as such term is defined
in the Warrant Agreement) one fully paid and nonassessable share
of Common Stock (a "Warrant Share") at the initial exercise price
(the "Exercise Price") of $1.50 payable in lawful money of the
United States of America upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of
the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be August 14, 2000.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Company.
<PAGE>
IN WITNESS WHEREOF, ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its Chairman and
has caused its corporate seal to be affixed hereunto or imprinted
hereon.
Dated: August 15, 1994
ALLIANCE GAMING CORPORATION
By ______________________
Name:
Title:
[SEAL] [Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of August 15, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
certified or official bank check at the office of the Company
<PAGE>
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
series and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _________
shares of Common Stock and herewith tenders payment for such
shares to the order of Alliance Gaming Corporation in the amount
of $__________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be
registered in the name of ___________________, whose address is
________________________ and that such shares be delivered to
________________ whose address is ______________________. If
such number of shares is less than all of the shares of Common
Stock purchasable hereunder after giving effect to any delivery
of Warrants in payment of the Exercise Price, the undersigned
requests that a new Warrant Certificate representing the
remaining balance of such shares be registered in the name of
__________________, whose address is ________________, and that
such Warrant Certificate be delivered to _____________, whose
address is _____________________.
Signature:
Date: ___________________
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL APPLICABLE
STATE SECURITIES OR "BLUE SKY" LAWS.
<PAGE>
No. SG-002 83,000 Warrants
Warrant Certificate
SERIES B
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that STEVE
GREATHOUSE, or registered assigns, is the registered holder of
Warrants ("Warrants") to purchase Common Stock, par value $.10
per share (the "Common Stock"), of ALLIANCE GAMING CORPORATION, a
Nevada corporation (the "Company"). Upon the terms and subject
to the conditions contained in that certain Warrant Agreement
referred to on the reverse side hereof including, without
limitation, Section 5 thereof, each Warrant entitles the holder
upon exercise to receive from the Company at any time after the
occurrence of the "Exercise Conditions" (as such term is defined
in the Warrant Agreement) one fully paid and nonassessable share
of Common Stock (a "Warrant Share") at the initial exercise price
(the "Exercise Price") of $1.50 payable in lawful money of the
United States of America upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of
the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be August 15, 2000.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Company.
<PAGE>
IN WITNESS WHEREOF, ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its Chairman and
has caused its corporate seal to be affixed hereunto or imprinted
hereon.
Dated: August 15, 1994
ALLIANCE GAMING CORPORATION
By____________________________
Name:
Title:
[SEAL] [Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of August 15, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
certified or official bank check at the office of the Company
<PAGE>
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
series and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ____________
shares of Common Stock and herewith tenders payment for such
shares to the order of Alliance Gaming Corporation in the amount
of $_________ in accordance with the terms hereof. The under-
signed requests that a certificate for such shares be registered
in the name of __________________, whose address is ____________
__________________ and that such shares be delivered to
______________________ whose address is _______________. If such
number of shares is less than all of the shares of Common Stock
purchasable hereunder after giving effect to any delivery of
Warrants in payment of the Exercise Price, the undersigned
requests that a new Warrant Certificate representing the
remaining balance of such shares be registered in the name of
_______________________, whose address is ___________________,
and that such Warrant Certificate be delivered to
__________________________, whose address is ___________________.
Signature:
Date: ___________________
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
<PAGE>
No. SG-003 83,000 Warrants
Warrant Certificate
SERIES C
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that STEVE
GREATHOUSE, or registered assigns, is the registered holder of
Warrants ("Warrants") to purchase Common Stock, par value $.10
per share (the "Common Stock"), of ALLIANCE GAMING CORPORATION, a
Nevada corporation (the "Company"). Upon the terms and subject
to the conditions contained in that certain Warrant Agreement
referred to on the reverse side hereof including, without
limitation, Section 5 thereof, each Warrant entitles the holder
upon exercise to receive from the Company at any time after the
occurrence of the "Exercise Conditions" (as such term is defined
in the Warrant Agreement) one fully paid and nonassessable share
of Common Stock (a "Warrant Share") at the initial exercise price
(the "Exercise Price") of $1.50 payable in lawful money of the
United States of America upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of
the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be August 14, 2000.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
<PAGE>
This Warrant Certificate shall not be valid unless
countersigned by the Company. IN WITNESS WHEREOF,
ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its Chairman and
has caused its corporate seal to be affixed hereunto or imprinted
hereon.
Dated: August 15, 1994
ALLIANCE GAMING CORPORATION
By ________________________
Name:
Title:
[SEAL] [Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of August 15, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
<PAGE>
certified or official bank check at the office of the Company
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor
and series and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for
this Warrant Certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ___________
shares of Common Stock and herewith tenders payment for such
shares to the order of Alliance Gaming Corporation in the amount
of $____________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be
registered in the name of __________________, whose address is
______________________ and that such shares be delivered to
___________________ whose address is ____________________. If
such number of shares is less than all of the shares of Common
Stock purchasable hereunder after giving effect to any delivery
of Warrants in payment of the Exercise Price, the undersigned
requests that a new Warrant Certificate representing the
remaining balance of such shares be registered in the name of
_____________________, whose address is __________________, and
that such Warrant Certificate be delivered to ________________,
whose address is _____________________.
Signature:
Date: ___________________
<PAGE>
Exhibit 4.3
AGREEMENT
AGREEMENT dated as of September 1, 1994 by and between
Alliance Gaming Corporation, a Nevada corporation (the
"Company"), and Craig Fields, an individual (the "Executive").
R E C I T A L S :
A. The Company considers it important and in its best
interest and the best interest of its stockholders to foster the
retention and engagement of key senior personnel, including in
respect of service on the Company's Board of Directors (the
"Board"), and the Company desires to retain the services of the
Executive in such capacity, on the terms and subject to the
conditions provided in this Agreement.
B. The Executive desires to accept such engagement by
the Company and to render services to the Company, on the terms
and subject to the conditions provided in this Agreement.
A G R E E M E N T :
The parties hereto agree as follows:
1. Engagement. The Company hereby agrees to retain
the services of the Executive, and the Executive agrees to be
retained by the Company, to render services to the Company for
the period, at the rate of compensation and upon the other terms
and conditions set forth in this Agreement.
2. Term. The term of the Executive's engagement
under this Agreement (the "Term") shall commence on the date
hereof and shall continue through and including August 31, 1997,
unless earlier terminated as provided in this Agreement (the date
of any termination of this Agreement or the expiration of the
Term, as provided herein, the "Termination Date").
3. Position and Duties.
(a) Position. Subject to the remainder of this
Section 3(a), the Executive shall serve as a Vice Chairman of the
Board. During his engagement hereunder, the Executive shall
<PAGE>
report directly to the Board. The Executive shall, if so elected
by the stockholders of the Company, serve on the Board from time
to time, for successive periods of such election(s) and for such
period as shall be agreed to by the Executive, subject, in each
case, to the continued election thereto by the Company's
stockholders.
In the event that this Agreement is terminated, for any
reason, except as otherwise agreed to in writing by the Company,
the Executive shall be deemed to have immediately resigned from
the Board, such resignation being effective on the Termination
Date.
In the event that the Executive shall fail to be
elected to the Board or shall otherwise resign from or be removed
from the Board during the Term, as a result of action by the
stockholders of the Company (at a regular or special meeting
thereof), including their failure to so elect the Executive, or
otherwise, then, notwithstanding any such event (but subject to
the remainder of this Agreement, including without limitation,
Sections 7 and 8 below), (i) the Executive shall nonetheless
continue to render the services to the Company otherwise provided
in this Agreement to be rendered by the Executive, (ii) the
Company shall otherwise continue to furnish the compensation and
other remunerations to the Executive otherwise provided in this
Agreement to be furnished, and (iii) the parties shall, if
appropriate, reasonably agree to an amendment or modification to
this Agreement appropriately to reflect such state of affairs.
(b) Duties. During the Term, the Executive shall,
subject to supervision by the Board, have the authority and power
to perform such duties as are consistent with those of Vice
Chairman of the Board. During the Term, the Executive shall
perform the duties contemplated by such title and such other
duties, consistent with his experience and abilities, as may be
assigned to the Executive by the Board. The Executive shall
devote substantially full time and efforts to the business and
affairs of the Company, use his best efforts to further the
interests of the Company and at all times conduct himself in a
manner which reflects credit upon the Company. It is
contemplated that the Executive shall render services to the
Company from an office established by the Executive on behalf of
the Company or the cost of which is paid for or reimbursed by the
Company (and reasonably approved by the Company) in Washington,
D.C.; however, the parties acknowledge and agree that the
Executive may be required to travel extensively during the Term
in fulfilling his duties hereunder (including numerous trips to
New York City and Las Vegas, Nevada).
4. Compensation and Reimbursement of Expenses.
<PAGE>
(a) Compensation. For purposes of this Agreement,
each consecutive 12-month period during the Term ending on each
August 31st during the Term shall be referred to as an
"Engagement Year." For services rendered by the Executive under
this Agreement, the Company shall pay to the Executive as
compensation during each Engagement Year during the Term, a base
amount of compensation (the "Base Compensation") at an annual
rate of $250,000 per year (prorated for any partial Engagement
Years). The Base Compensation shall be payable in equal bi-
weekly installments, commencing with the end of the pay period
which next follows the commencement of the Term, and shall be
subject to customary payroll deductions (i.e., for social
security, federal, state and local taxes and other amounts
customarily withheld from the compensation of members of the
Board and/or employees of the Company).
(b) Bonus. The Executive shall be eligible to receive
from the Company, within 120 days of the end of each Engagement
Year, a cash bonus in respect of such Engagement Year (the
"Annual Bonus"), which shall be based upon all relevant criteria,
including without limitation, (i) the performance of the Company
and/or the operations of the Company for which the Executive is
primarily or exclusively responsible, during such Engagement
Year, based upon customary financial and other criteria, such as
but not limited to, return on the Company's consolidated
stockholders' equity and total capital (i.e., stockholders'
equity and total debt), performance of the Company's Common
Stock, par value $.10 per share (the "Common Stock"), and the
Company's and such operations' absolute and relative amounts of
consolidated cash flow, operating income and net income, and the
comparison of such results with the Company's and such
operations' budgets and projections therefor and (ii) the
performance of the Executive in rendering services to the
Company; it being understood that the Company shall not be
obligated to pay to the Executive any Annual Bonus and the
payment, if any, and amount thereof shall be solely within the
discretion of the Board (with the Executive not voting on such
determination). It is also contemplated that the Compensation
Committee of the Board shall formulate specific criteria and
performance targets for the determination of the Annual Bonus, if
any. The Annual Bonus shall be subject to customary payroll
deductions (i.e., for social security, federal, state and local
taxes and other amounts customarily withheld from the
compensation of members of the Board and/or employees of the
Company).
(c) Warrants and Options.
(1) Effective as of the date hereof, the Company shall
issue to the Executive warrants to acquire 250,000 shares of
Common Stock pursuant to a warrant agreement and warrant in the
<PAGE>
form attached hereto as Exhibit A (the "Incentive Warrants").
Such warrant agreement and warrant are substantially identical to
the warrant agreement and warrant in respect of the warrants
issued to Kirkland-Ft. Worth Investment Advisors, L.P. ("KFW") on
September 21, 1993, except for provisions thereof such as the
number of shares of Common Stock covered thereby, the identity of
the holder thereof, the date and expiration date thereof of other
technical or transaction-specific terms. The Incentive Warrants
shall vest and become exercisable as follows:
As of the date hereof - 62,500 warrants
On August 31, 1995 - 62,500 warrants
On August 31, 1996 - 62,500 warrants
On August 31, 1997 - 62,500 warrants
Prior to each such applicable date, except as
specifically set forth in this Agreement, the Incentive Warrants
shall not be vested or exercisable.
(2)(A) Effective as of the date hereof, the Company
shall issue to the Executive options (pursuant to the Company's
1991 Incentive Stock Option Plan (the "Plan")) to acquire 250,000
shares of Common Stock of the Company (the "Engagement Options").
The Engagement Options shall (1) have an exercise price of $5 3/4
per share, (2) expire on August 31, 1999 or as otherwise provided
in the Plan and (3) vest and become exercisable as follows:
As of the date hereof - 62,500 shares
On August 31, 1995 - 62,500 shares
On August 31, 1996 - 62,500 shares
On August 31, 1997 - 62,500 shares
Prior to each such applicable date, except as
specifically set forth in this Agreement, such Engagement Options
shall not be vested or exercisable.
(B) For purposes of this Agreement, a "Strategic
Transaction" means any transaction which (i) is a "Special
Strategic" transaction (as defined in the advisory letter
agreement dated June 25, 1993 among the Company, Gaming Systems
Advisors, L.P. ("GSA") and Alfred H. Wilms) in respect of which
GSA has received incremental warrants over and above the warrants
otherwise issuable for a strategic transaction (as defined in
such agreement) and (ii) involves a company or other entity
(other than the Company or its subsidiaries or affiliates) in the
electronic gaming systems business. In the event that prior to
the Termination Date a Strategic Transaction shall have occurred,
the Company shall issue to the Executive, within 30 days of the
consummation of such Strategic Transaction, additional Engagement
Options to purchase an additional 150,000 shares of Common Stock.
<PAGE>
The exercise price of such Engagement Options shall be equal to
the average of the closing prices of a share of Common Stock (on
the principal exchange or trading market on which the Common
Stock is then listed or quoted) for the five consecutive trading
days (starting at the latest date and preceding to an earlier
date) preceding the day which is two business days prior to the
day that the pendency or consummation of, or intention to
consummate, such Strategic Transaction is first announced to the
public. Such Engagement Options shall be vested and exercisable
upon issuance. This subsection (B) shall apply only to the first
Strategic Transaction consummated during the Term.
(3) The Executive acknowledges that the Incentive
Warrants (and any Common Stock underlying the Incentive Warrants)
have not been registered for sale under the Securities Act of
1933 (the "Securities Act") or applicable state "blue sky" laws
and that such Incentive Warrants and Common Stock may be sold
only pursuant to such registration or applicable exemptions
therefrom. The Executive confirms that he is an accredited
investor (as defined under the Securities Act) and has been
afforded the opportunity to ask questions of and receive
information from management and other representatives of the
Company in connection with the receipt of the Incentive Warrants
and such Common Stock. The Executive agrees that in connection
with his receipt and ownership of the Incentive Warrants and, as
applicable, any other securities of the Company issued or
delivered to the Executive in connection with his engagement by
the Company, (A) he shall vote such stock and other securities at
all regular or special meetings of the stockholders of the
Company for the election of directors in the manner directed by
and required of Kirkland Investment Corporation ("KIC"), pursuant
to the Stockholders Agreement dated as of September 21, 1993, as
amended October 20, 1994, among the Company, KIC, KFW, GSA and
Alfred H. Wilms (the "Stockholders Agreement") for as long as the
Stockholders Agreement is in effect, and (B) he shall file in a
timely manner any and all applicable forms or filings required
under the Securities Act or the Securities Exchange Act of 1934,
including without limitation, a Schedule 13D (and any required
amendments thereto) and/or Forms 3, 4 and/or 5.
(d) Reimbursement of Expenses. Consistent with
established policies of the Company as in effect from time to
time, the Company shall pay to or reimburse the Executive for all
reasonable and actual out-of-pocket expenses, including without
limitation, travel, hotel and similar expenses, incurred by the
Executive from time to time in performing his obligations under
this Agreement.
5. Benefits.
<PAGE>
(a) Benefit Plans. The payments provided in Section 4
above are in addition to any benefits to which the Executive may
be, or may become, entitled under any of the Company's benefit
plans or programs for which members of the Board are or shall
become eligible. In addition, the Executive shall be eligible to
receive during the Term benefits and emoluments which are
consistent with the benefits and emoluments provided to all
members of the Board or senior executives of the Company.
(b) Vacation. The Executive shall be entitled to
reasonable periods of vacation and sick leave consistent with his
role as the Vice Chairman of the Board.
(c) No Reduction. There shall be no material reduc-
tion or diminution of the benefits provided in this Section 5
during the Term unless (i) the Executive shall have provided his
consent to such reduction or diminution, (ii) an equitable
arrangement (embodied in an ongoing substitute or alternative
benefit or plan) has been made with respect to such benefit or
plan or (iii) such reduction is part of a program of across-the-
board benefit reductions similarly affecting the senior executive
officers of the Company or members of the Board.
6. Benefits Payable Upon Disability.
(a) Disability Benefits. During any period of
Disability (as defined below) occurring during the Term, the
Company shall continue to pay to the Executive the Base
Compensation as provided herein and continue to extend to him the
benefits described in Sections 4 and 5 hereof; it being
understood that if disability benefits are provided under any
disability insurance or similar policy maintained by the Company
(or maintained by the Executive, the cost of which is reimbursed
or paid by the Company), payments under such policy shall
be considered as payments by the Company and shall offset any
Base Compensation payable to the Executive under this Agreement.
As used in this Agreement, "Disability" shall mean the inability
(as determined by a majority of the remaining members of the
Board (other than the Executive) voting for such determination)
of the Executive to render services to the Company, as provided
herein, as a result of physical or mental infirmity or
disability.
(b) Services During Disability. During the Term,
notwithstanding any Disability, the Executive shall, to the
extent that he is physically and mentally able to do so, furnish
information, assistance and services to the Company, and, upon
the reasonable request in writing on behalf of the Board (as
determined by a majority of the remaining members of the Board
(other than the Executive) voting for such determination), from
time to time, he shall make himself available to the Company to
<PAGE>
undertake reasonable assignments and fulfill his duties
hereunder, consistent with his current position with the Company
and his physical and mental health.
7. Termination. This Agreement shall be terminated
in accordance with the provisions of this Section 7, in which
case the provision of Section 8 below shall be applicable.
(a) Upon Expiration of the Term. This Agreement shall
terminate in accordance with Section 2 above.
(b) By The Company. In addition to the provisions of
Section 7(a) above, this Agreement is subject to earlier
termination by the Company (which right may be exercised, as
applicable, by the Company, or the Chairman of the Board (in such
capacity), acting individually), as follows:
(i) Death of Executive. If the Executive dies, this
Agreement shall terminate, the Termination Date being the
date of the Executive's death.
(ii) Disability. If the Executive has been absent
from service to the Company, as required in this Agreement,
for a period of 90 days or more as a result of Disability
during any consecutive 180-day period during the Term, the
Company shall have the right to terminate this Agreement (as
determined by a majority of the remaining members of the
Board (other than the Executive) voting for such
determination), the Termination Date being 15 days after
notice thereof is provided to the Executive.
(iii) Termination by Company for Cause. The Company
shall have the right to terminate the Executive's engagement
under this Agreement for Cause (as defined below), the
Termination Date to be immediately upon notice thereof from
the Company to the Executive. For purposes of this
Agreement, "Cause" shall mean the Executive's (A) conviction
of any misdemeanor involving moral turpitude or any felony,
(B) misappropriation or embezzlement from the Company, (C)
denial or rejection of any gaming license or permit issued
by the State of Nevada (or any applicable agency or
political subdivision) or any other jurisdiction in or from
which the denial of a gaming license or permit could
materially adversely affect the Company's business, or
commission of any act which could reasonably be expected to
result in such denial or rejection, (D) any breach during
the Term of Sections 10 or 11 below or (E) the persistent
refusal, after written notice, to undertake the Executive's
duties or obligations hereunder in the Executive's capacity
as Vice Chairman of the Board.
<PAGE>
(iv) Termination by the Company Without Cause. The
Company shall have the right to terminate the Executive's
engagement hereunder for any other reason not set forth in
clauses (i), (ii) or (iii) of this Section 7(b), the
Termination Date being 15 days after notice from the Company
to the Executive.
(c) By The Executive. In addition to the provisions
of Section 7(a) above, this Agreement is subject to earlier
termination by the Executive, as follows:
(i) Termination by the Executive for Just Cause. The
Executive shall have the right to terminate his engagement
under this Agreement upon the occurrence of a material
breach of this Agreement by the Company, which the parties
agree shall be limited to (A) a reduction by the Company in
the Base Compensation below the minimum Base Compensation
specified in Section 4(a) above or the failure of the
Company to pay to the Executive any portion of the Base
Compensation within 30 days of the time that any such amount
is due and payable hereunder or (B) the assignment to the
Executive of duties and responsibilities that are materially
inconsistent with those of a Vice Chairman of the Board, in
each case, in the cases of clauses (A) and (B), which has
not been cured by the Company after 30 days' written notice
from the Executive to the Company; provided, that in the
case of three such defaults (and notice thereof), the
Executive shall have thereafter have the right during the
remainder of the Term to terminate this Agreement upon five
days' written notice to the Company following the first of
any such subsequent defaults hereunder (provided such
subsequent default is not cured within such five-day period)
and, if the Company thereafter again shall default in its
obligations hereunder, the Executive shall have the right to
terminate this Agreement immediately upon written notice to
the Company. In the event that the Executive elects to
terminate this Agreement as a result of the events described
in clauses (A) or (B) above, the Executive shall exercise
such right within 10 days after the lapsing of the 30-day
or, if applicable, five-day period referred to above in this
clause (i) (assuming, in each case, that the Company shall
have failed to cure such material breach within such period)
or, if applicable, within five days of the event giving rise
to a right of immediate termination, as referred to above in
this clause (i); thereafter, such right to terminate shall
no longer be exercisable. The Termination Date shall be a
date specified by the Executive, which shall be between 30
and 45 days after the date of such default notice by the
Executive.
(ii) Termination by the Executive Without Just Cause.
The Executive shall have the right to terminate the
<PAGE>
Executive's engagement under this Agreement for any other
reason not set forth in clause (i) of this Section 7(c), the
Termination Date being 15 days after notice thereof from the
Executive to the Company.
8. Effect of Termination. The following provisions
shall be applicable in the event of the termination of this
Agreement as provided in Section 7 above.
(a) Expiration of Term. Upon termination of this
Agreement as provided in Section 7(a) above, this Agreement
shall terminate and be of no further force and effect,
except as provided in Sections 11, 12 and 13(b) below, which
shall survive such termination, and no additional payments,
liabilities or obligations shall be due and owing from
either party to the other.
(b) Death. Upon the termination of this Agreement as
provided in Section 7(b)(i) above, the Company shall pay to
the Executive's estate (i) an amount equal to the sum of (A)
six months' of the Base Compensation in effect on the
Termination Date and (B) any Annual Bonus for the Engagement
Year in which the Termination Date occurs that the Board
determines would otherwise have been payable had the
Executive not died, which Annual Bonus shall be reduced by
prorating it through the Termination Date, in each case, in
the case of clauses (A) and (B) above, payable, at the time
such payments would otherwise be due and payable hereunder,
and (ii) expense reimbursement amounts accrued through the
Termination Date, at the time such payment would otherwise
be due and payable thereunder, and neither party shall have
any further liability or obligation to the other, except as
provided in Section 12 below, which shall survive the
Termination Date. Any unvested Incentive Warrants and
Engagement Options otherwise provided in this Agreement to
vest and become exercisable within the 364-day period
following the Termination Date shall vest and become
exercisable on the Termination Date by virtue of any
termination under Section 7(b)(i) above. Notwithstanding
the provisions of clauses (A) and (B) above, the Company
shall have the right to provide for either or both of such
payments by either purchasing life insurance on the
Executive's life itself or reimbursing to the Executive the
cost of the premiums in respect of such life insurance which
shall be purchased directly by the Executive; in the event
that either of such insurance coverages is obtained, the
applicable payments under such clauses (A) and (B) above
shall be made solely from such insurance coverages and not
from the Company and shall constitute the Executive's
estate's or heirs' sole remedy in respect of such payments.
<PAGE>
(c) Disability. Upon the termination of this
Agreement as provided in Section 7(b)(ii) above, the Company
shall pay to the Executive (i) an amount equal to the sum of
(A) six months of Base Compensation in effect on the
Termination Date and (B) any Annual Bonus for the Engagement
Year in which the Termination Date occurs that the Board
determines would otherwise have been payable had the
Executive not become Disabled, which Annual Bonus shall be
reduced by prorating it through the Termination Date, in
each case, in the case of clauses (A) and (B) above, payable
at the times such payments would otherwise be due and
payable hereunder; provided, in the case of clauses (A) and
(B) above, that the Executive continues to comply with his
covenants in Sections 10 (during the period that any such
payments are provided to be made) and 11 below, as provided
therein, and (ii) expense reimbursement amounts accrued
through the Termination Date, at the time such payments
would otherwise be due and payable thereunder, and neither
party shall have any further liability or obligation to the
other, except that the provisions of Sections 10, 11, 12 and
13(b) below shall survive the Termination Date, to the
extent provided above and therein. Any unvested Incentive
Warrants and Engagement Options otherwise provided in this
Agreement to vest and become exercisable within the 364-day
period following the Termination Date shall vest and become
exercisable on the Termination Date by virtue of any
termination under Section 7(b)(ii) above. Notwithstanding
the provisions of clauses (A) and (B) above, the Company
shall have the right to provide for either or both of such
payments by either purchasing disability insurance itself in
respect of the Executive or reimbursing to the Executive the
cost of the premiums in respect of such disability insurance
which shall be purchased directly by the Executive; in the
event that either of such insurance coverages is obtained,
the applicable payments under such clauses (A) and (B) above
shall be made solely from such insurance coverages and not
from the Company and shall constitute the Executive's sole
remedy in respect of such payments.
(d) Termination by the Company For Cause. Upon the
termination of this Agreement as provided in Section
7(b)(iii) above, the Company shall pay to the Executive
(i) the accrued and unpaid Base Compensation, if any,
through the Termination Date and (ii) expense reimbursement
amounts accrued through the Termination Date, at the time
such payments are otherwise due and payable thereunder, and
neither party shall have any further liability or obligation
to the other, except that the provisions of Sections 10, 11,
12 and 13(b) below shall survive the Termination Date, to
the extent provided therein. No unvested Incentive Warrants
<PAGE>
or Engagement Options shall vest or become exercisable by
virtue of any termination under Section 7(b)(iii) above and
any and all rights thereto then possessed by the Executive
shall be terminated and of no further force and effect.
(e) Termination by the Company Without Cause. Upon
termination of this Agreement as provided in Section
7(b)(iv) above, the Company shall pay to the Executive
(i) an amount equal to the aggregate of (A) the Base
Compensation which would otherwise be payable hereunder in
respect of the shorter of (1) the remainder of the Term and
(2) the 12 months following the Termination Date, in each
case, had such termination not occurred (provided, that if
the Executive commences full-time employment with another
entity within the applicable period described in clauses (1)
or (2) above, then, in each such case, from and after the
date of commencement of such other employment, (x) if the
aggregate compensation payable to the Executive in respect
of such other employment is at a rate which exceeds the Base
Compensation, no additional compensation shall be payable to
the Executive under this clause (A) and (y) if the aggregate
compensation payable to the Executive in respect of such
other employment is at a rate which is less than the Base
Compensation, the Company shall be obligated to pay to the
Executive (for the applicable period described in clauses
(1) or (2) above) the difference between the Base
Compensation and the such other compensation), and (B) any
Annual Bonus which would be otherwise payable in the year in
which the Termination Date occurs that the Board determines
would otherwise have been payable had such termination not
occurred, which Annual Bonus shall be reduced by prorating
it through the Termination Date, in each case, in the case
of clauses (A) and (B) above, payable at the times such
payments are otherwise due and payable hereunder; provided,
that the Executive continues to comply with the covenants in
Section 11 below, as provided therein, and (ii) expense
reimbursement amounts accrued through the Termination Date,
in such case, at the time such payment is otherwise due and
payable thereunder, and neither party shall have any further
liability or obligation to the other (including under
Section 10 below), except that the provisions of Sections
11, 12 and 13(b) below shall survive the Termination Date,
to the extent provided therein. Any unvested Incentive
Warrants and Engagement Options otherwise provided in this
Agreement to vest and become exercisable within the 364-day
period following the Termination Date shall vest and become
exercisable on the Termination Date by virtue of any
termination under Section 7(b)(iv) above.
(f) Termination by the Executive for Just Cause. Upon
termination of this Agreement as provided in Section 7(c)(i)
<PAGE>
above, the Company shall pay to the Executive (i) an amount
equal to the aggregate of (A) the Base Compensation which
would otherwise be payable hereunder in respect of the
shorter of (1) the remainder of the Term and (2) the 12
months following the Termination Date, in each case, had
such termination not occurred (provided, that if the
Executive commences full-time employment with another entity
within the applicable period described in clauses (1) or (2)
above, then, in each such case, from and after the date of
commencement of such other employment, (x) if the aggregate
compensation payable to the Executive in respect of such
other employment is at a rate which exceeds the Base
Compensation, no additional compensation shall be payable to
the Executive under this clause (A) and (y) if the aggregate
compensation payable to the Executive in respect of such
other employment is at a rate which is less than the Base
Compensation, the Company shall be obligated to pay to the
Executive (for the applicable period described in clauses
(1) or (2) above) the difference between the Base
Compensation and the such other compensation), and (B) any
Annual Bonus which would be otherwise payable in the year in
which the Termination Date occurs that the Board determines
would otherwise have been payable had such termination not
occurred, which Annual Bonus shall be reduced by prorating
it through the Termination Date, in each case, in the case
of clauses (A) and (B) above, payable at the times such
payments are otherwise due and payable hereunder; provided,
that the Executive continues to comply with the covenants in
Section 11 below, as provided therein, and (ii) expense
reimbursement amounts accrued through the Termination Date,
in each case, at the time such payment is otherwise due and
payable thereunder, and neither party shall have any further
liability or obligation to the other (including under
Section 10 below), except that the provisions of Sections
11, 12 and 13(b) below shall survive the Termination Date,
to the extent provided therein. Any unvested Incentive
Warrants and Engagement Options otherwise provided in this
Agreement to vest and become exercisable within the 364-day
period following the Termination Date shall vest and become
exercisable on the Termination Date by virtue of any
termination under Section 7(c)(i) above.
(g) Termination by the Executive Without Just Cause.
Upon the termination of this Agreement as provided in
Section 7(c)(ii) above, the Company shall pay to the
Executive (i) the accrued and unpaid Base Compensation, if
any, through the Termination Date and (ii) expense
reimbursement amounts accrued through the Termination Date,
at the time such payments are otherwise due and payable
<PAGE>
thereunder, and neither party shall have any further
liability or obligation to the other, except that the
provisions of Sections 10, 11, 12 and 13(b) below shall
survive the Termination Date, to the extent provided
therein. No unvested Engagement Options shall vest or
become exercisable by virtue of any termination under
Section 7(c)(ii) above and any and all rights thereto then
possessed by the Executive shall be terminated and of no
further force and effect.
9. Federal Income Tax and Other Withholdings. The
Company shall withhold from any benefits payable pursuant to this
Agreement such Federal, State, City or other taxes and other
amounts as may be required to be withheld pursuant to any
applicable law or governmental regulations or ruling and shall
timely pay over to the appropriate governmental or other
authorities the amount withheld, together with any additional
amounts required to be paid by the Company in respect thereof.
10. Non-Competition. (a) The Executive covenants and
agrees that he will not at any time during his engagement by the
Company and, to the extent provided for in the applicable
subsections of Section 8 above, for a period of 12 months
thereafter, directly or indirectly, whether as employee, owner,
partner, agent, director, officer, consultant, stockholder
(except as the beneficial owner of not more than 5% of the
outstanding shares of a corporation, any of the capital stock of
which is listed on any national or regional securities exchange
or quoted in the daily listing of over-the-counter market
securities and, in each case, in which the Executive does not
undertake any management or operational or advisory role) or in
any other capacity, for his own account or for the benefit of any
person or entity, establish, engage or be connected with or in
any manner any person or entity which is at the time engaged in a
business which is on the date hereof or on any applicable
Termination Date in competition with the business of the Company
(or any of its subsidiaries or affiliates).
(b) In addition to the provisions in Section 10(a)
above, the following provisions shall be applicable: During the
Term, the Executive shall be permitted to continue to serve on
boards of directors or advisory boards of other corporations on
which he presently serves. In addition, the Executive shall be
permitted in the future to serve on additional boards of
directors or advisory boards of other companies, in each case,
with the consent of the Company, which shall not be unreasonably
withheld; such consent principally focusing on whether such other
service limits in a material respect the Executives' time
commitment to the Company or presents a conflict of interest with
the Company. Other than as set forth above, the Executive shall
<PAGE>
not be permitted to serve on boards of directors or advisory
board of other entities.
11. Confidential Information and Non-Disparagement.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company and its stockholders all secret,
confidential or proprietary information, knowledge or data
relating to the Company (and any of its subsidiaries or
affiliates), which shall have been obtained by the Executive
during or by reason of his engagement by the Company, in
accordance with the principles of NRS 600A.010 et seq. (the so-
called Uniform Trade Secrets Act). During and after the end of
the Term, the Executive shall not, without the prior written
consent of the Company, communicate or divulge any such
information, knowledge or data to any person or entity other than
the Company (or such applicable subsidiaries or affiliates) and
those designated by them which would result in any
misappropriation under and as defined in such Act, except that,
during his engagement hereunder, in furtherance of the business
and for the benefit of the Company, the Executive may provide
confidential information as appropriate to attorneys,
accountants, financial institutions or other persons or entities
engaged in business with the Company from time to time.
(b) Each of the parties agrees that from and after any
termination or expiration of the Term, neither shall, publicly or
privately, disparage or make any statements (written or oral)
that could impugn the integrity, acumen (business or otherwise),
ethics or business practices, of the other, except, in each case,
to the extent (but solely to the extent) necessary in any
judicial or arbitral action to enforce the provisions of this
Agreement.
12. Indemnification and Liability Insurance.
(a) Indemnification. The Company shall indemnify and
hold the Executive harmless, to the fullest extent legally
permitted by Section 78.751 of the Nevada Corporation Code (as
amended and in effect from time to time) against any and all
expenses, liabilities and losses (including without limitation,
reasonable attorneys' fees and disbursements of counsel
reasonably satisfactory to the Company), incurred or suffered by
him in connection with his service as a member of the Board
during the Term, in each case, except to the extent of the
Executive's negligence or willful misconduct.
(b) Insurance. The Company shall maintain, for the
benefit of the Executive, a directors' and officers' liability
insurance policy insuring the Executive's service as a member of
the Board during the Term in accordance with its customary
<PAGE>
practices as in effect from time to time during the Term. The
parties acknowledge and agree that such policy may cover other
directors and officers of the Company in addition to the
Executive.
13. General Provisions.
(a) Assignment. Neither this Agreement nor any right
or interest hereunder shall be assignable by the Executive or the
Company without the prior written consent of the other; provided,
that (i) in the event of the Executive's Death during the Term,
the Executive's estate and his heir, executors, administrators,
legatees and distributees shall have the rights and obligations
set forth herein, as provided herein, and (ii) nothing contained
in this Agreement shall limit or restrict the Company's ability
to merge or consolidate or effect any similar transaction with
any other entity, irrespective of whether the Company is the
surviving entity; provided, that such surviving entity shall
continue to be bound by the provisions hereof binding upon the
Company.
(b) Material Inducements. The provisions of Sections
10 and 11 above are material inducements to the Company entering
into and performing this Agreement; accordingly, in the event of
any breach of such provisions by the Executive, in addition to
all other remedies at law or in equity possessed by the Company,
(i) the Company shall have the right to terminate and not pay any
amounts payable to the Executive hereunder, (ii) all Incentive
Warrants and Engagement Options that are unexercised shall be
immediately forfeited and returned to the Company and (iii) the
Executive shall immediately account to the Company and return to
the Company an amount in cash equal to all profits or benefits
obtained or realized by the Executive by virtue of the ownership
or disposition of the Incentive Warrants and Engagement Options.
(c) Binding Agreement. This Agreement shall be
binding upon, and inure to the benefit of, the Executive and the
Company and their respective heirs, executors, administrators,
legatees and distributees, successors and permitted assigns.
(d) Amendment of Agreement. This Agreement may not be
modified or amended except by an instrument in writing signed by
the parties hereto.
(e) Severability. If, for any reason, any provision
of this Agreement is determined to be invalid or unenforceable,
such invalidity or lack of enforceability shall not affect any
other provision of this Agreement not so determined to be invalid
or unenforceable, and each such other provision shall, to the
full extent consistent with applicable law, continue in full
<PAGE>
force and effect, irrespective of such invalid or unenforceable
provision.
(f) Effect of Prior Agreements. This Agreement
contains the entire understanding between the parties hereto
respecting the Executive's engagement by the Company, and super-
sedes any prior agreement between the Company and the Executive
relating to such matters.
(g) Notices. For the purpose of this Agreement,
notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been
duly given (i) when delivered, if sent by telecopy or by hand,
(ii) one business day after sending, if sent by reputable
overnight courier service, such as Federal Express, or
(iii) three business days after being mailed, if sent by United
States certified or registered mail, return receipt requested,
postage prepaid. Notices shall be sent by one of the methods
described above; provided, that any notice sent by telecopy shall
also be sent by any other method permitted above. Notices shall
be sent, if to the Executive, to 2737 Devonshire Place,
Washington, D.C. 20008; telecopy no. (202) 667-2840; and if to
the Company, to Alliance Gaming Corporation, 4380 Boulder
Highway, Las Vegas, Nevada 89121; telecopy no. (702) 454-0478,
directed to the attention of the Board with copies to the
Chairman and the Secretary of the Company; or to such other
address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
(h) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
(i) Arbitration. In the event of a dispute or con-
troversy arising under or in connection with this Agreement
(except, at the option of the Company, Sections 10 and 11 above),
the Executive shall give the Company or the Company shall give
the Executive, as applicable, a written demand for relief. If
the dispute or controversy is not resolved, it shall be settled
exclusively by arbitration, conducted in Las Vegas, Nevada, in
accordance with the rules of the American Arbitration Association
(or if the such association does not then conduct business in
such city, another arbitral panel reasonably satisfactory to each
party) then in effect. Judgment shall be entered on the
arbitrator's award in any court having jurisdiction over the
parties hereto.
(j) Indulgences, Etc. Neither the failure nor any
delay on the part of either party to exercise any right, remedy,
<PAGE>
power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise
of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege
with respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other
occurrence.
(k) Headings. The headings of sections and paragraphs
herein are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the
provisions of this Agreement.
(l) Governing Law. This Agreement has been executed
and delivered in the State of Nevada, and its validity, inter-
pretation, performance, and enforcement shall be governed by the
laws of such State, without regard to principles of conflicts of
laws.
(m) Board Approval. This Agreement is subject to the
approval of the Board and shall be and become effective only upon
the approval thereof by the Board; prior to such time it shall
not have any force and effect.
[The remainder of this page is left blank.]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer, and the
Executive has signed this Agreement, all as of the date first set
forth above.
Alliance Gaming Corporation
By:___________________________
Name:
Title:
___________________________
Craig Fields
<PAGE>
Exhibit 4.4
WARRANT AGREEMENT
This WARRANT AGREEMENT (this "Agreement") is dated as
of September 1, 1994 by and between ALLIANCE GAMING CORPORATION,
a Nevada corporation (the "Company"), and CRAIG FIELDS, an
individual (together with any successors or other holders of the
Warrants (as defined below) issued hereunder, the "Holder").
RECITALS
A. The Company proposes to issue to Holder common
stock purchase Warrants, as hereinafter defined, to purchase up
to an aggregate of 250,000 shares of common stock, par value $.10
per share (the "Common Stock"), of the Company (the Common Stock
issuable on exercise of the Warrants being referred to herein as
the "Warrant Shares"), pursuant to an Agreement, dated as of
September 1, 1994 relating to the initial Holder's engagement by
the Company (the "Engagement Agreement").
B. The Warrants to be issued hereunder are to be
issued in three separate series, each such series to be
exercisable upon the attainment of certain market prices for the
Common Stock and the occurrence of other specified events, as
more fully set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
covenants and premises contained herein and for other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The Company shall
deliver to the initial Holder on the date hereof in accordance
with the provisions of the Engagement Agreement (i) Warrants to
purchase up to 83,334 shares of Common Stock (the "Series A
Warrants") evidenced by a certificate substantially in the form
attached hereto as "Warrant Certificate A," (ii) Warrants to
purchase up to 83,333 shares of Common Stock (the "Series B
Warrants") evidenced by a certificate substantially in the form
attached hereto as "Warrant Certificate B," and (iii) Warrants to
purchase up to 83,333 shares of Common Stock (the "Series C
Warrants") evidenced by a certificate substantially in the form
attached hereto as "Warrant Certificate C", and together with
Warrant Certificate A and Warrant Certificate B, the "Warrant
Certificates". The Series A Warrants, Series B Warrants and
<PAGE>
Series C Warrants are herein collectively referred to as the
"Warrants." Twenty-five percent of each of the Series A
Warrants, the Series B Warrants and the Series C Warrants shall
vest on the date of the initial Holder's initial engagement by
the Company, as provided in the Engagement Agreement (which the
parties agree is September 1, 1994), and 25% of each of the
Series A Warrants, the Series B Warrants and the Series C
Warrants shall vest on each of the first, second and third
anniversary of the date of the initial Holder's initial
engagement by the Company under the Engagement Agreement, as set
forth in Section 4(c)(2)(A) thereof. Prior to each applicable
vesting date, as set forth above, no unvested Warrants shall be
exercisable and, prior to each such applicable vesting date,
unvested Warrants are subject to return to the Company as
provided in the Engagement Agreement.
SECTION 2. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its
Chairman of the Board or its President or a Vice President and by
its Secretary or an Assistant Secretary under its corporate seal.
Each such signature upon any Warrant Certificate may be in the
form of a facsimile signature of the present or any future
Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced
on the Warrant Certificates, and for that purpose the Company may
adopt and use the facsimile signature of any person who shall
have been Chairman of the Board, President, Vice President,
Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or
disposed of such person shall have ceased to hold such office.
The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced
on the Warrant Certificates.
In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such
officer before the Warrant Certificates so signed shall have been
delivered by the Company, such Warrant Certificates nevertheless
may be issued as though such person had not ceased to be such
officer of the Company; and any Warrant Certificate may be signed
on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate, although
at the date of the execution of this Warrant Agreement any such
person was not such officer.
SECTION 3. Registration. The Warrant Certificates to
be delivered pursuant to this Agreement shall be in registered
form only. The Company shall number and register the Warrant
Certificates in a register as they are issued. The Company may
<PAGE>
deem and treat the registered holder(s) of the Warrant
Certificates as the absolute owner(s) thereof (notwithstanding
any notation of ownership or other writing thereon made by
anyone), for all purposes, and shall not be affected by any
notice to the contrary and shall not be bound to recognize any
equitable or other claim to or in the Warrant Certificates on the
part of any other person.
SECTION 4. Registration of Transfers and Exchanges.
Subject to Section 6 hereof, the Company shall from time to time
register the transfer in whole or in part of any outstanding
Warrant Certificates in a Warrant register to be maintained by
the Company upon surrender thereof to the Company at the office
designated for such purpose (the address of which is set forth in
Section 13 hereof) accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to the
Company, duly executed by the registered holder or holders
thereof or by the duly appointed legal representative thereof or
by a duly authorized attorney. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an
official copy thereof, duly certified, shall be deposited with
the Company. In case of transfer by executors, administrators,
guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion.
Upon any such registration of transfer, a new Warrant Certificate
of the appropriate series shall be issued to the transferee(s)
and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Company.
Each Holder, by its acceptance thereof, agrees that
prior to any proposed transfer of any Warrant as permitted by the
foregoing paragraph, if such transfer is not made pursuant to an
effective registration statement under the Securities Act of
1933, as amended (the "Act"), or pursuant to Rule 144 under the
Act, or pursuant to an opinion of counsel, reasonably
satisfactory in form and substance to the Company, that such
Warrant or Warrant Shares may be sold without registration under
the Act, the Holder will deliver to the Company:
(a) an investment representation from the proposed
transferee substantially to the effect that such securities are
being acquired in good faith for investment for the transferee's
own account and not with a view to a distribution or resale of
any of such securities in violation of any applicable securities
laws;
(b) an agreement by such transferee to the impression
of the restrictive legends set forth below on the Warrant or the
Warrant Shares, as the case may be;
<PAGE>
(c) an agreement by such transferee that the Company
may place a notation in the stock books of the Company or a "stop
transfer order" with any transfer agent or registrar with respect
to the Warrant Shares; and
(d) an agreement by such transferee to be bound by the
provisions of this Warrant Agreement, including, without
limitation, this Section 4 relating to the transfer of such
Warrant or Warrant Shares.
The Warrants are subject to the terms and conditions of
the Agreement. The Holders agree that each certificate
representing Warrants or Warrant Shares will bear a legend
reading substantially as follows until such Warrants or Warrant
Shares have been sold pursuant to an effective registration
statement or Rule 144 under the Act or an opinion of counsel
reasonably satisfactory to the Company:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SAID SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION UNDER SAID ACT AND THE RULES AND
REGULATIONS THEREUNDER AND ALL APPLICABLE STATE SECURITIES
OR "BLUE SKY" LAWS OR AN EXEMPTION THEREFROM UNDER SAID ACT
AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS."
Warrant Certificates may be exchanged at the option of
the Holder(s), when surrendered to the Company at the office
designated for such purpose (the address of which is set forth in
Section 13 hereof) for another Warrant Certificate or other
Warrant Certificates of like tenor and series and representing in
the aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange shall be cancelled by the Company.
SECTION 5. Warrants; Exercise of Warrants.
(a) General. Subject to the terms of this Agreement,
none of the Warrants may be exercised unless and until (x) each
of the "Initial Conditions" set forth in Section 5(b) hereof have
occurred, (y) in respect of the series of Warrants to be
exercised, the related "Series Condition" set forth in Section
5(c)(i), (ii) or (iii) hereof (as the case may be) has occurred,
and (z) the Warrants are exercised on or after one year from the
date of issue but on or prior to 5:00 p.m. New York City time on
September 21, 2000 (the "Expiration Date"). In respect of any
particular Warrant issued hereunder, the Initial Conditions and
the Series Conditions are herein collectively referred to as the
"Exercise Conditions."
<PAGE>
(b) Initial Conditions. No Warrants shall be
exercisable unless and until with respect to any Holder, either
(i) no gaming license, finding of suitability or similar approval
is required in respect of such Holder from the State of Nevada
(or any applicable agency or political subdivision thereof) or
any other jurisdiction in or from which the denial of a gaming
license, finding of suitability or similar approval could
materially adversely affect the Company's business, which
jurisdiction has indicated, generally (by statute, regulation or
otherwise) or as a matter of specific application to the Company
or the Holder, that issuance of such license, findings of
suitability or similar approval is required for exercise of the
Warrants, or (ii) the Licensing Date has occurred with respect to
such Holder relative to its acquisition of the shares of Common
Stock to be issued upon the exercise of such Warrants. For
purposes of this clause (b), the term "Licensing Date" shall have
the meaning provided in the Company's Certificate of
Designations, Preferences and Relative, Participating, Optional
and other Special Rights of Special Stock.
(c) Series Conditions. In addition to the
satisfaction of the Initial Conditions, no Warrants of a given
Series may be exercised unless:
(i) in respect of the Series A Warrants, the average
"Quoted Price" (as defined below) of the Common Stock for 15
consecutive trading days commencing on or after September 1, 1995
must have been equal to or greater than $11.00 per share;
(ii) in respect of the Series B Warrants, the average
Quoted Price of the Common Stock for 15 consecutive trading days
commencing on or after September 1, 1995 must have been equal to
or greater than $13.00 per share;
(iii) in respect of the Series C Warrants, the average
Quoted Price of the Common Stock for 15 consecutive trading days
commencing on or after September 1, 1995 must have been equal to
or greater than $15.00 per share;
in each case, on at least one occasion during the term of the
Warrants. If the Series Conditions are satisfied with respect to
any Series of Warrants, at any time, the Warrants in such Series
shall, subject to satisfaction of the Initial Conditions,
thereafter be exercisable for the remainder of the term thereof
irrespective of whether or not the Series Conditions thereafter
are satisfied. The prices referred to above in clauses (i), (ii)
and (iii) are referred to herein as the "Vesting Prices."
(d) Expiration. Each Warrant not exercised prior to
5:00 p.m., New York City time, on the Expiration Date shall
<PAGE>
become void and all rights and obligations thereunder and all
rights and obligations in respect thereof under this Agreement
shall cease as of such time.
(e) Exercise; Delivery of Warrant Shares. A Warrant
may be exercised in whole or in part from time to time upon
surrender to the Company at its office designated for such
purpose (the address of which is set forth in Section 13 hereof)
of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse
thereof duly filled in and signed and upon payment to the Company
of the exercise price (the "Exercise Price") which is set forth
in the form of Warrant Certificates attached hereto as Exhibits
A, B and C, as adjusted as herein provided, for the number of
Warrant Shares in respect of which such Warrants are then
exercised, as adjusted as herein provided. The Warrant shall be
deemed to have been exercised immediately prior to the close of
business on the date of its surrender and exercise and payment of
the purchase price as provided above, and the person entitled to
receive Warrant Shares issuable upon such exercise shall be
treated for such purpose as the holder of such shares of record
as of the close of business on such date. Payment of the
aggregate Exercise Price shall be made in cash or by certified or
official bank check to the order of the Company. Subject to the
provisions of Section 6 hereof, upon such surrender of Warrants,
payment of the Exercise Price and the delivery of all related
documentation, the Company shall issue and cause to be delivered
within five business days to or upon the written order of the
holder and in such name or names as the Warrant holder may
designate, a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise of such Warrants
together with cash as provided in Section 11 hereof; provided,
however, that if any consolidation, merger, sale, lease, transfer
or conveyance of assets is proposed to be effected by the Company
as described in subsection (i) of Section 10 hereof, or a tender
offer or an exchange offer for shares of Common Stock of the
Company shall be made, upon such surrender of Warrants and
payment of the Exercise Price as aforesaid, the Company shall, as
soon as possible, but in any event not later than two business
days thereafter, issue and cause to be delivered the full number
of Warrant Shares issuable upon the exercise of such Warrants in
the manner described in this sentence together with cash as
provided in Section 11 hereof. Such certificate or certificates
shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of
such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of
the holders thereof, either in full or from time to time in part
<PAGE>
and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate of the same tenor
evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section and of
Section 2 hereof.
(f) Miscellaneous. All Warrant Certificates
surrendered upon exercise of Warrants shall be cancelled and
disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder
available for inspection by the holders during normal business
hours at its office.
SECTION 6. Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of
Warrant Shares upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any registration or transfer
involved in the issue or delivery of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon
the exercise of a Warrant, and the Company shall not be required
to issue or deliver such Warrant Certificates or certificates for
Warrant Shares unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the reasonable satisfaction
of the Company that such tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates.
In case any of the Warrant Certificates shall be mutilated, lost,
stolen or destroyed, the Company shall, as soon as practicable
upon receiving notice of such event, issue, in exchange and
substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate
of like tenor and series and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of
such Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to it or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant
Certificate. Applicants for such substitute Warrant Certificates
shall also comply with such other reasonable requests and pay
such other reasonable charges as the Company may prescribe.
SECTION 8. Reservation of Warrant Shares. The Company
will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but
<PAGE>
unissued Common Stock or its authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy
any obligation to issue Warrant Shares upon exercise of Warrants,
the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for
the Common Stock (the "Transfer Agent") and every subsequent
transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights contained herein
will be irrevocably authorized and directed for so long as any
Warrants are outstanding to reserve such number of authorized
shares as shall be required for such purpose. The Company will
keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants. The Company will
furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder
pursuant to Section 12 hereof.
Before taking any action which would cause an
adjustment pursuant to Section 10 hereof to reduce the Exercise
Price below the then par value (if any) of the Warrant Shares,
the Company will take any corporate action which may, in the
opinion of its counsel (which may be counsel employed by the
Company), be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may
be issued upon exercise of Warrants in accordance with this
Agreement will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and
security interests with respect to the issue thereof created by
or claiming through the Company.
SECTION 9. Obtaining Stock Exchange Listings. The
Company will from time to time take all action, if any, which may
be necessary so that the Warrant Shares, immediately upon their
issuance upon the exercise of Warrants in accordance with this
Agreement, will be listed on the principal securities exchanges
and markets within the United States of America, if any, on which
other shares of Common Stock are then listed.
SECTION 10. Adjustment of Exercise Price, Vesting
Prices and Number of Warrant Shares Issuable. Whether or not the
Exercise Conditions have been met and whether or not the Warrants
have been issued, or are exercisable or exercised, the Exercise
Price, Vesting Prices and the number of Warrant Shares issuable
<PAGE>
upon the exercise of each Warrant are subject to adjustment from
time to time until the exercise thereof upon the occurrence of
the events enumerated in this Section 10. In the event any
adjustment of the Exercise Price is required by this Section 10,
a similar and proportional adjustment shall be made in the
Vesting Prices. Such adjustment shall be made successively
whenever any event described or referred to below shall occur.
For purposes of this Section 10, "Common Stock" means shares now
or hereafter authorized of any class of common stock of the
Company.
(a) Adjustment for Changes in Capital Stock, etc. If
the Company:
(i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common
Stock into a greater number of shares;
(iii) combines its outstanding shares of Common Stock
into a smaller number of shares; or
(iv) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock or preferred
stock, then the Exercise Price in effect immediately prior to
such action shall be proportionately adjusted so that the Holder
of any Warrant thereafter exercised may receive the aggregate
number and kind of shares of capital stock of the Company which
he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action,
and the Vesting Prices shall be proportionately adjusted.
The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and
immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a Holder upon exercise of any
Warrant may receive shares of two or more classes of capital
stock of the Company, the Board of Directors of the Company
shall, in good faith, determine the allocation of the adjusted
Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price and the
Vesting Prices, as applicable, of each class of capital stock
shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section.
(b) Adjustment for Rights Issue. If the Company
distributes any rights, options or warrants to the holders of its
<PAGE>
Common Stock generally entitling them for a period expiring
within 60 days after the record date mentioned below to purchase
shares of Common Stock at a price per share less than the current
market price per share on that record date, the Exercise Price
shall be adjusted in accordance with the formula:
O + N x P
_____
E' = E x M
_____
O + N
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price (as it may have
been previously adjusted under
this Section 10).
O = the number of shares of Common Stock
outstanding on the record date.
N = the number of additional shares of Common
Stock offered.
P = the offering price per share of the
additional shares.
M = the "Current Market Price" (as defined
below) per share of Common Stock on the record
date.
and the Vesting Prices shall be proportionately adjusted.
The adjustment shall be made successively whenever any
such rights, options or warrants are issued and shall become
effective immediately after the record date for the determination
of stockholders entitled to receive the rights, options or
warrants. If at the end of the period during which such rights,
options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Exercise Price and the
Vesting Price shall be immediately readjusted to what it would
have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustment for Other Distributions. If the
Company distributes to the holders of its Common Stock generally
any of its assets (including but not limited to "ordinary"
<PAGE>
dividends payable out of consolidated earnings or earned surplus
of the Company during the first three years from the date hereof,
as set forth below), debt securities, preferred stock, or any
rights, options or warrants to purchase assets, debt securities,
preferred stock, Common Stock, or other securities of the Company
(other than those rights, options and warrants covered Section
10(b)), the Exercise Price shall be adjusted in accordance with
the formula:
E' = E x M - F
_____
M
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price (as it may have
been previously adjusted under this Section
10).
M = the Current Market Price (as defined below) per
share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the
assets or securities applicable to one share of
Common Stock and distributed to the holders of
Common Stock generally. The fair market value
shall be determined in good faith by the
disinterested members of the Board of Directors
of the Company (the "Board of Directors" or the
"Board"), or, if such Board members so elect,
by a nationally recognized investment banking
or appraisal firm selected by the disinterested
members of the Board of Directors.
and the Vesting Prices shall be proportionately adjusted.
The adjustment shall be made successively whenever any
such distribution is made and shall become effective immediately
after the record date for the determination of stockholders
entitled to receive the distribution.
This subsection (c) does not apply to (i) any
distributions referred to in subsection 10(a), (ii) any rights,
options or warrants referred to in subsection 10(b), or (iii) the
payment of "ordinary" dividends payable out of consolidated
<PAGE>
earnings or earned surplus of the Company effected more than
three years after the date of this Agreement. "Ordinary"
dividends refers to dividends made, or which the Company when
made intended to make, on a periodic and recurring basis.
(d) Purchase of Common Stock by the Company. If the
Company at any time while this Warrant is outstanding shall,
directly or indirectly through a subsidiary or otherwise,
purchase, redeem or otherwise acquire any shares of its Common
Stock at a price per share (the "Benchmark Price") greater than
the Quoted Price on the date such purchase, redemption or other
acquisition is effected, then the Exercise Price and Vesting
Prices upon each such purchase, redemption or acquisition shall
be adjusted to that price determined by multiplying such Exercise
Price and Vesting Prices by a fraction:
(i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such
purchase, redemption or acquisition minus the number of
shares of Common Stock which the aggregate consideration for
the total number of such shares of Common Stock so
purchased, redeemed or acquired would otherwise have
purchased at the Benchmark Price; and
(ii) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such
purchase, redemption or acquisition.
For purposes of this subsection (d), a purchase, redemption or
acquisition of a Common Stock equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation
herein required shall be made on the basis of the full exercise,
conversion or exchange of such Common Stock equivalent pursuant
to the terms thereof on the date as of which such computation is
required hereby to be made. Notwithstanding the foregoing,
however, for purposes of this subsection (d), the purchase,
payment, redemption or acquisition of any such Common Stock
equivalent of the Company at the lesser of (i) the fair market
value of such securities or (ii) the purchase or redemption price
set forth in the instrument governing such securities shall not
be deemed to be a purchase of the underlying Common Stock (and,
accordingly, no adjustment shall be made in the terms of exercise
of any Warrant), but any purchase, payment, redemption or
acquisition at a price in excess of the lesser of the fair market
value or the purchase or redemption price contained therein shall
be deemed to be a purchase of the underlying Common Stock for
purposes of this subsection (d), unless such purchase, payment,
redemption or acquisition at such price is mandatory under the
terms of such instrument. For purposes of the immediately prior
<PAGE>
sentence, the fair market value of any securities shall be
determined in good faith by the disinterested members of the
Board of Directors or, if such Board members so elect, by a
nationally recognized investment banking or appraisal firm
selected by the disinterested members of the Board.
(e) Current Market Price. In subsections (b), (c) and
(d) of this Section 10 the "Current Market Price" per share of
Common Stock on any date is the average of the Quoted Prices of
the Common Stock for 10 consecutive trading days commencing five
trading days before the date in question. The "Quoted Price" of
the Common Stock is the last reported sales price of the Common
Stock as reported by the NASDAQ National Market System, or if the
Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange which
shall be for consolidated trading if applicable to such exchange,
or if neither so reported or listed, the last reported bid price
of the Common Stock. In the absence of such quotations on one or
more such trading days, the Board of Directors shall determine
the Quoted Price for such trading days on the basis of such
quotations as it in good faith considers appropriate.
(f) When De Minimis Adjustment May Be Deferred or No
Adjustment Required. No adjustment in the Exercise Price or
Vesting Prices need be made unless the adjustment would require
an increase or decrease of at least 1% in the Exercise Price or
Vesting Prices. Any adjustments that are not made shall be
carried forward and taken into account in any subsequent
adjustment.
All calculations under this Section 10 shall be made to
the nearest cent or to the nearest 1/100th of a share, as the
case may be.
No adjustment need be made for the issuance or exercise
of rights to purchase Common Stock pursuant to a Company plan for
reinvestment of dividends or interest in the event that no
adjustment need be made in respect of the underlying dividend.
No adjustment need be made for a change in the par
value of the Common Stock (including a change from par value to
no par value or from no par value to par value).
To the extent the Warrants become convertible into
cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
(g) Notice of Adjustment. Whenever the Exercise Price
or Vesting Prices are adjusted, the Company shall provide the
notices required by Section 12 hereof.
<PAGE>
(h) Notice of Certain Transactions. If:
(i) the Company takes any action that would require
an adjustment in the Exercise Price and Vesting Prices
pursuant to subsections (a), (b), (c) or (d) of this
Section 10;
(ii) the Company takes any action that would
require a supplemental Warrant Agreement pursuant to subsection
(i) of this Section 10; or
(iii) there is a liquidation, dissolution or winding
up of the Company;
the Company shall mail to Warrant holders a notice stating the
proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. The Company shall mail the notice at
least 15 days before such date. Failure to mail the notice or
any defect in it shall not affect the validity of the
transaction.
(i) Reorganization of Company. If the Company
consolidates or merges with or into, or sells, leases, transfers
or conveys all or substantially all its assets to, any person,
upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of
securities, cash or other assets which the holder of a Warrant
would have owned immediately after the consolidation, merger,
transfer or lease if the holder had exercised the Warrant
immediately before the effective date of the transaction.
Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or
merger, if other than the Company, or the person to which such
sale, lease, transfer or conveyance shall have been made, shall
enter into a supplemental Warrant Agreement so providing and
further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in
this Section 10. The successor Company shall mail to Warrant
holders a notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise
of Warrants under the supplemental Warrant Agreement is an
affiliate of the formed, surviving, transferee or lessee
corporation, that issuer shall join in the supplemental Warrant
Agreement.
If this subsection (i) applies, subsections (a), (b),
(c) and (d) of this Section 10 do not apply.
<PAGE>
(j) Company Determination Final. Any good faith
determination that the Company, the Board of Directors or an
investment banking or appraisal firm, as the case may be, makes
pursuant to this Section 10 shall be conclusive.
(k) When Issuance or Payment May Be Deferred. In any
case in which this Section 10 shall require that an adjustment in
the Exercise Price and the Vesting Prices be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the
holder of any Warrant exercised after such record date but prior
to the occurrence of such event the Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise
over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the
applicable Exercise Price and Vesting Prices and (ii) paying to
such holder any amount in cash in lieu of a fractional share
pursuant to Section 11; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional Warrant
Shares, other capital stock and cash upon the occurrence of the
event requiring such adjustment.
(l) Adjustment in Number of Shares. Upon each
adjustment of the Exercise Price and Vesting Prices pursuant to
this Section 10, each Warrant outstanding prior to the making of
the adjustment in the Exercise Price and Vesting Prices shall
thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock
(calculated to the nearest hundredth of a share) obtained from
the following formula:
N' = N x E
_
E'
where:
N = the adjusted number of Warrant Shares issuable
upon exercise of a Warrant by payment of the
adjusted Exercise Price.
N = the number of Warrant Shares previously issuable
upon exercise of a Warrant by payment of the
Exercise Price (as the same may previously have
been adjusted pursuant to this Section 10).
E' = the adjusted Exercise Price.
<PAGE>
E = the Exercise Price (as the same may previously
have been adjusted pursuant to this Section 10).
If the Company shall be in default under any of its
agreements to issue Warrant Shares hereunder and/or if applicable
law prevents the issuance of any such shares at the Exercise
Price adjusted in accordance herewith, the adjustment of shares
provided in the foregoing sentence shall nonetheless be made and
the Holder of this Warrant shall be entitled to purchase such
greater number of shares at the price at which this Warrant may
be exercised when such shares are issued.
(m) Form of Warrants. Irrespective of any adjustments
in the Exercise Price or Vesting Prices or the number or kind of
shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement, it being
understood that all adjustments required by this Agreement shall
have been assumed to have been made.
(n) Adjustments Not Duplicative: Adjustments
Successive. The adjustments provided for by this Section 10 are
not intended to be duplicative, it being the intention of the
parties that only one of the foregoing adjustment provisions, if
any, shall apply to any particular transaction or event. In the
event an unforeseen transaction or event occurs which could be
construed to implicate more than one of such adjustment
provisions, the Board of Directors shall determine in good faith
the single adjustment provision contained in this Section 10
which it considers most appropriate in respect of the particular
transaction or event, which provision shall govern the
adjustment, if any, to be made in the Exercise Price, Vesting
Prices and/or number of Warrant Shares issuable. Any series of
adjustments described in Section 10 shall be made successively.
SECTION 11. Fractional Interests. The Company shall
not be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be
presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable
upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the
Warrants so presented. If any fraction of a Warrant Share would,
except for the provisions of this Section 11, be issuable on the
exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Quoted Price on
the day immediately preceding the date the Warrant is presented
for exercise, multiplied by such fraction.
<PAGE>
SECTION 12. Notices to Warrant Holders. Upon any
adjustment of the Exercise Price or Vesting Prices pursuant to
Section 10, the Company shall promptly thereafter (i) cause to be
filed with the Company a certificate of a firm of independent
public accountants of recognized standing selected by the Board
of Directors (who may be the regular auditors of the Company)
setting forth the Exercise Price and Vesting Prices after such
adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based
and setting forth the number of Warrant Shares (or portion
thereof) issuable after such adjustment in the Exercise Price,
upon exercise of a Warrant and payment of the adjusted Exercise
Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, and (ii) cause to
be given to each of the registered holders of the Warrant
Certificates at its address appearing on the Warrant register
written notice of such adjustments by first class mail, postage
prepaid. Where appropriate, such notice may be given in advance
and included as a part of the notice required to be mailed under
the other provisions of this Section 12.
In case:
(a) the Company shall authorize the issuance to the
holders of shares of Common Stock generally of rights, options or
warrants to subscribe for or purchase shares of Common Stock or
of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to
the holders of shares of Common Stock generally of evidences of
its indebtedness or assets (other than cash dividends payable out
of consolidated earnings or earned surplus or dividends payable
in shares of Common Stock or distributions referred to in
subsection (a) of Section 10 hereof); or
(c) the Company shall be party to any consolidation or
merger, dissolution, distribution or winding up or tender or
exchange offer for which approval of any stockholders of the
Company is required, or the sale, lease, transfer or conveyance
of the properties and assets of the Company substantially as an
entirety, or (any reclassification or change of Common Stock
issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of
Common Stock; or
(d) the Company proposes to take any action (other
than actions of the character described in Section 10(a)) which
<PAGE>
would require an adjustment of the Exercise Price and Vesting
Prices pursuant to Section 10;
then the Company, in accordance with Section 13, shall cause to
be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register, at
least 15 days prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there is
no record date, a written notice stating (i) the date as of which
the holders of record of shares of Common Stock to be entitled to
receive any such rights, options, warrants or distribution are to
be determined, or (ii) the initial expiration date set forth in
any tender offer or exchange offer for shares of Common Stock, or
(iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is
expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common
Stock shall be entitled to exchange such shares for cash,
securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, sale, lease, conveyance,
transfer, dissolution, liquidation or winding up. The failure to
give the notice required by this Section 12 or any defect therein
shall not affect the legality or validity of any distribution,
right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote
upon any action.
SECTION 13. Notices to Company and Warrant Holders.
Any notice or demand authorized by this Agreement to be given or
made by the registered holder of any Warrant Certificate to or on
the Company shall be given or made in writing by hand delivery,
registered or certified first-class mail, telex, telecopier, or
air courier guaranteeing overnight delivery at the address
expressly designated by the Company as its office for purposes of
this Agreement (until the Warrant holders are otherwise notified
in accordance with this Section by the Company), as follows:
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Attention: Chairman
Telecopy number: 702/454-0478
Any notice pursuant to this Agreement to be given by
the Company to the registered holder(s) of any Warrant
Certificate shall be given in writing by hand delivery,
registered first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery at the address appearing on the
Warrant register of the Company (until the Company is otherwise
notified in accordance with this Section 13 by such holder).
<PAGE>
All such notices and demands shall be deemed to have
been duly given: at the time delivered by hand, if personally
delivered; four business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged by addressee, if by telecopier transmission;
and on the next business day if timely delivered to an air
courier guaranteeing overnight delivery.
SECTION 14. No Rights as Stockholders. Nothing
contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders' or transferees
thereof (in their respective capacity as holders or transferees
of Warrants) the right to vote for or to consent to, or to
receive notice as stockholders in respect of the meetings of
stockholders for, the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the
Company.
SECTION 15. Supplements and Amendments. The Company
may from time to time supplement or amend this Agreement without
the approval of holders of Warrant Certificates in order to cure
any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem
necessary or desirable and which shall not in any way adversely
affect the interests of the holders of Warrant Certificates. In
addition, the Company may from time to time supplement or amend
this Agreement with the consent of both (i) the holders of not
less than a majority of the Warrants and (ii) the Holder
originally named herein, if then a Holder; provided, however,
that no such amendment or supplement shall amend any of the
Exercise Conditions or change the Exercise Price or number of
Warrant Shares issuable upon exercise of Warrants (other than in
accordance with Section 10) without the consent of each holder of
Warrants adversely affected thereby.
SECTION 16. Successors. All the covenants and
provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, assigns and transferees of each
of the parties, including without limitation and without the need
for an express assignment, transferees of the Warrants.
SECTION 17. Termination. This Agreement shall
terminate at 5:00 p.m., New York City time on the Expiration
Date. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date if all Warrants have been
exercised.
<PAGE>
SECTION 18. Governing Law. This Agreement and each
Warrant Certificate issued hereunder shall be construed,
interpreted and the rights of the parties determined in
accordance with the internal laws of the State of Nevada, without
regard to the conflict of law principles thereof.
SECTION 19. Benefits of This Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company and the registered holders of
the Warrant Certificates any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company and the registered
holders of the Warrant Certificates.
SECTION 20. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
SECTION 21. HSR Act. Promptly after receipt of notice
from any holder of Warrants of its intention to exercise any
Warrants, the Company shall make all filings required to be made
by the Company under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), in connection with such
exercise. The applicable waiting period, including any extension
thereof, under the HSR Act shall have expired or been terminated
prior to the issuance of any Warrant Shares upon exercise of
Warrants.
SECTION 22. No Obligation to Exercise. Nothing
contained herein shall be construed to obligate any Holder to
exercise any Warrant issued pursuant to this Agreement.
SECTION 23. Board Approval. This Agreement and the
Warrants are subject to the approval of the Board and shall be
and become effective only upon the approval thereof by the Board;
prior to such time they shall not have any force and effect.
(Signature page(s) follow)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above
written.
ALLIANCE GAMING CORPORATION
By: _____________________________
Name:
Title:
Attest: ______________________
Secretary
_________________________
Craig Fields
Witness:
_________________________
<PAGE>
EXHIBIT A
[Form of Warrant Certificate A/B/C]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
No. CF- _____ Warrants
Warrant Certificate
SERIES [A][B][C]
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that CRAIG FIELDS or
registered assigns, is the registered holder of Warrants
("Warrants") to purchase Common Stock, par value $.10 per share
(the "Common Stock"), of ALLIANCE GAMING CORPORATION, a Nevada
corporation (the "Company"). Upon the terms and subject to the
conditions contained in that certain Warrant Agreement referred
to on the reverse side hereof including, without limitation,
Section 5 thereof, each Warrant entitles the holder upon exercise
to receive from the Company at any time after the occurrence of
the "Exercise Conditions" (as such term is defined in the Warrant
Agreement) one fully paid and nonassessable share of Common Stock
(a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $1.50 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of
the Exercise Price at the office of the Company designated for
such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be September 1,
2000.
<PAGE>
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Company.
IN WITNESS WHEREOF, ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its President and
by its Secretary and has caused its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: September 1, 1994
ALLIANCE GAMING CORPORATION
By _________________________
Name:
Title:
[SEAL]
<PAGE>
[Form of Warrant Certificate A/B/C]
[Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of September 1, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
certified or official bank check at the office of the Company
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
<PAGE>
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
series and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive
shares of Common Stock and herewith tenders payment
for such shares to the order of United Gaming, Inc. in the
amount of $ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be
registered in the name of ___________________, whose address is
_________________ and that such shares be delivered to ______
whose address is _________________. If said number of shares
is less than all of the shares of Common Stock purchasable
hereunder after giving effect to any delivery of Warrants in
payment of the Exercise Price, the undersigned requests that a
new Warrant Certificate representing the remaining balance of
such shares be registered in the name of __________, whose
address is ____________________, and that such Warrant
Certificate be delivered to _____________________, whose address
is _______________________________.
Signature: ________________________
Date: ___________________
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
No. CF-001 83,334 Warrants
Warrant Certificate
SERIES A
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that CRAIG FIELDS,
or registered assigns, is the registered holder of Warrants
("Warrants") to purchase Common Stock, par value $.10 per share
(the "Common Stock"), of ALLIANCE GAMING CORPORATION, a Nevada
corporation (the "Company"). Upon the terms and subject to the
conditions contained in that certain Warrant Agreement referred
to on the reverse side hereof including, without limitation,
Section 5 thereof, each Warrant entitles the holder upon exercise
to receive from the Company at any time after the occurrence of
the "Exercise Conditions" (as such term is defined in the Warrant
Agreement) one fully paid and nonassessable share of Common Stock
(a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $1.50 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of
the Exercise Price at the office of the Company designated for
such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be September 1,
2000.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
<PAGE>
This Warrant shall vest and be exercisable solely in
accordance with the provisions of the Warrant Agreement and the
Engagement Agreement referred to therein.
This Warrant Certificate shall not be valid unless
countersigned by the Company.
IN WITNESS WHEREOF, ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its President and
by its Secretary and has caused its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: September 1, 1994
ALLIANCE GAMING CORPORATION
By _________________________
Name:
Title:
[SEAL]
<PAGE>
[Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of September 1, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
certified or official bank check at the office of the Company
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
<PAGE>
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
series and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____________
shares of Common Stock and herewith tenders payment for such
shares to the order of Alliance Gaming Corporation in the amount
of $________________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be
registered in the name of __________________________, whose
address is ______________________ and that such shares be
delivered to _____________________________ whose address is
_________________ _________________________. If such number of
shares is less than all of the shares of Common Stock purchasable
hereunder after giving effect to any delivery of Warrants in
payment of the Exercise Price, the undersigned requests that a
new Warrant Certificate representing the remaining balance of
such shares be registered in the name of _______________________,
whose address is ____________________________________, and that
such Warrant Certificate be delivered to _______________________,
whose address is _____________________________.
Signature:
Date: ___________________
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
No. CF-002 83,333 Warrants
Warrant Certificate
SERIES B
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that CRAIG FIELDS,
or registered assigns, is the registered holder of Warrants
("Warrants") to purchase Common Stock, par value $.10 per share
(the "Common Stock"), of ALLIANCE GAMING CORPORATION, a Nevada
corporation (the "Company"). Upon the terms and subject to the
conditions contained in that certain Warrant Agreement referred
to on the reverse side hereof including, without limitation,
Section 5 thereof, each Warrant entitles the holder upon exercise
to receive from the Company at any time after the occurrence of
the "Exercise Conditions" (as such term is defined in the Warrant
Agreement) one fully paid and nonassessable share of Common Stock
(a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $1.50 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of
the Exercise Price at the office of the Company designated for
such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be September 1,
2000.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
<PAGE>
This Warrant shall vest and be exercisable solely in
accordance with the provisions of the Warrant Agreement and the
Engagement Agreement referred to therein.
This Warrant Certificate shall not be valid unless
countersigned by the Company.
IN WITNESS WHEREOF, ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its President and
by its Secretary and has caused its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: September 1, 1994
ALLIANCE GAMING CORPORATION
By ___________________________
Name:
Title:
[SEAL]
<PAGE>
[Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of September 1, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
certified or official bank check at the office of the Company
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
<PAGE>
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
series and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ____________
shares of Common Stock and herewith tenders payment for such
shares to the order of Alliance Gaming Corporation in the amount
of $_______________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be
registered in the name of ___________________________, whose
address is __________________________, and that such shares be
delivered to _______________________________, whose address is
___________________________________. If such number of shares is
less than all of the shares of Common Stock purchasable hereunder
after giving effect to any delivery of Warrants in payment of the
Exercise Price, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be
registered in the name of ________________________, whose address
is ______________________________, and that such Warrant
Certificate be delivered to __________________________, whose
address is __________________________.
Signature:
Date: ___________________
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER SUCH ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS
OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
No. CF-003 83,333 Warrants
Warrant Certificate
SERIES C
ALLIANCE GAMING CORPORATION
This Warrant Certificate certifies that CRAIG FIELDS,
or registered assigns, is the registered holder of Warrants
("Warrants") to purchase Common Stock, par value $.10 per share
(the "Common Stock"), of ALLIANCE GAMING CORPORATION, a Nevada
corporation (the "Company"). Upon the terms and subject to the
conditions contained in that certain Warrant Agreement referred
to on the reverse side hereof including, without limitation,
Section 5 thereof, each Warrant entitles the holder upon exercise
to receive from the Company at any time after the occurrence of
the "Exercise Conditions" (as such term is defined in the Warrant
Agreement) one fully paid and nonassessable share of Common Stock
(a "Warrant Share") at the initial exercise price (the "Exercise
Price") of $1.50 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of
the Exercise Price at the office of the Company designated for
such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement.
Subject to the terms and conditions of the Warrant
Agreement, no Warrant may be exercised prior to the date which is
one year after issue and upon the satisfaction of certain
specified Exercise Conditions, or after 5:00 p.m., New York City
time, on the "Expiration Date" (as defined in the Warrant
Agreement) and to the extent not exercised by such time such
Warrants shall become void. As more fully described in the
Warrant Agreement, the Expiration Date shall be September 1,
2000.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and in
the Warrant Agreement and such further provisions shall for all
purposes have the same effect as though fully set forth at this
place.
<PAGE>
This Warrant shall vest and be exercisable solely in
accordance with the provisions of the Warrant Agreement and the
Engagement Agreement referred to therein.
This Warrant Certificate shall not be valid unless
countersigned by the Company.
IN WITNESS WHEREOF, ALLIANCE GAMING CORPORATION has
caused this Warrant Certificate to be signed by its President and
by its Secretary and has caused its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: September 1, 1994
ALLIANCE GAMING CORPORATION
By _________________________
Name:
Title:
[SEAL]
<PAGE>
[Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring on the
Expiration Date (as defined in the Warrant Agreement) entitling
the holder on exercise to receive shares of Common Stock, and are
issued or to be issued pursuant to the Warrant Agreement, dated
as of September 1, 1994 (the "Warrant Agreement"), duly executed
and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company.
Upon the terms and subject to the conditions contained
in the Warrant Agreement including, without limitation, Section 5
thereof, Warrants may be exercised, in whole or in part at any
time and from time to time after the relevant Exercise Conditions
are satisfied. As more fully described in the Warrant Agreement,
the Exercise Conditions will generally be deemed satisfied (and
thus the Warrants represented by this certificate exercisable),
upon the terms and conditions set forth in the Warrant Agreement.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them upon the occurrence of the Exercise Conditions by
surrendering this Warrant Certificate, with the form of election
to purchase set forth herein properly completed and executed,
together with payment of the Exercise Price in cash or by
certified or official bank check at the office of the Company
designated for such purpose. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new
Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price, Vesting Prices and number
of Warrant Shares issuable may, subject to certain conditions, be
adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the Vesting Prices and the number of
shares of Common Stock issuable upon the exercise of each Warrant
shall also be adjusted. No fractions of a share of Common Stock
will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the
Warrant Agreement.
<PAGE>
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor and series evidencing in the aggregate
a like number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
series and evidencing in the aggregate a like number of Warrants
shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to
the contrary.
Neither the Warrants nor this Warrant Certificate
entitles any holder or transferee hereof to the right to vote for
or to consent to, or to receive notice as stockholder in respect
of the meetings of stockholders for, the election of directors of
the Company or any other matter, or any rights whatsoever of a
stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ____________
shares of Common Stock and herewith tenders payment for such
shares to the order of Alliance Gaming Corporation in the amount
of $________________ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be
registered in the name of ________________________, whose address
is ___________________________ and that such shares be delivered
to _________________________ whose address is __________________.
If such number of shares is less than all of the shares of Common
Stock purchasable hereunder after giving effect to any delivery
of Warrants in payment of the Exercise Price, the undersigned
requests that a new Warrant Certificate representing the
remaining balance of such shares be registered in the name of
_________________________, whose address is ___________________,
and that such Warrant Certificate be delivered to ______________,
whose address is ___________________________.
Signature:
Date: ___________________
<PAGE>
Exhibit 4.5
Amendment Agreement
Amendment Agreement dated as of October 20, 1994 to
Stockholders Agreement dated as of September 21, 1993 among
United Gaming, Inc., a Nevada corporation (the "Company"),
Kirkland Investment Corporation, a Delaware corporation ("KIC"),
Gaming Systems Advisors, L.P., a Delaware limited partnership
("GSA"), Kirkland-Ft. Worth Investment Partners, L.P., a Delaware
limited partnership ("KFW"), and Alfred H. Wilms, an individual.
R E C I T A L :
The parties hereto are parties to a Stockholders
Agreement dated as of September 21, 1993 (the "Stockholders
Agreement"). The Stockholders Agreement provides in substance
for, among other things, the taking of all actions (including the
voting of all shares of Common Stock, par value $.10 per share,
of the Company, possessed by Mr. Wilms and KIC and certain
transferees thereof) to cause the Board of Directors of the
Company to be constituted as provided in Section 2.1 thereof.
Given the Company's desire to attract qualified and experienced
new personnel and in light of the contemplated events involving
the Company's future business, the parties desire to amend the
Stockholders Agreement, as provided herein, to attempt to effect
certain changes to the composition of the Company's Board of
Directors.
A G R E E M E N T :
The parties agree as follows:
1. Capitalized terms not defined in this Agreement
shall have the meanings ascribed to them in the Stockholders
Agreement.
2. (a) Section 2.1 of the Stockholders Agreement is
hereby amended to read in its entirety as follows:
2.1 Board of Directors. From and after the date
hereof and subject to the following provisions, KIC and Mr.
Wilms and each of their respective Permitted Transferees
shall use its best efforts (including without limitation,
voting all of their shares of Common Stock and taking every
other action within their control) to cause the Board of
Directors of the Company to consist of seven members,
designated as set forth below:
<PAGE>
(a) Designation of Directors. KIC shall
designate four directors, Mr. Wilms shall designate one
director and the remaining two directors (the "New
Directors") shall, subject to Section 2.3 below, be
designated by a majority of the Board of Directors then
holding office (it being understood that the New Directors
shall initially be, from and after October 20, 1994, Craig
Fields and Steve Greathouse). The director designated by
Mr. Wilms shall be in the class which shall have an initial
term of three years from the date of the annual meeting next
following the Licensing Date) and the New Directors shall
fill the unexpired terms of resigning directors. In
addition, KIC shall designate the classes of directors of
which KIC's designees and the New Directors shall serve,
which designation, in the case of the New Directors, shall
be reasonably satisfactory to Mr. Wilms. In addition,
during such time that the covenants in this clause (a) are
otherwise in effect, (i) Mr. Wilms shall have the right to
designate two persons (who shall initially be, from and
after October 20, 1994, David Scheinman and Sidney Sosin)
(the "Advisors") who shall be observers of and advisors to
the Company's Board of Directors, who shall be entitled to
attend all of the Company's Board of Directors' meetings and
receive all information furnished to members of the
Company's Board of Directors, (ii) Mr. Wilms and/or at least
one Advisor shall be entitled to attend all meetings of
committees of the Company's and its subsidiaries' Board of
Directors, and (iii) Mr. Wilms and the Advisors shall be
reimbursed for their reasonable expenses in attending all
such meetings.
(b) Committees of the Board of Directors and
Subsidiaries. The rights to designate directors provided in
Section 2.1(a) above shall also apply to any committees of
the Board of Directors and to any board of directors and
committees of such board of any Subsidiary of the Company as
provided in the last sentence thereof; thus Mr. Wilms and/or
at least one Advisor shall have the right to attend each
such meeting of the Board of Directors of the Company, each
board of directors of any subsidiary of the Company or any
committee of the foregoing.
(b) Section 2.3 of the Stockholders Agreement is
amended by adding the following sentence to the end of such
section:
"Notwithstanding the foregoing, in the event that there
shall occur any vacancy in either or both of the
directorships held by the New Directors, such vacancies
shall be filled by the remaining members of the board of
directors upon the majority vote thereof subject to the
reasonable prior approval of KIC and Mr. Wilms."
<PAGE>
(c) Section 2.6 of the Stockholders Agreement is
amended to read as follows:
"The covenants and agreements contained in this Article II
shall terminate upon the earlier of (i) September 21, 1997
and (ii) the date that both (1) KIC and its Permitted
Transferees and (2) Mr. Wilms and his Permitted Transferees
each own in the aggregate Securities representing less than
5% of the Fully Diluted Common Stock of the Company (with
outstanding Convertible Stock and underlying Warrant Shares
being counted as Common Stock); provided, that in the event
that the average closing price of a share of Common Stock
(as traded on the NASDAQ National Market System or other
principal exchange or trading market on which the Common
Stock is then traded or listed) for any 30 consecutive
trading day period within the 15-month period prior to the
earlier of the dates described in clauses (i) and (ii) above
shall not have equaled or exceeded $15 (as appropriately
adjusted to give effect to stock splits, recapitalizations,
mergers, reorganizations or similar transactions) then, in
such event, as soon as practicable after September 21, 1997,
KIC and its Permitted Transferees shall use their best
efforts (including causing certain of their prior designees
to resign as directors, if appropriate) so as initially to
result in the Board of Directors of the Company from and
after September 21, 1997 being comprised of such number of
directors designated by KIC and such number of directors
designated by Mr. Wilms as will be in the ratio of four to
three (i.e., four KIC designees and three Wilms designees,
or eight KIC designees and six Wilms designees, etc.), it
being understood that the foregoing shall not require KIC or
Mr. Wilms or any of their respective Permitted Transferees
to vote for a particular designee at any regular or special
meeting of stockholders after September 21, 1997. Subject
to the provisions of Section 2.1(a) and notwithstanding the
foregoing, prior to the fifteenth anniversary of this
Agreement, KIC shall vote all of its shares of Common Stock
to cause Mr. Wilms to be elected a director of the Company
for so long as Mr. Wilms owns shares of Common Stock;
provided, however, that Mr. Wilms shall have the right, at
any time or from time to time, to terminate this provision
and, if he so elects, all parties hereto will cooperate in
the event Mr. Wilms determines to cease being a director of
the Company and cease receiving confidential or otherwise
non-public Company information."
3. Each of the provisions of Article VIII of the
Stockholders Agreement shall apply to this Agreement with the
same force and effect as originally applicable to the
Stockholders Agreement, except that references to the restrictive
legend in Section 8.1 thereof shall be deemed to refer to the
<PAGE>
"Stockholders Agreement (as amended by an Amendment Agreement
dated as of October 20, 1994)".
4. Other than as amended hereby, the Stockholders
Agreement shall remain in full force and effect as originally
stated.
In witness whereof, the parties have executed this
Amendment Agreement as of the date first set forth above.
United Gaming, Inc.
By: ___________________________
Name:
Title:
Kirkland Investment Corporation
By: ___________________________
Gaming Systems Advisors, L.P.
By: GSA, Inc., its general partner
By: __________________________
Kirkland-Ft. Worth Investment
Partners, L.P.
By: Kirkland Investment Corporation,
its general partner
By: _________________________
____________________________
Alfred H. Wilms
<PAGE>
Exhibit 4.6
AGREEMENT
AGREEMENT dated as of March 20, 1995 by and between
Alliance Gaming Corporation, a Nevada corporation (the
"Company"), and Joel Kirschbaum, an individual (the "Executive").
R E C I T A L S :
A. The Company considers it important and in its best
interest and the best interest of its stockholders to foster the
retention and engagement of key senior personnel, including in
respect of service on the Company's Board of Directors (the
"Board"), and the Company desires to retain the services of the
Executive in such capacity, on the terms and subject to the
conditions provided in this Agreement.
B. The Executive desires to accept such engagement by
the Company and to render services to the Company, on the terms
and subject to the conditions provided in this Agreement.
A G R E E M E N T :
The parties hereto agree as follows:
1. Engagement. The Company hereby agrees to retain
the services of the Executive, and the Executive agrees to be
retained by the Company, to render services to the Company for
the period, at the rate of compensation and upon the other terms
and conditions set forth in this Agreement.
2. Term. The term of the Executive's engagement
under this Agreement (the "Term") shall commence on the date
hereof and shall continue through and including July 14, 1997,
unless earlier terminated specifically as provided in this
Agreement (the date of any termination of this Agreement or the
expiration of the Term, as provided herein, the "Termination
Date").
3. Position and Duties.
(a) Position. Subject to the remainder of this
Section 3(a), the Executive shall serve as a member of the Board
and as a senior consultant to the Company. During his engagement
hereunder, the Executive shall report directly to the Board. The
Executive shall, if so elected by the stockholders of the Company
(and subject to existing stockholders' agreements of the
Company), serve on the Board from time to time, for successive
periods of such election(s) and for such period as shall be
<PAGE>
agreed to by the Executive, subject, in each case, to the
continued election thereto by the Company's stockholders. It is
contemplated that, to the extent requested by the Company, the
Executive shall devote a substantial portion of his business time
to the fulfillment of his duties hereunder, as contemplated by
Section 3(b) below.
In the event that the Executive shall fail to be
elected to the Board or shall otherwise resign from or be removed
from the Board during the Term, as a result of action by the
stockholders of the Company (at a regular or special meeting
thereof), including their failure to so elect the Executive, or
otherwise, then, notwithstanding any such event (but subject to
the remainder of this Agreement, including without limitation,
Sections 7 and 8 below), (i) the Executive shall nonetheless
continue to render the services to the Company otherwise provided
in this Agreement to be rendered by the Executive, (ii) the
Company shall otherwise continue to furnish the compensation and
other remunerations to the Executive otherwise provided in this
Agreement to be furnished, and (iii) the parties shall, if
appropriate, reasonably agree to an amendment or modification to
this Agreement appropriately to reflect such state of affairs.
(b) Duties. During the Term, the Executive shall,
subject to supervision by the Board, have the authority and power
to perform such duties as are consistent with those of a member
of the Board and a senior consultant to the Company. During the
Term, the Executive shall perform the duties contemplated by such
title and such other duties, consistent with his experience and
abilities, as may be properly assigned to the Executive by the
Board. The Executive shall use his best efforts to further the
interests of the Company and at all times conduct himself in a
manner which reflects credit upon the Company. It is
contemplated that the Executive shall render services to the
Company from an office established by the Executive on behalf of
the Company or the cost of which is paid for or reimbursed by the
Company (and reasonably approved by the Company) in New York, New
York; however, the parties acknowledge and agree that the
Executive may be required to travel extensively during the Term
in fulfilling his duties hereunder (including numerous trips to
Las Vegas, Nevada).
4. Compensation and Reimbursement of Expenses.
(a) Compensation. For purposes of this Agreement,
each consecutive 12-month period during the Term ending on each
March 31st during the Term shall be referred to as an "Engagement
Year." For services rendered by the Executive under this
Agreement, the Company shall pay to the Executive as compensation
during each Engagement Year during the Term, a base amount of
compensation (the "Base Compensation") at an annual rate of
<PAGE>
$250,000 per year (prorated for any partial Engagement Years).
Increases in the Base Salary shall be considered by the Board no
less frequently than annually, commencing at the end of the first
Employment Year hereunder and will be based upon criteria
applicable to other senior executives of the Company; it being
understood, however, that the award of any such increase shall be
in the sole discretion of the Board (with the Executive not
voting on such determination). The Base Compensation shall be
payable in equal bi-weekly installments, commencing with the end
of the pay period which next follows the commencement of the
Term, and shall be subject to customary payroll deductions (i.e.,
for social security, federal, state and local taxes and other
amounts customarily withheld from the compensation of members of
the Board and/or employees of the Company).
(b) Bonus. The Executive shall be eligible to receive
from the Company, within 120 days of the end of each Engagement
Year, a cash bonus in respect of such Engagement Year (the
"Annual Bonus"), which shall be based upon all relevant criteria,
including without limitation, (i) the performance of the Company
and/or the operations of the Company for which the Executive is
primarily or exclusively responsible, during such Engagement
Year, based upon customary financial and other criteria, such as
but not limited to, return on the Company's consolidated
stockholders' equity and total capital (i.e., stockholders'
equity and total debt), performance of the Company's Common
Stock, par value $.10 per share (the "Common Stock"), and the
Company's and such operations' absolute and relative amounts of
consolidated cash flow, operating income and net income, and the
comparison of such results with the Company's and such
operations' budgets and projections therefor and (ii) the
performance of the Executive in rendering services to the
Company; it being understood that the Company shall not be
obligated to pay to the Executive any Annual Bonus and the
payment, if any, and amount thereof shall be solely within the
discretion of the Board (with the Executive not voting on such
determination). It is also contemplated that the Compensation
Committee of the Board shall formulate specific criteria and
performance targets for the determination of the Annual Bonus, if
any. The Annual Bonus shall be subject to customary payroll
deductions (i.e., for social security, federal, state and local
taxes and other amounts customarily withheld from the
compensation of members of the Board and/or employees of the
Company).
(c) Options. The Executive shall be eligible to
receive from time to time employee and/or directors' stock
options in accordance with the customary practices of the
Company; it being understood that it is the contemplation of the
Company and the Executive that the Executive shall receive
<PAGE>
employee and/or directors' stock options in amounts and on terms
and conditions that are consistent with those granted to other
senior executives and board members of the Company from time to
time.
(d) Reimbursement of Expenses. Consistent with
established policies of the Company as in effect from time to
time, the Company shall pay to or reimburse the Executive for all
reasonable and actual out-of-pocket expenses, including without
limitation, travel, hotel and similar expenses, incurred by the
Executive from time to time in performing his obligations under
this Agreement.
5. Benefits.
(a) Benefit Plans. The payments provided in Section 4
above are in addition to any benefits to which the Executive may
be, or may become, entitled under any of the Company's benefit
plans or programs for which members of the Board or senior
executive officers of the Company are or shall become eligible.
In addition, the Executive shall be eligible to receive during
the Term benefits and emoluments which are consistent with the
benefits and emoluments provided to all members of the Board or
senior executive officers of the Company.
(b) Vacation. The Executive shall be entitled to
reasonable periods of vacation and sick leave consistent with his
role as a member of the Board or senior executive officers of the
Company.
(c) No Reduction. There shall be no material reduc-
tion or diminution of the benefits provided in this Section 5
during the Term unless (i) the Executive shall have provided his
consent to such reduction or diminution, (ii) an equitable
arrangement (embodied in an ongoing substitute or alternative
benefit or plan) has been made with respect to such benefit or
plan or (iii) such reduction is part of a program of across-the-
board benefit reductions similarly affecting the senior executive
officers of the Company or members of the Board.
6. Benefits Payable Upon Disability.
(a) Disability Benefits. During any period of
Disability (as defined below) occurring during the Term, the
Company shall continue to pay to the Executive the Base
Compensation as provided herein and continue to extend to him the
benefits described in Sections 4 and 5 hereof; it being
understood that if disability benefits are provided under any
disability insurance or similar policy maintained by the Company
(or maintained by the Executive, the cost of which is reimbursed
<PAGE>
or paid by the Company), payments under such policy shall
be considered as payments by the Company and shall offset any
Base Compensation payable to the Executive under this Agreement.
As used in this Agreement, "Disability" shall mean the inability
(as determined by a majority of the remaining members of the
Board (other than the Executive) voting for such determination)
of the Executive to render services to the Company, as provided
herein, as a result of physical or mental infirmity or
disability.
(b) Services During Disability. During the Term,
notwithstanding any Disability, the Executive shall, to the
extent that he is physically and mentally able to do so, furnish
information, assistance and services to the Company, and, upon
the reasonable request in writing on behalf of the Board (as
determined by a majority of the remaining members of the Board
(other than the Executive) voting for such determination), from
time to time, he shall make himself available to the Company to
undertake reasonable assignments and fulfill his duties
hereunder, consistent with his current position with the Company
and his physical and mental health.
7. Termination. This Agreement shall be terminated
in accordance with the provisions of this Section 7, in which
case the provision of Section 8 below shall be applicable.
(a) Upon Expiration of the Term. This Agreement shall
terminate in accordance with Section 2 above.
(b) By the Company. In addition to the provisions of
Section 7(a) above, this Agreement is subject to earlier
termination by the Company, as follows:
(i) Death of Executive. If the Executive dies, this
Agreement shall terminate, the Termination Date being the
date of the Executive's death.
(ii) Disability. If the Executive has been absent
from service to the Company, as required in this Agreement,
for a period of 90 days or more as a result of Disability
during any consecutive 180-day period during the Term, the
Company shall have the right to terminate this Agreement (as
determined by a majority of the remaining members of the
Board (other than the Executive) voting for such
determination), the Termination Date being 15 days after
notice thereof is provided to the Executive.
(iii) Termination by the Company for Cause. The
Company shall have the right to terminate the Executive's
engagement under this Agreement for Cause (as defined
below), the Termination Date to be immediately upon notice
<PAGE>
thereof from the Company to the Executive. For purposes of
this Agreement, "Cause" shall mean the Executive's (A)
conviction of any misdemeanor involving moral turpitude or
any felony, (B) misappropriation or embezzlement from the
Company, (C) denial or rejection of any gaming license or
permit issued by the State of Nevada (or any applicable
agency or political subdivision) or any other jurisdiction
in or from which the denial of a gaming license or permit
could materially adversely affect the Company's business, or
commission of any act which could reasonably be expected to
result in such denial or rejection, (D) any breach during
the Term of Sections 10 or 11 below or (E) the persistent
refusal, after written notice, to undertake the Executive's
duties or obligations hereunder.
(iv) No Termination by the Company Without Cause. The
Company shall not have the right to terminate the
Executive's engagement hereunder for any reason not
specifically set forth in clauses (i), (ii) or (iii) of this
Section 7(b).
(c) By The Executive. In addition to the provisions
of Section 7(a) above, this Agreement is subject to earlier
termination by the Executive, as follows:
(i) Termination by the Executive for Just Cause. The
Executive shall have the right to terminate his employment
under this Agreement upon the occurrence of a material
breach of this Agreement by the Company, which the parties
agree shall be limited to (A) a reduction by the Company in
the Base Salary below the minimum Base Salary specified in
Section 4(a) above or the failure of the Company to pay to
the Executive any portion of the Base Salary within 30 days
of the time that any such amount is due and payable
hereunder or (B) the assignment to the Executive of duties
and responsibilities that are materially inconsistent with
those of a member of the Board and senior consultant to the
Company, in each case, in the cases of clauses (A) and (B),
which has not been cured by the Company after 30 days'
written notice from the Executive to the Company; provided,
that in the case of three such material breaches (and notice
thereof), the Executive shall thereafter have the right to
terminate this Agreement immediately upon notice to the
Company in the case of a subsequent material breach. In the
event that the Executive elects to terminate this Agreement
as a result of the events described in clauses (A) or (B)
above, the Executive shall exercise such right within 10
days after the lapsing of the 30-day period referred to
above in this clause (i) (assuming that the Company shall
have failed to cure such material breach within such
period), or, as applicable, within 10 days of any additional
<PAGE>
material breach giving rise to an immediate right of
termination; thereafter, such right to terminate shall no
longer be exercisable. The Termination Date shall be a date
specified by the Executive, which shall be between 30 and 45
days after the date of the applicable notice giving rise to
a termination, by the Executive to the Company.
(ii) Termination by the Executive Without Just Cause.
The Executive shall have the right to terminate the
Executive's employment under this Agreement for any other
reason not set forth in clause (i) of this Section 7(c), the
Termination Date being 15 days after notice thereof from the
Executive to the Company.
8. Effect of Termination. The following provisions
shall be applicable in the event of the termination of this
Agreement as provided in Section 7 above.
(a) Expiration of Term. Upon termination of this
Agreement as provided in Section 7(a) above, this Agreement
shall terminate and be of no further force and effect,
except as provided in Sections 11, 12 and 13(b) below, which
shall survive such termination, and no additional payments,
liabilities or obligations shall be due and owing from
either party to the other.
(b) Death. Upon the termination of this Agreement as
provided in Section 7(b)(i) above, the Company shall pay to
the Executive's estate (i) an amount equal to the sum of (A)
the compensation otherwise payable to the Executive
hereunder for the six-month period following the Termination
Date, payable within 180 days after the Termination Date
(but not earlier than any recovery of insurance proceeds in
respect thereof, as provided below), and (B) any Annual
Bonus for the Employment Year in which the Termination Date
occurs that the Board determines would otherwise have been
payable had the Executive not died, which Annual Bonus shall
be reduced by prorating it through the Termination Date,
payable, in the case of this clause (B), at the time such
payment would otherwise be due and payable hereunder, and
(ii) expense reimbursement amounts accrued through the
Termination Date, at the time such payment would otherwise
be due and payable thereunder, and neither party shall have
any further liability or obligation to the other, except as
provided in Section 12 below, which shall survive the
Termination Date. Notwithstanding the provisions of clause
(i) above, the Company shall have the right to provide for
either or both of the payments described therein by
purchasing life insurance on the Executive's life itself or
reimbursing to the Executive the cost of the premiums in
<PAGE>
respect of such life insurance which shall be purchased
directly by the Executive; in the event that either or both
of such insurance coverages is obtained, such payments shall
be made solely from such insurance coverages and not from
the Company and shall constitute the Executive's estate's or
heirs' sole remedy in respect of such payments.
In the event that the Executive shall own any employee or
directors' stock options as of the Termination Date, an
amount equal to 50% of any such options which are unvested
as of the Termination Date shall vest and become exercisable
by virtue of any termination under Section 7(b)(i) and,
notwithstanding the provisions of the Company's Stock Option
Plan pursuant to which such options may have been granted,
the Executive's estate shall have a period of two years from
the Termination Date to exercise such options.
(c) Disability. Upon the termination of this
Agreement as provided in Section 7(b)(ii) above, the Company
shall pay to the Executive (i) an amount equal to the
compensation otherwise payable to the Executive hereunder
for the six-month period following the Termination Date, and
(ii) any Annual Bonus for the Employment Year in which the
Termination Date occurs that the Board determines would
otherwise have been payable had the Executive not become
Disabled, which Annual Bonus shall be reduced by prorating
it through the Termination Date, in each case, payable at
the times such payments would otherwise be due and payable
hereunder; provided, in the case of clauses (i) and (ii)
above, that the Executive continues to comply with his
covenants in Sections 10 (during the shorter of (A) 12
months from the Termination Date and (B) the remainder of
the Term had such termination under Section 7(b)(ii) above
not occurred) and 11 below, as provided therein, and (iii)
expense reimbursement amounts accrued through the
Termination Date, at the time such payment would otherwise
be due and payable thereunder, and neither party shall have
any further liability or obligation to the other, except
that the provisions of Sections 10, 11, 12 and 13(b) below
shall survive the Termination Date, to the extent provided
therein, with the provisions of such Section 10 surviving
for the shorter of (A) 12 months from the Termination Date
and (B) the remainder of the Term had such termination not
occurred. Notwithstanding the provisions of clauses (i) and
(ii) above, the Company shall have the right to provide for
either or both of such payments by either purchasing
disability insurance itself in respect of the Executive or
reimbursing to the Executive the cost of the premiums in
respect of such disability insurance which shall be
purchased directly by the Executive; in the event that
<PAGE>
either or both of such insurance coverages is obtained, such
payments shall be made solely from such insurance coverages
and not from the Company and shall constitute the
Executive's sole remedy in respect of such payments.
In the event that the Executive shall own any employee or
directors' stock options as of the Termination Date, an
amount equal to 50% of any such options which are unvested
as of the Termination Date shall vest and become exercisable
by virtue of any termination under Section 7(b)(ii) and,
notwithstanding the provisions of the Company's Stock Option
Plan pursuant to which such options may have been granted,
the Executive shall have a period of two years from the
Termination Date to exercise such options.
(d) Termination by the Company For Cause. Upon the
termination of this Agreement as provided in Section
7(b)(iii) above, the Company shall pay to the Executive
(i) the accrued and unpaid Base Salary, if any, through the
Termination Date and (ii) expense reimbursement amounts
accrued through the Termination Date, at the time such
payments are otherwise due and payable thereunder, and
neither party shall have any further liability or obligation
to the other, except that the provisions of Sections 10, 11,
12 and 13(b) below shall survive the Termination Date, to
the extent provided therein, with the provisions of such
Section 10 surviving for the shorter of (A) 12 months from
the Termination Date and (B) the remainder of the Term had
such termination not occurred. No unvested employee or
directors' stock options shall vest or become exercisable by
virtue of any termination under Section 7(b)(iii) and any
and all rights thereto then possessed by the Executive shall
be terminated and of no further force and effect.
(e) Termination by the Executive for Just Cause. Upon
termination of this Agreement as provided in Section 7(c)(i)
above, the Company shall pay to the Executive (i) the Base
Salary which would otherwise be payable hereunder in respect
of the remainder of the Term; provided, that the Executive
continues to comply with the covenants in Section 11 below,
as provided therein, and (ii) expense reimbursement amounts
accrued through the Termination Date, in each case, in the
case of clause (i) and (ii) above, at the time such payments
are otherwise due and payable thereunder, and neither party
shall have any further liability or obligation to the other,
except that the provisions of Sections 11, 12 and 13(b)
below shall survive the Termination Date, to the extent
provided therein; it being understood that the covenants in
Section 10 below shall be of no further force and effect
following the Termination Date. All unvested employee and
<PAGE>
directors' stock options, if any, shall vest and become
exercisable (in accordance with the Plan) by virtue of any
termination under Section 7(c)(i).
(f) Termination by the Executive Without Just Cause.
Upon the termination of this Agreement as provided in
Section 7(c)(ii) above, the Company shall pay to the
Executive (i) the accrued and unpaid Base Salary, if any,
through the Termination Date, (ii) expense reimbursement
amounts accrued through the Termination Date and (iii) Base
Salary at a rate of 50% of the Base Salary otherwise in
effect on the Termination Date per calendar year during the
period that the provisions of Section 10 shall be in effect,
as provided below, at the time such payments are otherwise
due and payable thereunder, and neither party shall have any
further liability or obligation to the other, except that
the provisions of Sections 10, 11, 12 and 13(b) below shall
survive the Termination Date, to the extent provided
therein, with the provisions of such Section 10 surviving
for the shorter of (A) 12 months from the Termination Date
and (B) the remainder of the Term had such termination not
occurred. During such period that the provisions of Section
10 are in effect, the Executive shall continue to be
eligible to receive the benefits provided in Section 5
above. No unvested employee or directors' options shall
vest or become exercisable by virtue of any termination
under Section 7(c)(ii) above and any and all rights thereto
to such unvested options then possessed by the Executive
shall be terminated and of no further force and effect.
9. Federal Income Tax and Other Withholdings. The
Company shall withhold from any benefits payable pursuant to this
Agreement such federal, state, city or other taxes and other
amounts as may be required to be withheld pursuant to any
applicable law or governmental regulations or ruling and shall
timely pay over to the appropriate governmental or other
authorities the amount withheld, together with any additional
amounts required to be paid by the Company in respect thereof.
10. Non-Competition. The Executive covenants and
agrees that he will not at any time during the Term and, to the
extent provided for in the applicable subsections of Section 8
above, up to a period of 12 months thereafter as provided in such
subsections in Section 8 above, directly or indirectly, whether
as employee, owner, partner, agent, director, officer,
consultant, stockholder (except as the beneficial owner of not
more than 5% of the outstanding shares of a corporation, any of
the capital stock of which is listed on any national or regional
securities exchange or quoted in the daily listing of over-the-
counter market securities and, in each case, in which the
<PAGE>
Executive does not undertake any management or operational or
advisory role) or in any other capacity, for his own account or
for the benefit of any person or entity, establish, engage or be
connected with or in any manner any person or entity which is at
the time engaged in a business which is on the date hereof or on
any applicable Termination Date in competition with the business
of the Company (or any of its subsidiaries or affiliates).
11. Confidential Information and Non-Disparagement.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company and its stockholders all secret,
confidential or proprietary information, knowledge or data
relating to the Company (and any of its subsidiaries or
affiliates), which shall have been obtained by the Executive
during or by reason of his engagement by the Company, in
accordance with the principles of NRS 600A.010 et seq. (the so-
called Uniform Trade Secrets Act). During and after the end of
the Term, the Executive shall not, without the prior written
consent of the Company, communicate or divulge any such
information, knowledge or data to any person or entity other than
the Company (or such applicable subsidiaries or affiliates) and
those designated by them which would result in any
misappropriation under and as defined in such Act, except that,
during his engagement hereunder, in furtherance of the business
and for the benefit of the Company, the Executive may provide
confidential information as appropriate to attorneys,
accountants, financial institutions or other persons or entities
engaged in business with the Company from time to time.
(b) Each of the parties agrees that from and after any
termination or expiration of the Term, neither shall, publicly or
privately, disparage or make any statements (written or oral)
that could impugn the integrity, acumen (business or otherwise),
ethics or business practices, of the other, except, in each case,
to the extent (but solely to the extent) necessary in any
judicial or arbitral action to enforce the provisions of this
Agreement.
12. Indemnification and Liability Insurance.
(a) Indemnification. The Company shall indemnify and
hold the Executive harmless, to the fullest extent legally
permitted by Section 78.751 of the Nevada Corporation Code (as
amended and in effect from time to time) against any and all
expenses, liabilities and losses (including without limitation,
reasonable attorneys' fees and disbursements of counsel
reasonably satisfactory to the Company), incurred or suffered by
him in connection with his service as a member of the Board
during the Term, in each case, except to the extent of the
Executive's negligence or willful misconduct.
<PAGE>
(b) Insurance. The Company shall maintain, for the
benefit of the Executive, a directors' and officers' liability
insurance policy insuring the Executive's service as a member of
the Board during the Term in accordance with its customary
practices as in effect from time to time during the Term. The
parties acknowledge and agree that such policy may cover other
directors and officers of the Company in addition to the
Executive.
13. General Provisions.
(a) Assignment. Neither this Agreement nor any right
or interest hereunder shall be assignable by the Executive or the
Company without the prior written consent of the other; provided,
that (i) in the event of the Executive's Death during the Term,
the Executive's estate and his heir, executors, administrators,
legatees and distributees shall have the rights and obligations
set forth herein, as provided herein, and (ii) nothing contained
in this Agreement shall limit or restrict the Company's ability
to merge or consolidate or effect any similar transaction with
any other entity, irrespective of whether the Company is the
surviving entity; provided, that such surviving entity shall
continue to be bound by the provisions hereof binding upon the
Company.
(b) Material Inducements. The provisions of Sections
10 and 11 above are material inducements to the Company entering
into and performing this Agreement; accordingly, in the event of
any breach of such provisions by the Executive, in addition to
all other remedies at law or in equity possessed by the Company,
the Company shall have the right to terminate and not pay any
amounts payable to the Executive hereunder.
(c) Binding Agreement. This Agreement shall be
binding upon, and inure to the benefit of, the Executive and the
Company and their respective heirs, executors, administrators,
legatees and distributees, successors and permitted assigns.
(d) Amendment of Agreement. This Agreement may not be
modified or amended except by an instrument in writing signed by
the parties hereto.
(e) Severability. If, for any reason, any provision
of this Agreement is determined to be invalid or unenforceable,
such invalidity or lack of enforceability shall not affect any
other provision of this Agreement not so determined to be invalid
or unenforceable, and each such other provision shall, to the
full extent consistent with applicable law, continue in full
force and effect, irrespective of such invalid or unenforceable
provision.
<PAGE>
(f) Effect of Prior Agreements. This Agreement
contains the entire understanding between the parties hereto
respecting the Executive's engagement by the Company, and super-
sedes any prior agreement between the Company and the Executive
relating to the retention of the Executive as a senior consultant
to the Company. Nothing contained in this Agreement shall affect
in any manner whatsoever any of the agreements or instruments
executed on or prior to the date hereof among the Executive or
any of his affiliates on the one hand (including without
limitation, Kirkland-Ft. Worth Investment Partners, L.P.,
Kirkland Investment Corporation, Gaming Systems Advisors, L.P. or
GSA, Inc.), and the Company or any other party, on the other
hand.
(g) Notices. For the purpose of this Agreement,
notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been
duly given (i) when delivered, if sent by telecopy or by hand,
(ii) one business day after sending, if sent by reputable
overnight courier service, such as Federal Express, or
(iii) three business days after being mailed, if sent by United
States certified or registered mail, return receipt requested,
postage prepaid. Notices shall be sent by one of the methods
described above; provided, that any notice sent by telecopy shall
also be sent by any other method permitted above. Notices shall
be sent, if to the Executive, to 25 Grace Court, Brooklyn, New
York 11201; telecopy no. (718) 596-3038; and if to the Company,
to Alliance Gaming Corporation, 4380 Boulder Highway, Las Vegas,
Nevada 89121; telecopy no. (702) 454-0478, directed to the
attention of the Board with copies to the Chairman and the
Secretary of the Company; or to such other address as either
party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be
effective only upon receipt.
(h) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
(i) Arbitration. In the event of a dispute or con-
troversy arising under or in connection with this Agreement
(except, at the option of the Company, Sections 10 and 11 above),
the Executive shall give the Company or the Company shall give
the Executive, as applicable, a written demand for relief. If
the dispute or controversy is not resolved, it shall be settled
exclusively by arbitration, conducted in Las Vegas, Nevada, in
accordance with the rules of the American Arbitration Association
(or if such association does not then conduct business in such
city, another arbitral panel reasonably satisfactory to each
<PAGE>
party) then in effect. Judgment shall be entered on the
arbitrator's award in any court having jurisdiction over the
parties hereto.
(j) Indulgences, Etc. Neither the failure nor any
delay on the part of either party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise
of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege
with respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other
occurrence.
(k) Headings. The headings of sections and paragraphs
herein are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the
provisions of this Agreement.
(l) Governing Law. This Agreement has been executed
and delivered in the State of Nevada, and its validity, inter-
pretation, performance, and enforcement shall be governed by the
laws of such State, without regard to principles of conflicts of
laws.
[The remainder of this page is left blank.]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer, and the
Executive has signed this Agreement, all as of the date first set
forth above.
Alliance Gaming Corporation
By: __________________________
Name:
Title:
_________________________
Joel Kirschbaum
<PAGE>
Exhibit 4.7
ALLIANCE GAMING CORPORATION
4380 BOULDER HIGHWAY
LAS VEGAS, NEVADA 89121
March 20, 1995
Mr. Steven Greathouse
c/o Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Dear Mr. Greathouse:
Alliance Gaming Corporation (formerly United Gaming, Inc.),
a Nevada corporation (the "Company"), has advised you that it
intends to file a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). The Registration Statement will
cover the offer and sale of outstanding restricted shares of
Common Stock of the Company, $.10 par value (the "Common Stock")
owned by you (in the capacity as owner of such shares of Common
Stock, the "Selling Stockholder"). In connection therewith, this
letter (the "Agreement") sets forth the agreement and
understanding of the Company and the Selling Stockholder.
1. Registration Statement. The Registration Statement
will cover the 250,000 shares of restricted Common Stock held by
the Selling Stockholder (the "Shares"). Subject to Section 3
hereof, the Company will cause the Registration Statement to be
declared and to remain effective until the latter to occur of (i)
the first anniversary of the date the Selling Stockholder ceases
to be an employee of the Company and (ii) the date on which the
Selling Shareholder may sell, freely and without restriction, his
Shares unregistered in compliance with federal securities laws.
2. Plan of Distribution; Notification of Sales. The
Selling Stockholder has carefully reviewed the information to be
included under the caption "Plan of Distribution" in the
Prospectus (the "Prospectus") included in the Registration
Statement and agrees that (i) it accurately sets forth the
contemplated manner in which the Shares will be distributed and
(ii) the Selling Stockholder will refrain from any transactions
relating to the offer or sale of all or any of the Shares not
described therein unless prior written advice of such fact has
<PAGE>
been provided to the Company and an appropriate supplement to the
Prospectus or Post-Effective Amendment, if required, has been
filed with the SEC, the appropriate state regulatory authorities
and, if required, NASDAQ (or such other exchange or listing or
quotation service on which the Common Stock is then traded,
listed or quoted). As required by the Securities Act and the
rules and regulations thereunder, the Selling Stockholder will
take all action necessary to cause a current Prospectus to be
delivered in connection with any sale of Shares under the
Registration Statement. In order to ensure the continued
accuracy of the information under the caption "Plan of
Distribution" in the Prospectus, the Selling Stockholder agrees
to notify the Company in writing of any sales made pursuant to
the Registration Statement, including the selling price, type of
transaction and the name of and compensation received by any
participating broker, dealer or underwriter.
3. Termination or Suspension of Registration Statement.
The Selling Stockholder recognizes and acknowledges that, from
time to time, events will occur which require that the Prospectus
be updated or otherwise amended to ensure that it not misstate a
material fact or omit to state a material fact necessary to make
the statements contained therein not misleading. In addition to
developments in the Company's business, such an updating may also
be required on an annual basis. In order to ensure that no
offers or sales of Shares are made under the Registration
Statement at such times, the Selling Stockholder agrees that,
upon delivery of notice by the Company to the Selling Stockholder
that the effectiveness of the Registration Statement has been
terminated or suspended, the Selling Stockholder shall
immediately discontinue any further offers or sales of Common
Stock under the Registration Statement until notified otherwise
in writing by the Company that offers and sales under the
Registration Statement may be resumed. If necessary, the Company
will also provide the Selling Stockholder with an updated
Prospectus to be delivered in connection with such offers and
sales.
4. 1934 Act. The Selling Stockholder acknowledges that he
will be subject to the applicable provisions of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder, including without limitation,
Rules 10b-6 and 10b-7, which generally regulate the circumstances
under and means by which an individual participating in the
distribution of securities may purchase, solicit or induce the
solicitation of purchase of such securities while such
distribution is taking place, and agree to comply therewith.
5. Legend. The Company may place a legend on the stock
certificate or certificates representing shares of Common Stock
or other securities held by the Selling Stockholder reflecting
<PAGE>
the foregoing restrictions and may issue a stop-transfer order to
the Company's transfer agent in order to prevent any transfer in
violation of such restrictions.
6. State Securities Law. The Company will use
commercially reasonable efforts and will cooperate with the
Selling Stockholder to qualify the Common Stock for offering and
sale under the laws of such jurisdictions as the Selling
Stockholder designates and will use such efforts to comply with
such laws so as to permit the sales of Common Stock in each such
jurisdiction; provided, however, that the Company will not be
obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise subject. The Company
will file such statements and reports as may be required by the
laws of each jurisdiction in which the Common Stock has been
qualified as above provided. The Company will also supply
the Selling Stockholder with such information as is necessary for
the determination of the legality of the Common Stock for
investment under the laws of such jurisdiction as the Selling
Stockholder may request.
7. Representations and Warranties. The Selling
Stockholder hereby represents and warrants that he has full power
and authority to enter into this Agreement, and that, upon
request, the Selling Stockholder will execute any additional
documents necessary or desirable in connection with the
enforcement hereof. All authority herein conferred or agreed to
be conferred shall survive the death, incapacity or dissolution
of the Selling Stockholder and any obligations of the Selling
Stockholder shall be binding upon the heirs, personal
representatives, successors and assigns of the Selling
Stockholder.
8. Costs. The Company will pay and bear all costs and
expenses incident to the preparation, printing and filing of the
Registration Statement, as originally filed and as amended, and
the Prospectus and any supplements thereto, and the costs of
furnishing copies thereof to the Selling Stockholder in such
quantities as the Selling Stockholder may reasonably request from
time to time. The Selling Stockholder will pay and bear all
costs and expenses incident to the delivery of the shares of
Common Stock to be sold by him, including any transfer taxes
payable upon the sale of such shares to the purchaser thereof and
any commissions or discounts payable to any underwriters, dealers
or agents with respect to any particular offer of shares of
Common Stock.
<PAGE>
9. Indemnification.
(a) Indemnification by the Company. The Company
agrees to indemnify and hold harmless, to the full extent
permitted by applicable law, the Selling Stockholder from and
against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in the Registration
Statement or any amendments thereto, the Prospectus or any
supplement to the Prospectus or 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, except
insofar as the same are caused by or contained in any information
furnished in writing to the Company by the Selling Stockholder
expressly for use therein; provided, however, that the Company
shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Prospectus if (i) it is
determined that it was the responsibility of the Selling
Stockholder to provide the person asserting such loss, claim,
damage, liability or expense with a current copy of the
Prospectus and the Selling Stockholder failed to deliver or cause
to be delivered a copy of the Prospectus to such person after the
Company had furnished the Selling Stockholder with a sufficient
number of copies of the same and (ii) the Prospectus corrected in
a timely manner such untrue statement or omission. The foregoing
indemnity shall be in addition to any liability the Company may
otherwise have, shall remain in full force and effect regardless
of any investigation made by or on behalf of the Selling
Stockholder.
(b) Indemnification by the Selling Stockholder.
The Selling Stockholder agrees to indemnify and hold harmless, to
the full extent permitted by law, the Company, its directors,
officers, employees and agents and each person who controls the
Company (within the meaning of the Securities Act and the
Exchange Act) from and against any losses, claims, damages,
liabilities and expenses resulting from any untrue statement of a
material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or necessary
to make the statements therein not misleading, to the extent, but
only to the extent, that such untrue statement or omission is
contained in any information furnished in writing by the Selling
Stockholder to the Company specifically for inclusion in such
Registration Statement or Prospectus and has not been corrected
in a subsequent writing prior to or concurrently with the sale of
the Shares to the person asserting such loss, claim, damage,
liability or expense. For all purposes contemplated hereby, the
<PAGE>
Company acknowledges that the name of the Selling Stockholder and
the number of Shares to be registered constitute the only
information furnished in writing by the Selling Stockholder to
the Company and the Selling Stockholder confirms that such
information is correct. This indemnity shall be in addition to
any liability the Selling Stockholder may otherwise have, shall
remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such officer, director
or controlling person and shall survive termination of this
Agreement and the transfer of Shares by the Selling Stockholder.
(c) Conduct of Indemnification Proceedings. Any
person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party;
provided, however, that any delay or failure to so notify the
indemnifying party shall relieve the indemnifying party of its
obligations hereunder only to the extent, if at all, that it is
prejudiced by reasons of such delay or failure; provided,
further, however, that any person entitled to indemnification
hereunder shall have the right to select and employ separate
counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense
of such person unless (a) the indemnifying party has agreed in
writing to pay such fees or expenses, or (b) the indemnifying
party shall have failed to assume the defense of such claim
within a reasonable time after receipt of notice of such claim
from the person entitled to indemnification hereunder and employ
counsel reasonably satisfactory to such person, or (c) in the
reasonable judgment of any such person, based upon advice of its
counsel, a conflict of interest may exist between such person and
the indemnifying party with respect to such claims (in which
case, if the person notifies the indemnifying party in writing
that such person elects to employ separate counsel at the expense
of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such claim on behalf of such
person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such
consent will not be unreasonably withheld); provided, that an
indemnifying party shall not be required to consent to any
settlement involving the imposition of equitable remedies or
involving the imposition of any material obligations on such
indemnifying party other than financial obligations for which
such indemnified party will be indemnified hereunder. No
indemnifying party shall consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all
<PAGE>
liability in respect of such claim or litigation. Whenever the
indemnified party or the indemnifying party received a firm offer
to settle a claim for which indemnification is sought hereunder,
it shall promptly notify the other of such offer. If the
indemnifying party refuses to accept such offer within 20
business days after receipt of such offer (or of notice thereof),
such claim shall continue to be contested and, if such claim is
within the scope of the indemnifying party's indemnity contained
herein, the indemnified party shall be indemnified pursuant to
the terms hereof. If the indemnifying party notifies the
indemnified party in writing that the indemnifying party desires
to accept such offer, but the indemnified party refuses to accept
such offer within 20 business days after receipt of such notice,
the indemnified party may continue to contest such claim and, in
such event, the total maximum liability of the indemnifying party
to indemnify or otherwise reimburse the indemnified party
hereunder with respect to such claim shall be limited to and
shall not exceed the amount of such offer, plus reasonable
out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) to the date of notice that the
indemnifying party desires to accept such offer; provided, that
this sentence shall not apply to any settlement of any claim
involving the imposition of equitable remedies or to any
settlement imposing any material obligations on such indemnified
party other than financial obligations for which such indemnified
party will be indemnified hereunder.
(d) Contribution. If for any reason the
indemnification provided for in the preceding paragraphs (a) and
(b) is unavailable to an indemnified party or insufficient to
hold it harmless as contemplated by the preceding paragraphs (a)
and (b), then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as it
appropriate to reflect not only the relative benefits received by
the indemnified party and the indemnifying party, but also the
relative fault of the indemnified party and the indemnifying
party, as well as an other relevant equitable considerations. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
10. Counterparts. This Agreement may be executed in one or
more counterparts and when a counterpart has been executed by
each party, all such counterparts taken together shall constitute
one and the same agreement.
11. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Nevada, without regard to conflict of laws.
<PAGE>
If the foregoing accurately sets forth our understanding,
please so indicate by signing the original of this letter and
returning it to the Company.
Very truly yours,
ALLIANCE GAMING CORPORATION
By: __________________________
John W. Alderfer
Senior Vice President,
Treasurer and Chief
Financial Officer
Accepted and agreed as of the 20th day
of March, 1995:
______________________________
Steven Greathouse
<PAGE>
Exhibit 5.1
Law Offices
Schreck, Jones, Bernhard, Woloson & Godfrey
Chartered
600 East Charleston Boulevard
Las Vegas, Nevada 89104
Telephone: (702) 382-2101
Telecopier: (702) 382-8135
Frank A. Schreck Sean T. McGowan
Leslie Terry Jones Dawn M. Cica
Peter C. Bernhard F. Edward Mulholland II
Kenneth A. Woloson Todd L. Bice
John A. Godfrey James J. Pisanelli
David D. Johnson --
James R. Chamberlain Of Counsel
Michelle L. Morgando Howard W. Cannon
Lance C. Earl
Thomas R. Canham
March 24, 1995
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Re: Alliance Gaming Corporation
Common Stock, Par Value $.10
Dear Ladies and Gentlemen:
This opinion is rendered in connection with the filing
by Alliance Gaming Corporation, a Nevada corporation (the
"Company"), of a registration statement on Form S-3 (the
"Registration Statement") filed by the Company with the
Securities and Exchange Commission on March 24, 1995, and any
amendments thereto, under the Securities Act of 1933, as amended,
with respect to the sale of up to 250,000 shares of the Company's
Common Stock, $0.10 par value (the "Shares"), being offered by a
certain stockholder of the Company (the "Selling Stockholder").
We have acted as counsel to the Company in connection with the
issuance of the Shares.
<PAGE>
In our capacity as such counsel, we are familiar with
the proceedings taken and to be taken by the Company in
connection with the Shares. In addition, we have made such legal
and factual examinations and inquiries, including an examination
of originals (or copies certified or otherwise identified to our
satisfaction as being true reproductions of originals) of such
documents, corporate records and other instruments, and have
obtained from officers of the Company and agents thereof such
certificates and other representations and assurances, as we have
deemed necessary and appropriate for purposes of this opinion.
Without limiting the generality of the foregoing, in
rendering this opinion, we have, with your permission, assumed
without independent verification (i) the genuineness of all
signatures, (ii) each of the parties thereto has duly and validly
executed and delivered each instrument, document, and agreement
to which such party is a signatory, and such party's obligations
set forth therein are its legal, valid, and binding obligations,
enforceable in accordance with their respective terms, (iii) that
each natural person executing any such instrument, document, or
agreement is legally competent to do so, (iv) there are no oral
or written modifications of or amendments to the documents, and
there has been no waiver of any of the provisions of the
documents, by actions or conduct of the parties or otherwise, (v)
all documents submitted to us as originals are authentic, all
documents submitted to us as certified or photostatic copies
conform to the original document, all signatures on all documents
submitted to us for examination are genuine, and all public
records reviewed are accurate and complete, and (vi) the accuracy
and completeness of all corporate records made available to us by
the Company.
We are qualified to practice law in the State of Nevada
and we do not purport to be experts on, or to express any opinion
herein concerning, any law other than the laws of the State of
Nevada. We assume no responsibility regarding the applicability,
or the effect thereon, of the laws of any other jurisdiction. We
express no opinion herein concerning any federal law, including
any federal securities law, or any state securities law.
Based upon the foregoing, we are of the opinion that
the Shares have been and, upon the effectiveness of the
Registration Statement, will be duly authorized, validly issued,
fully paid and nonassessable.
<PAGE>
We consent to your filing this opinion as an exhibit to
the Registration Statement and to the reference to our firm
contained under the heading "Legal Matters" of the prospectus
included therein.
Yours very truly,
/s/ SCHRECK, JONES, BERNHARD,
WOLOSON & GODFREY
<PAGE>
Exhibit 23.2
Independent Auditors' Consent
The Board of Directors and Shareholders
Alliance Gaming Corporation
We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
Las Vegas, Nevada
March 24, 1995
