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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4 )*
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ALLIANCE GAMING CORPORATION
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(Name of Issuer)
Common Stock, $.10 par value
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(Title of Class of Securities)
364654 10
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(CUSIP Number)
Joel Kirschbaum
Kirkland Investment Corporation
Kirkland-Ft. Worth Investment Partners, L.P.
535 Madison Avenue
New York, New York 10022
(212) 888-2399
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
September 5, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with this statement [_]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 36454 10 PAGE 2 OF PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Joel Kirschbaum, Kirkland Investment Corporation, a Delaware corporation, and
Kirkland-Ft. Worth Investment Partners, L.P., a Delaware limited partnership
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
See Item 5 (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e). [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America; Delaware; Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 1,016,800 See Items 4 and 5
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH -0-
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REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,016,800 See Items 4 and 5
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WITH 10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,016,800 See Items 4 and 5
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.1% (based on 31,832,410 outstanding shares of Common Stock, as set forth
in the Company's Annual Report on Form 10-K for the year ended June 30,
1996)
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14 TYPE OF REPORTING PERSON*
IN, CN, PN
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2 OF 5
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INTRODUCTION
This Statement filed by Mr. Joel Kirschbaum, Kirkland Investment Corporation,
a Delaware corporation ("KIC"), and Kirkland-Ft. Worth Investment Partners,
L.P., a Delaware limited partnership ("KFW"), amends the Schedule 13D, dated
June 23, 1994, filed by Mr. Kirschbaum, KIC, KFW and Gaming Systems Advisors,
L.P., a Delaware limited partnership ("GSA"), as amended by Amendment No. 1
filed by such persons and Dr. Craig Fields, Mr. Jay R. Gottlieb and Mr. David
Robbins, Amendment No. 2 filed by Dr. Fields and Messrs. Kirschbaum and Robbins
and Amendment No. 3 filed by Messrs. Kirschbaum and Robbins, with respect to the
common stock, par value $.10 per share (the "Common Stock"), of Alliance Gaming
Corporation, a Nevada corporation (formerly United Gaming, Inc.) (the
"Company").
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 4 to Schedule 13D relates to the Common Stock of the
Company. The address of the Company's principal executive office is 6601 South
Bermuda Road, Las Vegas, Nevada 89119.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Amendment is being filed by Mr. Kirschbaum, KIC and KFW in
respect of the transactions described herein.
(d)-(e) During the last five years, none of the Reporting Persons has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
state securities laws for finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
Item 3 is amended by adding the following text to the end thereof:
The source of funds for the investment described herein is personal funds of
Mr. Kirschbaum.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is amended by adding the following text to the end thereof:
On June 4, 1996 KIC and GSA, Inc., a Delaware corporation, the sole general
partners in KFW and GSA, respectively, entered into an agreement (as amended on
October 29, 1996, the "Letter Agreement") with Kirkland Investors, L.P.
("Investors"), the sole limited partner in KFW and GSA, which provided in
substance for the distribution of assets (including shares of Common Stock and
warrants to acquire such Common Stock) from KFW and GSA to KIC and GSA, Inc., on
the one hand, and Investors, on the other hand, as part of the orderly winding
up of the KFW and GSA partnerships pursuant to the their terms and as provided
for in the Letter Agreement. A copy of the Letter Agreement is filed as Exhibit
7.1 hereto. As a result of the transactions contemplated by the Letter
Agreement, Mr. Kirschbaum, KIC and KFW are no longer beneficially deemed to own
the securities formerly owned by KFW and GSA, respectively, but which were
distributed or are provided to be distributed to Investors. None of Mr.
Kirschbaum, KIC or GSA, Inc. received any consideration in connection with such
distribution.
In connection with the Company's merger with Bally Gaming International, Inc.
("BGII"), which occurred in June 1996, GSA became entitled to receive warrants
to acquire 2.75 million shares of Common Stock (none of which are presently
exercisable), which will be distributed to GSA, Inc. and Investors in accordance
with the Letter Agreement.
During July 1996, Mr. Kirschbaum purchased 50,000 shares of Common Stock on
the open market at prices ranging from $2.875 to $3.00 per share.
2 OF 5
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On August 29, 1996, the Board of Directors authorized the issuance of options
to Mr. Kirschbaum to acquire 550,000 shares of Common Stock with an exercise
price of $3-7/16 per share. Mr. Kirschbaum expects that such options will be
reflected in an option agreement to be executed between him and the Company.
On September 5, 1996, Mr. Kirschbaum purchased 16,800 shares of Common Stock
on the open market at an average price of $2.7274 per share. Also on September
5, 1996, certain other directors and officers of the Company purchased shares of
Common Stock; specifically, Steve Greathouse, the Company's Chairman and Chief
Executive Officer, purchased 33,500 shares (as well as 15,000 shares on
September 23, 1996 and 17,000 shares on September 24, 1996), Jacques Andre, a
director of the Company, purchased 1,700 shares, Anthony L. DiCesare, a director
and Executive Vice President of the Company, purchased 4,300 shares (he also
purchased 12,000 shares during July 1996 and was granted options to acquire
375,000 shares on August 29, 1996), Hans Kloss, president of the Company's BGII
subsidiary, purchased 50,400 shares (as well as 31,000 shares on September 26,
1996 and 19,000 shares on September 27, 1996) and David Robbins, a director of
the Company, purchased 8,400 shares. All of such transactions have been reported
on Form 4s filed by such persons on October 9, 1996 and August 8, 1996.
Other than as described above in Item 4, none of the Reporting Persons has
any plans or proposals relating to any of the items described in items (a)
through (j) of Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended as follows:
(a) Mr. Kirschbaum may be deemed to own beneficially 1,016,800
shares of Common Stock, constituting approximately 3.1% of the shares of Common
Stock deemed outstanding, consisting of (1) open market purchases of 66,800
shares, (2) options to acquire up to 550,000 shares, which are presently
exercisable, and (3) 400,000 shares allocable to KIC under the Letter Agreement
(of which certain shares are subject to options and/or transfers, including to
Mr. DiCesare and to persons referred to in Schedule A to the Letter Agreement,
of certain beneficial interests, as provided therein). Since the Reporting
Persons may be deemed to own less than 5% of the Common Stock reports on Form
13D are or may be no longer required.
(b) Other than as described in Item 4 or Item 6, no person other
than the Reporting Persons at present has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock deemed to be beneficially owned by them.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See item 7 below.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
7.1 Letter Agreement dated June 4, 1996 and amended October 29, 1996
between KIC and GSA, Inc., on the one hand, and Investors, on the other hand,
relating to KFW and GSA.
2 OF 5
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SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, each of the undersigned certifies that the information set forth in
this Statement is true, complete and correct.
Dated: October 30, 1996
/s/ Joel Kirschbaum
---------------------------------------
Joel Kirschbaum
KIRKLAND INVESTMENT CORPORATION
By: /s/ Joel Kirschbaum
-----------------------------------
Joel Kirschbaum
President
Kirkland-Ft. Worth Investment Partners, L.P.
By: Kirkland Investment Corporation
its general partner
By: /s/ Joel Kirschbaum
-----------------------------------
Joel Kirschbaum
President
2 OF 5
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Amendment Agreement
Amendment Agreement dated June 4, 1996 among Kirkland Investment
Corporation, a Delaware corporation ("KIC"), GSA, Inc., a Delaware corporation
("GSAI"), and Kirkland Investors, L.P., a Delaware limited partnership
("Investors"; each party hereto is sometimes referred to herein as a "Partner").
RECITALS:
A. KIC is the sole general partner and Investors is the sole limited
partner in Kirkland-Ft. Worth Investment Partners, L.P., a Delaware limited
partnership ("KFW"), pursuant to a Limited Partnership Agreement dated June 27,
1990 (as amended, the "KFW Partnership Agreement"). GSAI is the sole general
partner and Investors is the sole limited partner in Gaming Systems Advisors,
L.P., a Delaware limited partnership ("GSA"; together with KFW, the
"Partnerships"), pursuant to an oral limited partnership agreement between such
parties (as amended, the "GSA Partnership Agreement"; together with the KFW
Partnership Agreement, the "Partnership Agreements").
B. The parties desire to set forth herein certain amendments to the
Partnership Agreements, relating solely to (1) allocation and distribution of
cash and securities to the Partners, (2) the timing of such distribution and (3)
certain other matters.
C. The sole property and assets of KFW and GSA as of the date hereof
are the following:
(i) Cash (owned by KFW) in the amount of approximately
$75,000;
(ii) 1,333,333 shares of Common Stock, par value $.10 per
share (the "Alliance Common Stock"), of Alliance Gaming
Corporation, a Nevada corporation ("Alliance") (owned by
KFW), a portion of which (or interests in which) have been
or may be transferred to certain other persons or
entities, as set forth in Schedule A hereto (the "Alliance
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Sell-Down"); after giving full potential effect to the
Alliance Sell-Down, KFW holds 1,098,666 shares of Alliance
Common Stock;
(iii) Warrants to acquire 2,750,000 shares of Alliance Common
Stock, with exercise prices of $1.50 per share and in
three equal tranches with vesting prices of $11, $13 and
$15 per share, respectively (owned by KFW), a portion of
which (or interests in which) have been or may be
transferred to certain other persons or entities in
connection with the Alliance Sell-Down, as set forth on
Schedule A hereto; after giving full potential effect to
----------
the Alliance Sell-Down, KFW holds
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<PAGE>
warrants to acquire 2,266,000 shares of Alliance Common
Stock;
(iv) Warrants to acquire 1,250,000 shares of Alliance Common
Stock, with exercise prices of $1.50 per share and in
three equal tranches with vesting prices of $11, $13 and
$15 per share, respectively (owned by GSA) (the warrants
described in this clause (iv) and clause (iii) above,
collectively, the "Alliance Warrants"; together with the
Alliance Common Stock, the "Alliance Securities"); thus,
KFW and GSA collectively own Alliance Warrants to acquire
4,000,000 shares of Alliance Common Stock before giving
effect to the Alliance Sell-Down and Alliance Warrants to
acquire 3,516,000 shares of Alliance Common Stock after
giving full potential effect to the Alliance Sell-Down;
GSA is entitled to receive under its Advisory Agreement
dated June 25, 1993 with Alliance and Mr. Alfred H. Wilms
(the "Advisory Agreement") Alliance Warrants to acquire up
to an additional 2,500,000 shares of Alliance Common
Stock, depending upon the occurrence of certain events,
which maximum amount GSA expects to receive in connection
with the consummation of Alliance's proposed transaction
to acquire Bally Gaming International, Inc. ("BGII"). All
Alliance Warrants received or to be received pursuant to
the Advisory Agreement have exercise prices of $1.50 per
share and are or will be issued in three equal tranches
with vesting prices of $11, $13 and $15 per share,
respectively; and
(v) 100,750 shares of Common Stock, par value $.01 per share
(the "AEN Common Stock"; together with the Alliance
Securities, the "Securities"), of American Environmental
Networks, Inc., a Delaware corporation ("AEN"), of which
7,750 shares are held by KFW solely for the benefit of
KIC, the sole stockholder of which is Joel Kirschbaum (who
has paid the consideration to subscribe for such shares),
and in respect of which neither KFW nor Investors has any
beneficial interest; therefore, KFW holds 93,000 shares of
AEN Common Stock for its own account.
D. The Partnerships' respective dates of dissolution have occurred
and the Partnerships have not been reconstituted or continued; accordingly, the
Partnerships are currently in dissolution, and the parties shall cause them to
be wound up and terminated as provided in this Amendment Agreement.
AGREEMENT:
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<PAGE>
The parties agree as follows:
1. The property and assets described above shall be allocated and
distributed to KIC and GSAI, on the one hand, and Investors, on the other hand,
as follows:
(a) The cash described in clause C.(i) (the "Retained Amount"),
shall be retained by KIC to pay, and shall be used only to pay,
miscellaneous expenditures (including legal and accounting fees
and disbursements with respect to this Amendment Agreement and
other matters related to the Partnerships and Regulatory
Approvals (as defined below), accrued franchise and other
similar accrued taxes and related matters) relating to the
Partnerships and their respective dissolutions; such
expenditures (paid and accrued) shall be reported quarterly by
KIC to Investors; and any remaining amount from the Retained
Amount shall be allocated and distributed 25% to KIC and 75% to
Investors on or prior to December 31, 1996.
(b) The 1,098,666 shares of Alliance Common Stock described in
clause C.(ii) above, after giving full potential effect to the
Alliance Sell-Down, shall be allocated and distributed 30% to
KIC and 70% to Investors, and such amount shall be distributed
to KIC and Investors as soon as practicable (but in any event
within 20 business days) after the regulatory approvals
specified on Schedule B hereto (the "Regulatory Approvals")
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(which KIC represents, to its knowledge, after reasonable
inquiry, to Investors are the only regulatory approvals that
will be required in respect of such distribution) shall have
been obtained. KIC agrees to seek the Regulatory Approvals
(and at the same time to seek approvals for the further
distribution of such Alliance Securities from Investors to its
direct or indirect partners) as provided in Section 1(e) below
and thereafter diligently to pursue the Regulatory Approvals.
KIC shall continue to hold, until the earlier to occur of
October 31, 1996 and the date which is 120 days after the date,
if any, of the consummation of the merger of BGII and Alliance
(provided, that if such BGII transaction does not occur, such
October 31, 1996 date shall be applicable) (the "Sell-Down
Date"), the Alliance Common Stock and Alliance Warrants
described in Paragraph 5 of Schedule A to effectuate the
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Alliance Sell-Down; it being understood that the remainder of
the Alliance Securities described in such Schedule A shall
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continue to be held in accordance with the arrangements
described therein and in the documentation in respect thereof,
which has been furnished to Investors. To the extent that any
of the Alliance Securities subject to the Alliance Sell-Down
(i) described in such Paragraph 5 of Schedule A have not been
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sold on or prior to the Sell-Down Date or (ii) described in
Paragraphs 2 or 3 of Schedule A have not been sold on or prior
to the dates provided for
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therein, such shares of Alliance Common Stock and Alliance
Warrants shall thereafter, to the knowledge of KIC, be free and
clear of any claims of third persons to effectuate the Alliance
Sell-Down, and such shares of Alliance Common Stock shall be
promptly allocated 30% to KIC and 70% to Investors and such
Alliance Warrants shall be promptly allocated 38% to KIC and
62% to Investors, and each will be distributed to KIC and
Investors (as so allocated) as soon as practicable (but within
20 business days) after the Regulatory Approvals specified in
Schedule B shall have been obtained. All cash received after
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the date hereof in respect of the Alliance Sell-Down shall
within five business days of receipt thereof be allocated and
distributed 1/3 to KIC and 2/3 to Investors.
(c) The Alliance Warrants to acquire 3,516,000 shares of Alliance
Common Stock described in clauses C.(iii) and C.(iv) above,
after giving full potential effect to the Alliance Sell-Down,
shall be allocated and distributed 38% to KIC or GSAI, as
applicable, on the one hand, and 62% to Investors, on the other
hand, and such amount shall be distributed to KIC, GSAI and
Investors as soon as practicable (but in any event with 20
business days) after the Regulatory Approvals shall have been
obtained. KIC agrees to seek the Regulatory Approvals (and at
the same time to seek approvals for the further distribution of
such Alliance Securities from Investors to its direct and
indirect partners) as provided in Section 1(e) below, and
thereafter diligently to pursue the Regulatory Approvals. In
the event that GSA acquires any or all Alliance Warrants
pursuant to the Advisory Agreement, such Alliance Warrants
shall be promptly allocated and distributed, subject to receipt
of the Regulatory Approvals, as soon as practicable (but in any
event within 20 business days thereafter) in the ratio of 38%
to GSAI and 62% to Investors. In addition, KIC shall use
commercially reasonable efforts to cause Alliance to issue
directly to Investors Investors' share of any Alliance
Securities issued after the date hereof and otherwise provided
to be allocated and distributed to Investors hereunder.
(d) 93,000 shares of the AEN Common Stock described in clause
C.(v) above shall be allocated promptly and distributed 50% to
KIC and 50% to Investors, as soon as practicable (but in any
event within 20 business days) after the date hereof, and the
remaining 7,750 shares of AEN Common Stock shall be allocated
and distributed to KIC, as soon as practicable after the date
hereof. Simultaneously with the execution and delivery of this
letter agreement, KIC shall commence and shall thereafter
diligently prosecute such distribution.
(e) KIC and GSAI shall use commercially reasonable efforts
promptly (but in any event within 90 days of the date hereof)
to complete and
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file with the appropriate regulatory authorities and deliver to
appropriate third parties all proper and necessary applications
and requests for approvals and consents to distribution of the
Alliance Securities. To the extent permitted by applicable
laws, all such applications and requests for approvals and
consents to distribution of the Alliance Securities will
include those Alliance Securities (including without
limitation, Alliance Warrants) which will or may be distributed
at a future date or dates. In connection with the foregoing,
Investors shall, and shall cause its direct and indirect
partners (or their representatives) to, reasonably cooperate
with KIC to effect, complete and pursue such applications,
requests and consents, including without limitation, execution
and delivery of appropriate documents or instruments and
attendance at regulatory proceedings.
Article 4 of the KFW Partnership Agreement relating to allocations and
distributions and Sections 7.4 and 7.5 of the KFW Partnership Agreement relating
to winding up and distribution upon liquidation (and the correlative
definitions) are amended to give effect to the foregoing provisions of this
Amendment Agreement in lieu of the provisions originally stated therein; the GSA
Partnership Agreement is similarly so amended . The Partnerships shall not
conduct any business except as provided herein for their winding up and
liquidation, and in connection with amendments to the Stockholders Agreement.
As soon as practicable after (a) the Partnerships' assets shall have been
distributed as provided by this Amendment Agreement and (b) the Stockholders
Agreement and arrangements or agreements now in place relating to the Alliance
Sell-Down (or now or hereafter as may be in place as provided in Paragraph 5 of
Schedule A hereto relating thereto) have been terminated or have expired or no
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longer reasonably require the Partnerships' continued existence in order that
the parties thereto realize the essential benefits thereof, the Partnerships
shall expeditiously be wound down and terminated and a certificate of
cancellation shall be filed with the Delaware Secretary of State.
2. Investors acknowledges and agrees that, except as expressly stated
to the contrary herein, neither KIC nor GSAI nor any direct or indirect partner
therein nor any of their respective stockholders, directors, officers,
employees, trustees, custodians or agents, makes any representation or warranty
regarding the Securities or any issuer thereof, or the value of any Securities,
or the tax or accounting treatment thereof, and that none of such persons shall
have any liability to Investors or to any of its direct or indirect partners or
their respective stockholders, directors, officers, employees, trustees,
custodians or agents with respect thereto. At the same time as Securities are
distributed to Investors, KIC and GSAI shall provide Investors with copies of
all publicly available materials (and upon execution of an appropriate and
customary confidentiality agreement and to the extent not limited or proscribed
by existing contractual or fidicuary arrangements, non-public materials) in
their possession pertaining to the Securities and to the issuers thereof,
including without limitation, all contractual transfer restrictions affecting
the Securities.
3. Investors and KIC agree that with respect to the Stockholders
Agreement:
(a) KIC and GSAI shall be authorized by Investors and the Partnerships
to effect amendments and modifications thereto; provided, that neither KIC nor
GSAI shall
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<PAGE>
exercise or consent to any amendments, modifications, extensions, renewals of or
other actions relating to the Stockholders Agreement in a manner that favors KIC
or GSAI relative to Investors.
(b) KIC or GSAI, as applicable, shall give Investors at least 15 days'
(and such additional time as shall be practicable in the circumstances) prior
written notice prior to entering into any amendment to the Stockholders
Agreement. Notices shall be deemed given only upon receipt by Investors.
(c) "Stockholders Agreement" means the Stockholders Agreement dated
September 21, 1993, as amended October 20, 1994, among Alliance, KIC, KFW, GSA
and Alfred H. Wilms; "Transfer" has the meaning set forth therein.
4. This Amendment Agreement may be executed in counterparts and
delivered by facsimile transmission. This Amendment Agreement shall be binding
upon the parties' respective successors and assigns. Investors shall not
Transfer any Alliance Securities to any other person or entity unless the
transferee agrees in writing to be bound by the provisions of the Stockholders
Agreement and Investors shall have furnished a copy of such agreement to KIC and
GSAI prior to such Transfer (such written agreement being reasonably
satisfactory to Investors and KIC and including, among other things, a provision
to the effect that any transferee shall not subsequently Transfer any Alliance
Securities unless such subsequent transferee agrees in writing to be bound by
the provisions of the Stockholders Agreement). Other than as set forth above,
each of the KFW Partnership Agreement and the GSA Partnership Agreement shall
remain in full force and effect as originally stated.
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<PAGE>
In witness whereof, the parties have executed this Amendment Agreement
as of the date first set forth above.
Kirkland Investment Corporation
By: /s/ Joel Kirschbaum
------------------------------------------
Joel Kirschbaum
President
GSA, Inc.
By: /s/ Joel Kirschbaum
-----------------------------------------
Joel Kirschbaum
President
Kirkland Investors, L.P.
By: Rainwater, Inc., its sole general partner
By:/s/ Kenneth Hersch
--------------------------------------
Kenneth Hersh
Vice President
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<PAGE>
Schedule A
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Alliance Sell-Down/1/
---------------------
1. Beneficial interest granted to Burden Direct Investment Fund IV in 10,000
shares of Alliance Common Stock and 20,625 Alliance Warrants in exchange for
$37,500 previously received by the Partnership.
2. Options granted to David Robbins to acquire, upon payment to the Partnership
of $75,000, 20,000 shares of Alliance Common Stock and 41,250 Alliance Warrants;
such options have a term of five years from the grant date, but may be triggered
earlier by KIC.
3. Option granted to Jay R. Gottlieb to acquire, upon payment to the Partnership
of $100,000, 26,666 shares of Alliance Common Stock and 55,000 Alliance
Warrants; such option has a term of five years from the grant date, but may be
triggered earlier by KIC.
4. Alliance Warrants to acquire 200,000 shares of Alliance Common Stock granted
to LH Friend, Weinress, Frankson & Presson, Inc. in full settlement of all prior
understandings relating to Alliance Securities (in process of being
distributed).
5. An additional 178,001 shares of Alliance Common Stock and 167,125 Alliance
Warrants held by KIC to effectuate the Alliance Sell-Down to persons and
entities previously disclosed to Investors, on such terms and conditions as KIC
shall designate; provided, that the purchase price to be paid by such persons or
entities shall not be less than the price paid by KFW to purchase such
securities./2/
- ----------
/1/ The Alliance Sell-Down relates to Alliance Common Stock and Alliance
Warrants held by KFW and not to Alliance Warrants held or hereafter
acquired by GSA.
/2/ Such amounts are calculated as follows:
a. Aggregate Alliance Sell-Down Amount (in accordance with January 13,
1995 letter from KIC to Investors): $880,000 out of $5,000,000 (such
$5,000,000 representing 1,333,333 shares of Alliance Common Stock and
Alliance Warrants to acquire 2,750,000 shares of Alliance Common Stock) =
234,667 shares of Alliance Common Stock and Alliance Warrants to acquire
484,000 shares of Alliance Common Stock.
b. Amounts set forth in Paragraphs 1, 2, 3 and 4 above: 56,666 shares of
Alliance Common Stock and Alliance Warrants to acquire 316,875 shares of
Alliance Common Stock.
c. Balances remaining are the amounts set forth in Paragraph 5 above,
which will be offered to certain individuals and entities as previously
disclosed to Investors.
-8-
<PAGE>
Schedule B
----------
Regulatory Approvals and Actions to be taken by KIC
---------------------------------------------------
Regulatory Approvals:
Nevada State Gaming Control Board
Actions to Be Taken by KIC:
Diligent application and prosecution of Regulatory Approvals from the Nevada
State Gaming Control Board, as provided herein.
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<PAGE>
EXHIBIT 7.1
KIRKLAND INVESTORS, L.P.
777 MAIN STREET, SUITE 2700
FORT WORTH, TEXAS 76102
October 29, 1996
Kirkland Investment Corporation
and
GSA, Inc.
535 Madison Avenue
New York, New York 10022
Re: Amendment Agreement dated June 4, 1996 (the "Amendment
Agreement"), among Kirkland Investment Corporation ("KIC"),
GSA, Inc. ("GSAI") and Kirkland Investors, L.P. ("Investors")
-------------------------------------------------------------
Gentlemen:
Reference is made to the Amendment Agreement, unless otherwise defined in this
letter, capitalized terms in this letter have the meanings ascribed to those
terms in the Amendment Agreement.
You have requested that the Sell-Down Date (defined in Paragraph 1(b)) be
changed to December 16, 1996. The undersigned is willing to agree to that
modification only if Paragraqph 1(b) is further modified by adding at the end
thereof the following:
"Notwithstanding the immediately two preceding sentences,
(i) to the extent that any of the Alliance Securities subject to the Alliance
Sell-Down described in such Paragraph 5 of Schedule A (I) have not been sold or
----------
(II) have not been distributed to KIC and Investors or (III) KIC shall not have
otherwise delivered to Alliance all certificates and instruments evidencing such
Alliance Securities, accompanied by irrevocable
<PAGE>
Kirkland Investment Corporation,
October 29, 1996
Page 2
written instructions to Alliance to effect such distribution by re-registering
such Alliance Securities in the names of KIC and Investors on or prior to the
Sell-Down Date (December 16, 1996), then, at KIC's election made by written
notification given to Investors on or prior to the Sell-Down Date, either (A)
such shares of alliance Commmon Stock and such Alliance Warrants shall be
distributed to KIC and Investors in the then-applicable proportions not later
than December 31, 1996 or (B) the Sell-Down Date shall be extended until January
15, 1997, the allocation of such shares of Alliance Common Stock between KIC and
Investors shall be changed from 30%/70% to 15%/85% and the allocation of such
Alliance Warrants shall be changed from 38%/62% to 19%/81%, and he cash received
in respect of the Alliance Sell-Down after December 16, 1996 shall be allocated
and distributed 1/6 to KIC and 5/6 to Investors;
(ii) if the Sell-Down Date shall have been extended to January 15, 1997, as
provided above, to the extent that any of the Alliance Securities subject to the
Alliance Sell-Down described in such Paragraph 5 of Schedule A (I) have not
----------
been sold or (II) have not been distributed to KIC and Investors or (III) KIC
shall not have otherwise delivered to Alliance all certificates and instruments
evidencing such Alliance Securities, accompanied by irrevocable written
instructions to Alliance to effect such distribution by re-registering such
Alliance Securities in the names of KIC and Investors on or prior to January 15,
1997, then, at KIC's election made by written notification given to Investors on
or prior to January 14, 1997, either (A) such shares of Alliance Common Stock
and such Alliance Warrants shall be distributed to KIC and Investors in the
then-applicable proportions not later than January 29, 1997, or (B) the
Sell-Down Date shall be extended until February 17, 1997, the allocation of such
shares of Alliance Common Stock between KIC and Investors shall be changed from
15%/85% to 0%/100% and the allocation of such Alliance Warrants shall be changed
from 19%/81% to 0%/100%, and the cash received in respect of the Alliance
Sell-Down after January 15, 1997, shall be allocated and distributed 100% to
Investors;
(iii) to the extent that any of the Alliance Securities subject to the
Alliance Sell-Down described in such Paragraph 5 of Schedule A (I) have not
----------
been sold or (II) have not been distributed to KIC and Investors or (III) KIC
shall not have otherwise delivered to Alliance all certificates and instruments
evidencing such Alliance Securities, accompanied by irrevocable written
instructions to Alliance to effect such distribution by re-registering such
Alliance Securities in the names of KIC and Investors on or prior to February
17, 1997, all of such shares of Alliance Common Stock and all of such Alliance
Warrants shall be distributed to Investors not later than March 3, 1997; and
(iv) any sale of any Alliance Securities described in such Paragraph 5 of
Schedule A shall be considered to have occurred no earlier than the date on
- ----------
which KIC actually receives the full cash proceeds from such sale. The
provisions of the two sentences immediately preceding the preceding sentence
shall continue in effect except as explicitly modified by the preceding
sentence.
<PAGE>
Kirkland Investment Corporation
October 29, 1996
Page 3
The parties acknowledge and agree that KIC and/or Joel Kirschbaum shall have the
right to purchase any Alliance Securities on the terms otherwise provided in the
Alliance Sell-Down, in particular that the price to be paid for such Alliance
Securities shall not be less than the price paid by KFW to purchase such
Securities."
To indicate your acceptance and agreement with the terms of this letter,
execute a copy of this letter and return it to the undersigned not later than 5
p.m., Forth Worth, Texas time, on Tuesday, October 29, 1996, by courier or
facsimile transmission. If your execution of this letter is not received by that
deadline, the counteroffer made in this letter will lapse and the Amendment
Agreement will continue unmodified from June 4, 1996.
The Amendment Agreement remains in full force and effect, unmodified except as
set forth in this letter.
Very truly yours,
Kirkland Investors, L.P.
By: Rainwater, Inc., its general partner
By: /s/ J. Randall Chappel
----------------------
Name: J. Randall Chappel
Title:
Accepted and Agreed:
Kirkland Investment Corporation GSA, Inc.
By: /s/ Joel Kirschbaum By: /s/ Joel Kirschbaum
------------------- --------------------
Name: Joel Kirschbaum Name: Joel Kirschbaum
Title: President Title: President
Dated: October 29, 1996
