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Registration No. ______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALLIANCE GAMING CORPORATION
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(Exact name of registrant as specified in its charter)
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NEVADA 88-0104066
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
6601 SOUTH BERMUDA ROAD
LAS VEGAS, NEVADA 89119-3605
(702) 270-7600
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
1996 LONG TERM INCENTIVE PLAN
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(Full Title of the Plans)
SCOTT D. SCHWEINFURTH
CHIEF FINANCIAL OFFICER
ALLIANCE GAMING CORPORATION
6601 SOUTH BERMUDA ROAD
LAS VEGAS, NEVADA 89119-3605
(702) 270-7600
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(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Amount to Offering Aggregate Amount of
Title of Shares to be Regis- Price Per Offering Registration
be Registered tered Unit (1) Price (1) Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.10
par value 3,000,000 $4.00 $12,000,000 $3,636.36
</TABLE>
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(1) Estimated solely for the purposes of calculating the registration fee in
accordance with Rule 457(h) based on the average price at which the
options referred to herein may be exercised.
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THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933.
ALLIANCE GAMING CORPORATION
COMMON STOCK
Par Value $0.10 Per Share
-----------------------------
ALLIANCE GAMING CORPORATION
1996 LONG TERM INCENTIVE PLAN
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The shares of Common Stock, par value $0.10 per share (the "Common
Stock"), of Alliance Gaming Corporation (the "Company") hereby offered are those
shares which are offered to certain directors, employees and designated paid
consultants (as defined below) of the Company, pursuant to awards made under the
Alliance Gaming Corporation 1996 Long Term Incentive Plan (the "Plan").
Certain persons who receive shares of Common Stock pursuant to an award
under the Plan may be deemed to be "underwriters" or "affiliates" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"), and
may not resell such shares except pursuant to a separate prospectus or pursuant
to a specific exemption from the registration requirements of the Securities
Act.
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NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS DOCUMENT IN
CONNECTION WITH THE OFFER MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.
THE DATE OF THIS DOCUMENT IS AUGUST 20, 1997
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TABLE OF CONTENTS
ALLIANCE GAMING CORPORATION
1996 LONG TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION...................................................................... 2
1. Purpose..................................................................... 3
2. Administration.............................................................. 3
3. Common Stock Subject to the Plan............................................ 4
4. Eligibility................................................................. 4
5. Stock Options............................................................... 5
6. Restrictions Applicable to Restricted Stock................................. 8
7. Stock Appreciation Rights................................................... 9
8. Rights of Grantees.......................................................... 10
9. Determination of Fair Market Value.......................................... 10
10. Retirement, Termination of Employment or Death of Holders of Options,
Stock Appreciation Rights and Restricted Stock.............................. 11
11. Adjustments................................................................. 12
12. Maximum Awards.............................................................. 13
13. Manner of Grant............................................................. 13
14. Compliance with Law and Regulations......................................... 13
15. Tax Withholding............................................................. 13
16. Nonexclusivity of the Plan.................................................. 14
17. Amendment................................................................... 14
18. Termination or Suspension................................................... 14
19. Miscellaneous............................................................... 14
20. Exculpation and Indemnification............................................. 15
21. Governing Law............................................................... 15
22. Unfunded Plan............................................................... 15
PLAN COMMITTEE............................................................................. 15
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................... 15
</TABLE>
AVAILABLE INFORMATION
This document does not contain all the information set forth in the
Registration Statement, to which the Prospectus (of which this document is a
part) relates, and the exhibits to that Registration Statement which the Company
has filed with the Securities and Exchange Commission (the "SEC") under the
Securities Act and to which reference is hereby made. The Company will promptly
furnish, without charge, to any employee receiving this document, upon written
or oral request, a copy of (a) any of the documents incorporated by reference in
the Registration Statement to which the Prospectus (of which this document is a
part) relates (not including any exhibits to such incorporated documents unless
such exhibits are specifically incorporated by reference therein), (b) any other
documents required to be delivered pursuant to Rule 428(b) under the Securities
Act, and (c) the Plan. The documents referred to in clause (b) of the preceding
sentence are also incorporated by reference into this document. Requests should
be directed to the Secretary, Alliance Gaming Corporation, 6601 South Bermuda
Road, Las Vegas, Nevada 89119-3605, (702) 270-7600.
<PAGE> 5
ALLIANCE GAMING CORPORATION
1996 LONG TERM INCENTIVE PLAN
The Plan was established by the Board of Directors of the Company (the
"Board") and was approved by shareholders of the Company on April 16, 1997. The
Plan will continue in effect until terminated by the Board in accordance with
the terms of the Plan.
1. PURPOSE OF THE PLAN
The Plan is intended to encourage stock ownership by directors,
employees and designated paid consultants of the Company and its subsidiaries
(collectively, the "Subsidiaries" and individually, a "Subsidiary"), in order to
increase their proprietary interest in the success of the Company and to
encourage them to remain in the employ of the Company or a Subsidiary.
Options granted under the Plan may be either Incentive Stock Options or
Nonstatutory Stock Options; the term "option" when used hereinafter refers to
either Incentive Stock Options or Nonstatutory Stock Options, or both.
Restricted stock awarded under the Plan is subject to restrictions as determined
in each specific case by the Board or by a duly appointed committee of the Board
(the "Committee"). Stock Appreciation Rights may be granted under the Plan. The
term "Award" when used hereinafter collectively refers to options, Stock
Appreciation Rights and restricted stock awarded under the Plan.
2. ADMINISTRATION
Administration of the Plan. The Plan is administered by the Board or, if
the Board so determines, by the Committee, provided that except as otherwise
provided below, in the case of Awards to directors or officers subject to
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), the
Committee has exclusive responsibility for and authority to administer the Plan
unless the Board expressly determines otherwise. The membership of the Committee
consists of not less than two members of the Board and will be constituted, if
possible, to permit the Plan to comply with Rule 16b-3 promulgated under the
Exchange Act or any successor rule ("Rule 16b-3"). Duly authorized actions of
the Committee constitute actions of the Board for the purposes of the Plan and
its administration. The Board or the Committee, as applicable, has authority in
its sole discretion:
- - to determine the time or times at which, and the directors, employees
and consultants to whom options, Stock Appreciation Rights and
restricted stock are awarded under the Plan;
- - to determine the base price of any Stock Appreciation Right, the
Incentive Stock Option Price or the Nonstatutory Stock Option Price
(both as defined below) of, and the number of shares of Stock (as
defined below) to be covered by, Stock Appreciation Rights and options
granted under the Plan;
- - to determine the number of shares of Stock to be covered by awards of
restricted stock under the Plan;
<PAGE> 6
- - to determine the time or times at which each option and/or Stock
Appreciation Right granted under the Plan may be exercised, including
whether the option or Stock Appreciation Right may be exercised in whole
or in installments;
- - to establish the terms of the restrictions applicable to any restricted
stock awarded, and to determine the time or times at which restrictions
lapse;
- - to interpret the Plan and to prescribe, amend and rescind rules and
regulations relating to it; and
- - to make all other determinations which the Board or Committee, as
applicable, deem necessary or advisable for the administration of the
Plan.
Reserved Authority of the Board. The Committee has all the powers and
duties set forth above, as well as any additional powers and duties that the
Board may delegate to it; provided, however, that Board expressly retains the
right (i) to determine whether the shares of Stock reserved for issuance upon
the exercise of options or as restricted stock awarded under the Plan shall be
issued shares or unissued shares, (ii) to appoint the members of the Committee,
and (iii) to terminate or amend the Plan. The Board may from time to time
appoint members of the Committee in substitution for or in addition to members
previously appointed, may fill vacancies in the Committee, and may discharge the
Committee.
3. COMMON STOCK SUBJECT TO THE PLAN
Limitation on Number of Shares. The number of shares which may at any
time be made subject to options or Stock Appreciation Rights, or which may be
issued upon the exercise of options or Stock Appreciation Rights granted under
the Plan or made subject to grants of restricted stock, is limited to an
aggregate of 3,000,000 shares of the common stock, $.10 par value, of the
Company (the "Stock"). The shares reserved for issuance pursuant to the Plan may
consist either of authorized but previously unissued shares of Stock, or of
issued shares of Stock which have been reacquired by the Company, as determined
from time to time by the Board. If any option or Stock Appreciation Right
granted under the Plan expires, terminates or is canceled for any reason without
having been exercised in full, or any restricted stock Award is forfeited for
any reason, the shares of Stock allocable to the unexercised portion of the
option or Stock Appreciation Right or to the forfeited portion of the restricted
stock Award may again be made subject to an option or Award under the Plan.
Adjustments of Number of Shares. In the event of a change in the common
stock of the Company that is limited to a change in the designation thereof to
"Capital Stock" or other similar designation, or to a change in the par value
thereof, or from par value to no par value, without increase or decrease in the
number of issued shares, the shares resulting from any such change are deemed to
be the common stock for purposes of the Plan.
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4. ELIGIBILITY
Awards may be granted under the Plan to paid consultants, directors and
employees of the Company or a Subsidiary designated by the Board or the
Committee, provided that Incentive Stock Options may be awarded only to regular
full-time employees of the Company or a Subsidiary (including, employees who
serve as officers or directors). As used in the Plan, "paid consultant" means an
independent contractor retained to perform continuing and substantial services
for the Company or any subsidiary, and designated as a paid consultant by the
Board or the Committee. Any person granted an Award under the Plan (a "Grantee")
remains eligible to receive one or more additional grants thereafter,
notwithstanding that options or Stock Appreciation Rights previously granted to
such person remain unexercised in whole or in part, or that the applicable
restrictions on any restricted stock issued to such person have not lapsed.
5. STOCK OPTIONS
In General. The Plan authorizes the Board or the Committee to grant
options that qualify as incentive stock options pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") ("Incentive Stock
Options"), or options that do not so qualify ("Nonstatutory Stock Options").
Each option granted under the Plan is evidenced by a written and executed option
agreement which will specify whether the option granted therein is an Incentive
Stock Option or a Nonstatutory Stock Option.
Incentive Stock Options. Each stock option agreement covering an
Incentive Stock Option granted under the Plan and any amendment thereof, other
than an amendment to convert an Incentive Stock Option into a Nonstatutory Stock
Option, will conform to the following provisions and may contain other terms and
provisions consistent with the requirements of the Plan as the Board or the
Committee deem appropriate:
Option Price. The purchase price of each of the shares of Stock subject
to an Incentive Stock Option (the "Incentive Stock Option Price") will be a
stated price which is not less than the fair market value of such share of
Stock, determined in accordance with Section 9 below, or the par value of such
share if greater, as of the date such Incentive Stock Option is granted;
provided, however, that if an employee, at the time an Incentive Stock Option is
granted to him or her, owns stock representing more than 10% of the total
combined voting power of all classes of stock of the Company or of the parent
corporation (as defined in Section 425(e) of the Code), if any, of the Company
or of any of the Subsidiaries (or, under Section 425(d) of the Code, is deemed
to own stock representing more than 10% of the total combined voting power of
all such classes of stock, by reason of the ownership of such classes of stock,
directly or indirectly, by or for any brother, sister, spouse, ancestor, or
lineal descendent of such employee, or by or for any corporation, partnership,
estate or trust of which such employee is a shareholder, partner or
beneficiary), then the Incentive Stock Option Price of each share of Stock
subject to such Incentive Stock Option will be at least 110% of the fair market
value of such share of Stock, as determined in accordance with Section 9 below.
Term. Incentive Stock Options granted under the Plan will be
exercisable for the periods determined by the Board or the Committee at the time
of grant of each Incentive Stock Option, but in no event is an Incentive Stock
Option exercisable after the expiration of ten years from the date of grant;
provided, however, that an Incentive Stock Option granted to any employee as to
whom the Incentive Stock Option Price of each share of Stock subject thereto is
required to be 110% of the fair market value
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of the share of Stock pursuant to the preceding paragraph will not be
exercisable after the expiration of five years from the date of grant. Each
Incentive Stock Option granted under the Plan is also subject to earlier
termination as provided in the Plan.
Exercise. Generally under the Plan, Incentive Stock Options may be
exercised in whole or in installments, to the extent, and at the time or times
during the terms thereof, as determined by the Board or the Committee at the
time of grant of each option.
Incentive Stock Options granted under the Plan are exercisable only by
delivery to the Company of written notice of exercise, which states the number
of shares with respect to which such Incentive Stock Option is exercised, the
date of grant of the Incentive Stock Option, the aggregate purchase price for
the shares with respect to which the Incentive Stock Option is exercised and the
effective date of such exercise, which date may not be earlier than the date the
notice is received by the Company nor later than the date upon which the
Incentive Stock Option expires. The written notice of exercise must be sent
together with the full Incentive Stock Option Price of the shares purchased,
which may be paid in cash or in shares of any class of issued and outstanding
stock of the Company held for more than six months by the option holder, whether
preferred or common, or partly in cash and partly in such shares of stock. If
any portion of the Incentive Stock Option Price is paid in shares of stock of
the Company, the shares will be valued at their fair market value, as determined
in accordance with Section 9 below, as of the effective date of exercise of the
Incentive Stock Option.
In general, an Incentive Stock Option granted under the Plan remains
outstanding and is exercisable only so long as the person to whom the Incentive
Stock Option was granted remains an officer or employee of the Company, the
parent corporation, if any, of the Company, or any of the Subsidiaries. All
Incentive Stock Options granted under the Plan are nontransferable, except by
will or the laws of descent and distribution, and are exercisable during the
lifetime of the person to whom granted only by such person (or his duly
appointed, qualified, and acting personal representative).
No Incentive Stock Option may be exercised as to fewer than 100 shares
of Stock at any one time without the consent of the Board or the Committee,
unless the number of shares to be purchased upon the exercise is the total
number of shares at the time available for purchase under the Incentive Stock
Option.
The Board or the Committee may also permit Grantees (either on a
selective or group basis) to simultaneously exercise options and sell the shares
of the Stock thereby acquired, pursuant to a "cashless exercise" arrangement or
program, selected by and approved of in all respects in advance by the Board or
the Committee. Payment instruments shall be received by the Company subject to
collection. The proceeds received by the Company upon exercise of any option may
be used by the Company for general corporate purposes. Any portion of an option
that is exercised may not be exercised again.
Nonstatutory Stock Options. Each stock option agreement covering a
Nonstatutory Stock Option granted under the Plan and any amendment thereof will
conform to the following provisions and may contain other terms and provisions
consistent with the requirements of the Plan as the Board or the Committee deem
appropriate:
Option Price. The purchase price of each of the shares of Stock subject
to a Nonstatutory Stock Option (the "Nonstatutory Stock Option Price") will be a
fixed price determined by the Board or the
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Committee at the time of grant, which will not be less than the greater of the
par value of such share, or one hundred percent (100%) of the fair market value
of such share, determined in accordance with Section 9 below, on the date of the
grant of the Nonstatutory Stock Option.
Term. Nonstatutory Stock Options granted under the Plan are exercisable
for a period of ten years unless otherwise determined by the Board or the
Committee at the time of grant. Each Nonstatutory Stock Option granted under the
Plan will also be subject to earlier termination as provided in the Plan.
Exercise. Generally, under the Plan, Nonstatutory Stock Options may be
exercised in whole or in installments to the extent, and at the time or times
during the terms thereof, as determined by the Board or the Committee at the
time of grant of each option.
Nonstatutory Stock Options granted under the Plan are exercisable only
by delivery to the Company of written notice of exercise, which states the
number of shares with respect to which such Nonstatutory Stock Option is
exercised, the date of grant of the Nonstatutory Stock Option, the aggregate
purchase price for the shares with respect to which the Nonstatutory Stock
Option is exercised and the effective date of such exercise, which date may not
be earlier than the date the notice is received by the Company nor later than
the date upon which the Nonstatutory Stock Option expires. The written notice of
exercise must be sent together with the full Nonstatutory Stock Option Price of
the shares purchased, which may be paid in cash or in shares of any class of
issued and outstanding stock of the Company held for more than six months by the
option holder, whether preferred or common, or partly in cash and partly in such
shares of stock. If any portion of the Nonstatutory Stock Option Price is paid
in shares of stock of the Company, the shares will be valued at their fair
market value, as determined in accordance with Section 9 below, as of the
effective date of exercise of the Nonstatutory Stock Option.
In general, a Nonstatutory Stock Option granted under the Plan remains
outstanding and is exercisable only so long as the person to whom the
Nonstatutory Stock Option was granted remains either a director, employee or
paid consultant of the Company, the parent corporation, if any, of the Company,
or any of the Subsidiaries. A person is deemed to be a paid consultant only so
long as he or she continues to perform and be compensated for substantial
services for the Company, the parent corporation, if any, of the Company, or a
Subsidiary, as to which the determination of the Board or the Committee, as
applicable, will be binding and conclusive. Unless the Board or Committee
determines otherwise, all Nonstatutory Stock Options granted under the Plan will
be nontransferable, except by will or the laws of descent and distribution.
No Nonstatutory Stock Option may be exercised as to fewer than 100
shares at any one time without the consent of the Board or the Committee, unless
the number of shares to be purchased upon the exercise is the total number of
shares at the time available for purchase under the Nonstatutory Stock Option.
The Board or the Committee may also permit Grantees (either on a
selective or group basis) to simultaneously exercise options and sell the shares
of the Stock thereby acquired, pursuant to a "cashless exercise" arrangement or
program, selected by and approved of in all respects in advance by the Board or
the Committee. Payment instruments shall be received by the Company subject to
collection. The proceeds received by the Company upon exercise of any option may
be used by the Company for general corporate purposes. Any portion of an option
that is exercised may not be exercised again.
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The exercise or Option Price of any outstanding Incentive Stock Option
or Nonstatutory Stock Option may not be adjusted or amended by the Board or
Committee (other than in accordance with Section 11 below), whether by
amendment, cancellation, replacement grants, or any other means. As used herein,
"replacement grants" means any grant of Incentive Stock Options, Nonstatutory
Stock Options or Stock Appreciation Rights reasonably related to any prior or
potential cancellation of any outstanding options or stock appreciation rights
for new options or new stock appreciation rights in tandem with previously
granted options or stock appreciation rights that will operate to cancel the
previously granted options or stock appreciation rights upon exercise of the new
options or new stock appreciation rights.
6. RESTRICTIONS APPLICABLE TO RESTRICTED STOCK
The Board or the Committee may place any restrictions it deems
appropriate on any shares of restricted stock awarded under the Plan to an
employee, director or paid consultant; provided, however, that shares of
restricted stock awarded under the Plan are subject to certain restrictions
including the following:
Vesting. In general, shares of Stock awarded to directors, employees or
paid consultants will vest (a) in full with respect to all Stock underlying the
Award of restricted stock at the expiration of a period of not less than three
years from the date of grant of the Award, or (b) proportionately in equal
installments of the Stock underlying the Award of restricted stock over a period
of not less than three years from the date of grant of the Award, as the Board
or Committee determine, and, in each such case, based upon continued service
during any such period by the recipient as a director, employee or paid
consultant of the Company or any of its Subsidiaries. Any shares of Stock
remaining subject to forfeiture in accordance with the related vesting schedule
are hereinafter referred to as "Unvested Shares." Subject to Section 10 below,
neither the Board nor the Committee have the authority to otherwise accelerate
the vesting of an Award of restricted stock.
Delivery to Escrow. Unless the Board or the Committee determines
otherwise, upon issuance of a certificate evidencing such shares the recipient
will be required to deliver the certificate, endorsed in blank or with a duly
executed stock power attached, to the Secretary of the Company, or such other
person or entity as the Board or the Committee may designate, to be held until
any vesting restrictions applicable thereto have lapsed or any Unvested Shares
have been forfeited.
Legend. Unless the Board or the Committee determines otherwise, each
certificate evidencing Unvested Shares issued under the Plan will bear a legend
to the effect that such shares are subject to potential forfeiture and may not
be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of
except in accordance with the terms of an agreement between the issuer and the
registered owner.
7. STOCK APPRECIATION RIGHTS
The grant of Stock Appreciation Rights under the Plan is subject to the
following terms and conditions and any additional terms and conditions, not
inconsistent with the express terms and provisions of the Plan, as the Board or
the Committee sets forth in the relevant Award agreement:
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Stock Appreciation Rights. A Stock Appreciation Right is an Award
granted with respect to a specified number of shares of Stock entitling the
Grantee to receive an amount equal to the excess of (a) the fair market value of
a share of Stock on the date of exercise over (b) the fair market value of a
share of Stock on the date of grant of the Stock Appreciation Right (the "Base
Price") multiplied by the number of shares of Stock with respect to which the
Stock Appreciation Right has been exercised. Fair market value is determined in
accordance with Section 9 below.
Grant. A Stock Appreciation Right may be granted in addition to any
other Award under the Plan or in tandem with or independent of any Nonstatutory
Stock Option or Incentive Stock Option.
Date of Exercisability. Unless otherwise provided in the Grantee's
Award agreement in respect of any Stock Appreciation Right, a Stock Appreciation
Right may be exercised by the Grantee, in accordance with and subject to all of
the procedures established by the Board or the Committee, in whole or in part at
any time and from time to time during its specified term. Notwithstanding the
preceding sentence, in no event is a Stock Appreciation Right exercisable prior
to the exercisability of any Non-Qualified Stock Option or Incentive Stock
Option with which it is granted in tandem. The Board or the Committee may also
provide, as set forth in the relevant Award agreement, that some Stock
Appreciation Rights will be automatically exercised on one or more dates
specified by the Board or the Committee.
Form of Payment. Upon exercise of a Stock Appreciation Right, payment
may be made in cash, in restricted stock or in shares of unrestricted Stock, or
in any combination thereof, as the Board or the Committee, in its sole
discretion, determines and provides in the relevant Award agreement.
Tandem Grant. The right of the Grantee to exercise a tandem Stock
Appreciation Right terminates to the extent the Grantee exercises the
Non-Qualified Stock Option or the Incentive Stock Option to which the Stock
Appreciation Right is related.
The Base Price of any outstanding Stock Appreciation Right may not be
adjusted or amended by the Board or the Committee (other than in accordance with
Section 11 below), whether by amendment, cancellation, replacement grants, or
any other means.
8. RIGHTS OF GRANTEES
Options. No holder of an option or Stock Appreciation Right will be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to such option or Stock Appreciation
Right unless and until his or her option or Stock Appreciation Right has been
exercised pursuant to the terms thereof, the Company has issued and delivered to
the holder of the option or Stock Appreciation Right the shares of Stock as to
which the holder has exercised his or her option or Stock Appreciation Right,
and the holder's name has been entered as a stockholder of record on the books
of the Company. Thereupon, such person shall have full voting and other
ownership rights with respect to such shares of Stock.
Restricted Stock. Each recipient of a restricted stock award is deemed
to be the registered owner of any Unvested Shares subject to such award,
notwithstanding that such shares may be subject to restrictions and possible
forfeiture under the terms of the agreement pursuant to which they were
received. Unless and until all or a portion of the Unvested Shares are forfeited
in accordance with the terms of such agreement, the recipient thereof will have
full voting rights with respect to such shares as
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well as the right to receive any and all distributions thereon.
9. DETERMINATION OF FAIR MARKET VALUE
For the purposes of the Plan, the fair market value of a share of stock
of the Company is determined as follows:
(a) if on the date as of which a determination is made the class of
stock being valued is admitted to trading on a national
securities exchange or exchanges, including without limitation
the National Association of Securities Dealers Automated
Quotation System ("Nasdaq"), for which actual sale prices are
regularly reported, or actual sales prices are otherwise
regularly published for such stock, the fair market value of a
share of the stock is deemed to be equal to the closing sale
price reported for the stock on the date as of which the
determination is made (or the next preceding trading date if the
date of determination is not a trading date); or
(b) if on the date as of which a determination is made no such
closing sales prices are reported, but quotations for the class
of stock being valued are regularly listed on the Nasdaq or
another comparable system, the fair market value of a share of
the stock is deemed to be equal to the mean of the average of the
closing bid and asked prices for the stock quoted on such system
on the date as of which the determination is made (or the next
preceding trading date if the date of determination is not a
trading date); or
(c) if no such quotations or actual sales prices are available, the
fair market value of a share of the stock will be deemed to be
the average of the closing bid and asked prices furnished by a
professional securities dealer making a market in such shares, as
selected by the Board, for the trading date as of which the
determination is made (or the next preceding trading date if the
date of determination is not a trading date).
Notwithstanding (a) - (c) above, the Board or the Committee may
determine the fair market value of a share of stock of the Company on the basis
of such factors as it deems appropriate if it determines in good faith that the
approach specified above does not properly reflect the fair market value of such
stock.
10. RETIREMENT, TERMINATION OF EMPLOYMENT OR DEATH OF HOLDERS OF OPTIONS,
STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK
Retirement or Disability. If a Grantee retires from employment with the
Company or any of its Subsidiaries as a result of normal retirement (that is,
termination of employment by the Grantee after he or she attains age sixty-five
(65)), or terminates employment with the Company after becoming "permanently
disabled" (as defined in the Gaming and Technology, Inc. Profit Sharing 401(k)
Plan as in effect on the date of adoption of the Plan by the Board), any
restrictions then applicable to his or her Award will lapse and it will
thereafter be exercisable (in the case of options and Stock Appreciation Rights)
or transferable (in the case of restricted stock) in whole or in part, by the
person to whom granted (or his or her duly appointed, qualified, and acting
personal representative) in the manner set forth in Sections 5, 6 and 7 above,
at any time within the remaining term of the Award, unless otherwise determined
by the Board or the Committee at the time of grant.
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Other Termination of Service or Employment. Except as determined by the
Board or the Committee at the time of grant, or as otherwise provided herein or
in a Grantee's employment agreement, (a) if a person to whom restricted stock
has been awarded under the Plan ceases to be either a director, employee or paid
consultant of the Company or a Subsidiary, any Unvested Shares of restricted
stock held by the person are forfeited as of the last date he or she was either
a director, employee or paid consultant of the Company or a Subsidiary, and (b)
if a person to whom an option or Stock Appreciation Right has been granted under
the Plan ceases to be either a director, employee or paid consultant of the
Company or a Subsidiary, such option or Stock Appreciation Right will continue
to be exercisable or transferable to the same extent that it was exercisable on
the last day on which he or she was either a director, employee or paid
consultant for a period of 60 days thereafter, whereupon such option or Stock
Appreciation Right will terminate and not be exercisable thereafter; provided,
however, that in the event of termination of employment, termination of service
as a paid consultant, or removal from office as a director for Cause (as defined
below), any such option or Stock Appreciation Right will terminate ten days
after such termination of employment, service or removal from office rather than
60 days thereafter. No Award made under the Plan will be affected by any change
of duties or position of the person to whom the Award was made or by any
temporary leave of absence granted to the person by the Company or any of its
Subsidiaries. For purposes of the Plan, "Cause" means (i) the Grantee being
convicted of a felony, (ii) the Grantee willfully committing an act of
embezzlement or malfeasance which is intended to materially enrich himself or
herself at the expense of the Company or any of its Subsidiaries or is otherwise
intended to materially harm the Company, or (iii) the Grantee being rejected for
an applicable license or approval by a gaming regulatory authority having
jurisdiction over the Company as a result of an explicit finding of lack of
suitability solely as a result of the Grantee's commission of a crime or an act
of embezzlement or malfeasance.
Death. Unless otherwise determined by the Board or the Committee at the
time of grant, (a) if a person to whom an option or Stock Appreciation Right has
been granted under the Plan dies prior to the expiration of the term of the
option or Stock Appreciation Right, the option or Stock Appreciation Right is
exercisable by the estate of the Grantee, or by a person who acquired the right
to exercise such option or Stock Appreciation Right by bequest or inheritance
from the Grantee, at any time within two years after the death of the person and
prior to the date upon which such option or Stock Appreciation Right expires, to
the extent and in the manner exercisable by the Grantee at the date of his or
her death; and (b) if a person to whom restricted stock has been awarded under
the Plan dies prior to the lapse of all restrictions applicable to such
restricted stock, any Unvested Shares held by such person on the date of his or
her death will be forfeited.
Termination with Board Approval. If a Grantee ceases to be either a
director, employee or paid consultant of the Company or a Subsidiary for any
reason other than removal for Cause, and the Board or the Committee expressly
determines that such termination of service or employment is in the best
interests of the Company, then an option or Stock Appreciation Right awarded to
the Grantee under the Plan will be exercisable by the Grantee or by the estate
of the Grantee, by a person who acquired the right to exercise such option or
Stock Appreciation Right by bequest or inheritance from the Grantee or
otherwise, for an additional period following termination of service or
employment as determined by the Board or the Committee but in no event later
than the date upon which such option or Stock Appreciation Right would have
expired absent such termination of service or employment. Any such extended
option or Stock Appreciation Right will be exercisable only to the extent and in
the manner exercisable by the Grantee at the time of such termination of service
or employment.
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11. ADJUSTMENTS
Changes in Capitalization. In the event of any change in the number of
shares of the outstanding Stock of the Company by reason of a stock split, stock
dividend, combination or reclassification of shares, recapitalization, or
similar event, the Board or the Committee will adjust proportionally the number
and kind of shares subject to the Plan, and the number, kind, and per share
Stock Appreciation Right Base Price, Incentive Stock Option Price or
Nonstatutory Stock Option Price (as the case may be) of shares then subject to
unexercised options. Any such adjustment will be made without a change in the
aggregate purchase price or aggregate Base Price of the shares of the Stock
subject to the unexercised portion of any option or Stock Appreciation Right.
Merger Event. In the event of any merger, spin-off, split-off or other
similar consolidation, reorganization or change affecting any class of stock of
the Company (a "Merger Event") subject to Awards made under the Plan, or any
distribution (other than normal cash dividends) to holders of the stock, fair
and equitable adjustment will be made in good faith by the Board or the
Committee, including (without limitation) adjustments to avoid fractional
shares, in respect of all unexercised options or Stock Appreciation Rights to
give proper effect to such event and preserve the value, rights and benefits of
such options or Stock Appreciation Rights; provided, however, that the Board or
the Committee may, in the case of any Merger Event pursuant to which the Company
is not the surviving corporation and pursuant to which the former holders of the
Stock do not hold, directly or indirectly, more than a majority of the voting
securities of the resulting entity immediately after the Merger Event or in
connection with any acquisition by any person of more than fifty percent (50%)
of the outstanding shares of the Stock, provide that each option or Stock
Appreciation Right holder will receive a cash payment (in exchange for and in
cancellation of such option or Stock Appreciation Right) equal to the difference
(if greater than zero) between the value of the per share consideration received
by the holders of the Stock in the Merger Event or the acquisition and the
purchase price or Base Price of such option or Stock Appreciation Right,
multiplied by the number of shares of the Stock underlying such option or Stock
Appreciation Right (and if the difference is equal to or less than zero, the
Committee may provide that each such holder will receive no payment, nor any
other compensation, in exchange for and in cancellation of any such option or
Stock Appreciation Right). In addition, in the event of any Merger Event
pursuant to which all of the outstanding Stock held by the shareholders of the
Company is exchanged for any lawful consideration, all unvested and
unexercisable options or Stock Appreciation Rights outstanding on the date on
which shareholder approval of the Merger Event is obtained will become 100%
vested and exercisable.
12. MAXIMUM AWARDS
The following maximum annual and other amounts are subject to adjustment
under Section 11 above and are subject to the Plan maximum under Section 3
above. All Grantees in the aggregate may not receive in any fiscal year Awards
of options and/or Stock Appreciation Rights, in the aggregate, exceeding
2,500,000 underlying shares of Stock. Each individual Grantee may not receive in
any fiscal year Awards of options and/or Stock Appreciation Rights exceeding
1,500,000 underlying shares of Stock. No more than 600,000 shares of Stock may
be granted as Awards of restricted stock.
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13. MANNER OF GRANT
Nothing contained in the Plan or in any resolution adopted by the Board
or any committee thereof or by the stockholders of the Company with respect to
the Plan, except as provided in the Plan, will constitute the granting of an
Award under the Plan. The granting of an Award under the Plan is deemed to occur
only upon the date on which the Board or the Committee approves the grant of the
Award. All Awards granted under the Plan are evidenced by a written agreement,
in the form determined by the Board or the Committee, signed by a representative
of the Board or the Committee and the recipient thereof.
14. COMPLIANCE WITH LAW AND REGULATIONS
The obligation of the Company to sell and deliver any shares of Stock
under the Plan is subject to all applicable laws, rules and regulations, and the
obtaining of all approvals by governmental agencies deemed necessary or
appropriate by the Board or the Committee. In general, the Board or the
Committee may make such changes in the Plan and include such terms in any Award
agreement as may be necessary or appropriate, in the opinion of counsel to the
Company, to comply with the rules and regulations of any governmental authority,
or to obtain for employees granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and the regulations thereunder.
15. TAX WITHHOLDING
The Company or Subsidiary for whom services are performed by a director,
employee or paid consultant granted an Award under the Plan has the right to
deduct or otherwise effect a withholding of any amount required by federal or
state laws to be withheld with respect to the grant, vesting or exercise of any
Award or the sale of stock acquired upon the exercise of an Incentive Stock
Option in order for the Company or Subsidiary to obtain a tax deduction
otherwise available as a consequence of such grant, vesting, exercise or sale,
as the case may be.
16. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to the stockholders of the Company for approval has any impact on existing
qualified or nonqualified retirement or bonus plans of the Company or creates
any limitations on the power of the Board to adopt any other incentive
arrangements that it may deem desirable, including, without limitation, the
granting of stock options, stock appreciation rights or restricted stock
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
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17. AMENDMENT
The Board at any time, and from time to time, may amend the Plan,
subject to any required regulatory approval and subject to the limitation that,
except as provided above in Section 11, no amendment is effective unless
approved within 12 months after the date of the adoption of such amendment by
the affirmative vote of the holders of a majority of the shares of the Company's
Voting Stock present in person or represented by proxy at a duly held meeting at
which a quorum is present (or by such greater vote as may be required by
applicable law, regulation or provision of the certificate of incorporation or
bylaws of the Company) if the amendment would, but for such approval, prevent
the issuance of Incentive Stock Options under the Plan or cause the Plan to no
longer comply with the requirements of Section 162(m) of the Code.
Except as provided in Section 11 above, rights and obligations under any
Awards granted before amendment of the Plan may not be altered or impaired by
amendment of the Plan, except with the consent of the Grantee thereof.
18. TERMINATION OR SUSPENSION
The Board at any time may suspend or terminate the Plan. The Plan,
unless sooner terminated, will terminate on the 10th anniversary of its adoption
by the Board or its approval by the stockholders of the Company, whichever is
earlier, but such termination will not affect any Award theretofore granted. No
Award may be granted under the Plan while the Plan is suspended or after it is
terminated. In general, no rights or obligations under any Award granted while
the Plan is in effect will be altered or impaired by suspension or termination
of the Plan, except with the consent of the person to whom the Award was
granted. Any Award granted under the Plan may be terminated by agreement between
the holder thereof and the Company and, in lieu of the terminated Award, a new
Award may be granted.
19. MISCELLANEOUS
Nothing contained in the Plan (or in any written Award agreement)
obligates the Company or any Subsidiary to continue for any period to elect any
individual as a director or to employ an employee or consultant to whom an Award
has been granted, or interfere with the right of the Company or any Subsidiary
to vary the terms of the person's service or employment or reduce the person's
compensation.
20. EXCULPATION AND INDEMNIFICATION
To the fullest extent permitted by applicable law and regulation, the
Company will indemnify and hold harmless the members of the Board and the
members of the Committee from and against any and all liabilities, costs, and
expenses incurred by them as a result of any act, or omission to act, in
connection with the performance of their duties, responsibilities, and
obligations under the Plan, other than such liabilities, costs and expenses as
may result from the gross negligence, bad faith, willful misconduct, or criminal
acts of such persons.
21. GOVERNING LAW
The Plan and all actions taken thereunder are governed by and construed
in accordance with the laws of the State of Nevada, without reference to the
principles of conflict of laws thereof.
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22. UNFUNDED PLAN
The Plan is unfunded and the Company is not required to segregate any
assets in connection with any Awards under the Plan. Any liability of the
Company to any person with respect to any Award under the Plan or any Award
agreement is based solely upon the contractual obligations that may be created
as a result of the Plan or any such Award or agreement. No such obligation of
the Company will be deemed to be secured by any pledge of, encumbrance on, or
other interest in, any property or asset of the Company or any Subsidiary.
Nothing contained in the Plan or any Award agreement will be construed as
creating in respect of any Grantee (or beneficiary thereof or any other person)
any equity or other interest of any kind in any assets of the Company or any
Subsidiary or creating a trust of any kind or a fiduciary relationship of any
kind between the Company, any Subsidiary and/or any such Grantee, any
beneficiary thereof or any other person.
PLAN COMMITTEE
Information with respect to the administration of the Plan by the
Committee is set forth above in Section 2. Members of the Board will act in the
capacity as managers of the Plan and not as trustees thereof. Additional
information about the Committee may be obtained by calling the office of the
Secretary of the Company at (702) 270-7600, or by writing the Company's
Secretary at Alliance Gaming Corporation, 6601 South Bermuda Road, Las Vegas,
Nevada 89119-3605.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences applicable to the Plan. The summary does not reflect any provisions
of the income tax laws of any state or local taxing jurisdiction. Because the
tax consequences of events and transactions under the Plan depend upon various
factors, including a Grantee's own tax status, each person who receives a grant
or award under the Plan should consult his or her own tax advisor with respect
thereto.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
1. INCENTIVE STOCK OPTIONS
Upon the grant of an Incentive Stock Option, a Grantee will not
recognize any income. No income will be recognized by a Grantee upon the
exercise of an Incentive Stock Option if the requirements of the Plan and the
Code are met, including, without limitation, the requirement that the Grantee
remain an employee of the Company (or a Subsidiary) during the period beginning
on the date of the grant of the option and ending on the day three months (one
year if the Grantee becomes disabled) before the date the option is exercised.
The federal income tax consequences of a subsequent disposition of
shares of Common Stock acquired upon the exercise of an Incentive Stock Option
will depend upon when the disposition occurs and the type of disposition.
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If such shares are disposed of by the Grantee more than two years after
the date of grant of the Incentive Stock Option, and more than one year after
such shares are transferred to the Grantee, any gain or loss realized upon such
disposition will be characterized as long-term capital gain or loss, and the
Company (or the Subsidiary) will not be entitled to any income tax deduction in
respect of the option or its exercise.
If such shares are disposed of by the Grantee within two years after the
date of grant of the Incentive Stock Option, or within one year after such
shares are transferred to the Grantee (a "disqualifying disposition") and the
disqualifying disposition is a taxable disposition, the excess, if any, of the
amount realized (up to the fair market value of such shares on the exercise
date) over the option price will be compensation taxable to the Grantee as
ordinary income, and the Company (or the Subsidiary) will be entitled to a
deduction (subject to the provisions of Section 162(m) of the Code discussed
below under "Additional Information") equal to the amount of ordinary income
recognized by the Grantee. If the amount realized by the Grantee upon such
disqualifying disposition exceeds the fair market value of such shares on the
exercise date, the excess will be characterized as short-term capital gain. If
the option price exceeds the amount realized upon such disqualifying
disposition, the difference will be characterized as short-term capital loss.
If the disqualifying disposition is a non-taxable disposition (for
example, a gift or a sale to a related person), the excess, if any, of the fair
market value of such shares on the exercise date over the option price will be
compensation taxable as ordinary income, and the Company (or the Subsidiary)
will be entitled to a deduction (subject to the provisions of Section 162(m) of
the Code discussed below under "Additional Information") equal to the amount of
ordinary income recognized by the Grantee.
If a Grantee has not remained an employee of the Company (or a
Subsidiary) during the period beginning on the date of the grant of an Incentive
Stock Option and ending on the day three months (one year if the Grantee becomes
disabled) before the date the option is exercised, the exercise of such option
will be treated as the exercise of a Nonstatutory Stock Option with the tax
consequences described below.
2. NONSTATUTORY STOCK OPTIONS
Upon the grant of a Nonstatutory Stock Option, a Grantee will not
recognize any income. At the time a Nonstatutory Stock Option is exercised, the
Grantee will recognize compensation taxable as ordinary income, and the Company
(or the Subsidiary) will be entitled to a deduction (subject to the provisions
of Section 162(m) of the Code discussed below under "Additional Information"),
in an amount equal to the difference between the fair market value on the
exercise date of the shares of Common Stock acquired pursuant to such exercise
and the option price. Upon a subsequent disposition of such shares, the Grantee
will realize long-term or short-term capital gain or loss, depending upon the
holding period of such shares. For purposes of determining the amount of such
gain or loss, the Grantee's tax basis in such shares will be the sum of the
option price and the amount of ordinary income recognized upon exercise. In
order for any such gain or loss to qualify as long-term capital gain or loss,
the shares must be held for more than one year measured from the exercise date.
3. EFFECT OF SHARE FOR SHARE EXERCISE
If a Grantee elects to tender shares of Common Stock in partial or full
payment of the option
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price for shares to be acquired upon the exercise of a Nonstatutory Stock
Option, the Grantee will not recognize any gain or loss on such tendered shares.
The number of shares of Common Stock received by the Grantee upon any such
exercise that are equal in number to the number of tendered shares would retain
the tax basis and the holding period of the tendered shares for capital gain or
loss purposes. The Grantee will recognize compensation taxable as ordinary
income, and the Company (or the Subsidiary) will be entitled to a deduction
(subject to the provisions of Section 162(m) of the Code discussed below under
"Additional Information"), in an amount equal to the fair market value of the
number of shares received by the Grantee upon such exercise that is in excess of
the number of tendered shares, less any cash paid by the Grantee. The fair
market value of such excess number of shares would then become the tax basis for
those shares and the holding period of such shares for capital gain or loss
purposes will begin on the exercise date. If the tendered shares were previously
acquired upon the exercise of an Incentive Stock Option, the shares of Common
Stock received by the Grantee upon the exercise of the Nonstatutory Stock Option
that are equal in number to the number of tendered shares will be treated as
shares of Common Stock acquired upon the exercise of such Incentive Stock, the
shares of Common Stock received by the Grantee upon the exercise of the
Nonstatutory Stock Option that are equal in number to the number of tendered
shares will be treated as shares of Common Stock acquired upon the exercise of
such Incentive Stock Option.
Except as discussed in the following paragraph, if a Grantee elects to
tender shares of Common Stock in partial or full payment of the option price for
shares to be acquired upon the exercise of an Incentive Stock Option, the
Grantee will not recognize any gain or loss on such tendered shares. No income
will be recognized by the Grantee in respect of the shares received by the
Grantee upon the exercise of the Incentive Stock Option if, as previously
stated, the requirements of the Plan and the Code are met. The Internal Revenue
Service has not yet issued final regulations with respect to the determination
of the basis and the holding period of the shares acquired upon such an
exercise. Regulations proposed by the Internal Revenue Service provide that for
all shares of Common Stock acquired upon such an exercise, the requisite two
year and one year holding periods for stock acquired upon exercise of an
Incentive Stock Option (described above) must be satisfied, regardless of the
holding period applicable to the tendered shares. However, the tax basis (and
holding period for all other federal income tax purposes) of the tendered shares
will carry over to the same number of shares acquired upon the exercise. The
number of shares acquired which is in excess of the number of tendered shares
will have a tax basis of zero and a holding period for all purposes beginning on
the date of exercise. Any subsequent disqualifying disposition will be deemed
first to have been a disposition of the shares with a tax basis of zero and then
to have been a disposition of the shares with a carry over tax basis. For
purposes of determining the amount of compensation taxable to the Grantee upon a
subsequent disqualifying disposition, the option price of the shares with a tax
basis of zero will be deemed to be zero, and the option price of the shares with
a carry over basis will be deemed to be the fair market value of the shares on
the exercise date.
If a Grantee elects to tender shares of Common Stock that were
previously acquired upon the exercise of an Incentive Stock Option in partial or
full payment of the option price for shares to be acquired upon the exercise of
another Incentive Stock Option, and such exercise occurs within two years of the
date of grant of such Incentive Stock Option, or within one year after such
tendered shares were transferred to the Grantee, the tender of such shares will
be a taxable disqualifying disposition with the tax consequences described above
regarding the disposition within two years of the date of grant of an Incentive
Stock Option, or within one year after shares were acquired upon the exercise of
Incentive Stock Options. The shares of Common Stock acquired upon such exercise
will be treated as shares of
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Common Stock acquired upon the exercise of an Incentive Stock Option and the
holding period of such shares for all purposes will begin on the exercise date.
4. STOCK APPRECIATION RIGHTS
Upon the grant of a Stock Appreciation Right, a Grantee will not
recognize any income. At the time a Stock Appreciation Right is exercised, a
Grantee will recognize compensation taxable as ordinary income, and the Company
(or the Subsidiary) will be entitled to a deduction (subject to the provisions
of Section 162(m) of the Code discussed below under "Additional Information"),
in an amount equal to any cash received (before applicable withholding) plus the
fair market value on the exercise date of any shares of Common Stock received.
The Grantee's tax basis in any such shares received upon the exercise of a Stock
Appreciation Right will be the fair market value of such shares on the exercise
date and the holding period of such shares for capital gain or loss purposes
will begin on such date.
5. RESTRICTED STOCK
A Grantee will not recognize any income upon an Award of restricted
stock. Unless a Grantee has made an election under Section 83(b) of the Code in
respect of any shares of restricted stock, any dividend equivalents or dividends
received by the Grantee with respect to shares of restricted stock prior to the
date the Grantee recognizes income with respect to such award (as described
below) must be treated by the Grantee as compensation taxable as ordinary
income, and the Company (or the Subsidiary) will be entitled to a deduction
(subject to the provisions of Section 162(m) of the Code discussed below under
"Additional Information"), in an amount equal to the amount of ordinary income
recognized by the Grantee. After the terms and conditions applicable to a
restricted stock share of restricted stock are satisfied, or if the Grantee has
made an election under Section 83(b) of the Code in respect of any shares of
restricted stock, any dividends received by the Grantee in respect of such award
will be treated as a dividend taxable as ordinary income, and the Company (or
the Subsidiary) will not be entitled to a deduction in respect of any such
dividend payment.
At the time the terms and conditions applicable to a share of restricted
stock are satisfied, a Grantee will recognize compensation taxable as ordinary
income, and the Company (or the Subsidiary) will be entitled to a deduction
(subject to the provisions of Section 162(m) of the Code discussed below under
"Additional Information"), in an amount equal to the then fair market value of
the shares of unrestricted Common Stock received by the Grantee. The Grantee's
tax basis for any such shares of Common Stock would be their fair market value
on the date such terms and conditions are satisfied.
ADDITIONAL INFORMATION
Section 55 of the Code imposes an alternative minimum tax if a
taxpayer's "tentative minimum tax" exceeds his or her regular tax for the
taxable year in question. Such "tentative minimum tax" is for 1997 and later
years, equal to 26% of the first $175,000 ($87,500 for married individuals
filing a separate return) of "taxable excess" and 28% of the "taxable excess"
exceeding $175,000 ($87,500 for married individuals filing a separate return).
Taxable excess equals the amount by which a person's "alternative minimum
taxable income" exceeds his or her "exemption amount". The exemption amount
ranges from $22,500 to $45,000 (depending on the person's filing status) and is
reduced by $.25 for each $1.00 that the person's alternative minimum taxable
income exceeds an amount which ranges from $75,000 to $150,000 (depending,
again, or filing status), A person's alternative minimum taxable income under
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Section 55 of the Code consists of his or her regular taxable income (with
certain adjustments described in Sections 56 and 58 of the Code) increased by
the tax preference items described in Section 57 of the Code. In the case of a
person who is married and who files a separate return, the person's alternative
minimum taxable income is increased by the lesser of (a) 25% of the excess of
the alternative minimum taxable income (determined without this adjustment) over
$165,000 or (b) $22,500.
Upon the exercise of an Incentive Stock Option, one of the adjustments
described in Section 56 of the Code is to include in a person's alternative
minimum taxable income for any year an amount equal to the amount of income the
person would have recognized if the option had not been an Incentive Stock
Option with such inclusion occurring in the year in which such income would have
been recognized. As a result, unless the shares of Common Stock acquired upon
the exercise of an Incentive Stock Option are disposed of in a taxable
disposition in the same year in which the above described adjustment to the
Grantee's alternative minimum taxable income is made, a Grantee may incur
alternative minimum tax as a result of the exercise of an Incentive Stock Option
under the Plan.
If a Grantee incurs alternative minimum tax attributable to certain
items of tax preference or certain adjustments (including the adjustment
described above resulting from the exercise of an Incentive Stock Option), the
Grantee will receive a credit for such tax against the Grantee's regular income
tax liability (but not any alternative minimum tax liability) in future years.
In addition, in the year in which shares acquired as a result of the exercise of
an Incentive Stock Option are disposed of in a taxable disposition, the basis of
such shares for purposes of determining whether the Grantee is subject to
alternative minimum tax in such year will include the amount of the adjustment
described above resulting from the exercise of the Incentive Stock Option.
A Grantee's compensation income with respect to an Award under the Plan
will be subject to withholding for federal income and employment tax purposes.
If a Grantee, to the extent permitted by the terms of an Award and the Plan,
uses shares of Common Stock to satisfy the federal income and employment tax
withholding obligation and any similar withholding obligation for state and
local tax obligations, the Grantee will realize a capital gain or loss,
short-term or long-term, depending on the tax basis and holding period for such
shares of common stock.
If the provisions of the Plan relating to a Merger Event become
applicable, certain compensation payments or other benefits received by
"disqualified individual" (as defined in Section 280G(c) of the Code) under the
Plan or otherwise may cause or result in "excess parachute payments" (as defined
Section 280G(b)(1) of the Code). Section 4999 of the Code generally imposes a
20% excise tax on the amount of any such "excess parachute payment" received by
such a "disqualified individual" and any such "excess parachute payments" will
not be deductible by the Company (or the Subsidiary).
Under Section 162(m) of the Code, the amount of compensation paid to the
chief executive officer and the four other most highly paid executive officers
of the Company in the year for which a deduction is claimed by the Company
(including Subsidiaries) is limited to $1,000,000 per person, except that
compensation which is performance-based will be excluded for purposes of
calculating the amount of compensation subject to this $1,000,000 limitation.
The ability of the Company to claim a deduction for compensation paid to any
other executive officer or employee of the Company (including Subsidiaries) is
not affected by this provision.
The Company has structured the Plan so that any compensation for which
the Company may
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claim a deduction in connection with the exercise of Nonstatutory Stock Options
and related Stock Appreciation Rights and the non-qualifying disposition by a
Grantee of shares acquired upon exercise of Incentive Stock Options will be
performance-based within the meaning of Section 162(m) of the Code.
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
The Plan is not regarded as an "employee benefit plan" under Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and, therefore, is not subject to the provisions of ERISA. The Plan
is not a qualified plan under Section 401(a) of the Code.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Securities and Exchange
Commission (the "Commission") by Alliance Gaming Corporation (the "Company"),
are incorporated by reference:
(a) The Company's Annual Report on Form 10-K, as amended, for the
fiscal year ended June 30, 1996, pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act");
(b) The Company's Quarterly Report on Form 10-Q for the period
ended September 30, 1996, pursuant to the Exchange Act;
(c) The Company's Quarterly Report on Form 10-Q for the period
ended December 31, 1996 pursuant to the Exchange Act;
(d) The Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1997 pursuant to the Exchange Act;
(e) The Company's Current Reports on Form 8-K filed on September
11, 1996 and October 28, 1996, pursuant to the Exchange Act; and
(f) The description of the common stock of the Company, $.10 par
value (the "Common Stock"), contained in a registration statement filed under
the Exchange Act, which is on file with the Commission.
In addition, all documents filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Registration Statement and prior to the filing of
a post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated herein by reference and to be a part hereof from the date of
filing such documents with the Commission.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
<PAGE> 24
ITEM 6. 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 will 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 will be prospective only,
and will 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.
The Company's bylaws provide that the Company will, to the
maximum extent permitted by law, indemnify each person against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding as an Agent (including directors and officers)
of the Company. Expenses incurred in defending any such proceeding by any person
whom the Company is required to indemnify must be paid or reimbursed by the
Company promptly upon receipt of an undertaking of such person to repay such
expenses if it should ultimately be determined that such person was not entitled
to be indemnified. These provisions are deemed a contract, and no repeal or
modification of any applicable laws or of this bylaw provision will affect
rights or obligations then existing with respect ot any state or facts then or
theretofore existing or any proceeding brought or threatened based upon any such
state of facts.
Section 78.751 of the Nevada General Corporation Law permits the
Company 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 any 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
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<PAGE> 25
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
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 consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, 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 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
-3-
<PAGE> 26
otherwise by law.
6. The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to subsection 5, may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed as part of this registration
statement:
5.1 Opinion of Schreck Morris.
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Schreck Morris (included in Exhibit 5.1).
24.1 Power of Attorney (included in signature page to this
registration statement).
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
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<PAGE> 27
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act 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.
(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 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.
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 set forth in response to
Item 6, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
-5-
<PAGE> 28
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 or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
-6-
<PAGE> 29
The Registrant and each person whose signature appears below
hereby authorizes Morris Goldstein, Scott D. Schweinfurth and David D. Johnson
(the "Agents") to file one or more amendments (including post-effective
amendments) to the Registration Statement, which amendments may make such
changes in the registration statement as such Agent deems appropriate, and the
registrant and each such person hereby appoints each such Agent as
attorney-in-fact to execute in the name and on behalf of the registrant and each
such person, individually and in each capacity stated below, any such amendments
to the Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Alliance Gaming Corporation certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-8 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, on August
20, 1997.
ALLIANCE GAMING CORPORATION
By: /s/ Morris Goldstein
-------------------------------------
Morris Goldstein
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Morris Goldstein President and Chief August 20, 1997
- -------------------- Executive Officer
Morris Goldstein (Principal Executive Officer)
/s/ Scott D. Schweinfurth Sr. Vice President, Treasurer August 20,1997
- -------------------- & Chief Financial Officer
Scott D. Schweinfurth (Principal Accounting Officer and
Principal Financial Officer)
-7-
<PAGE> 30
/s/ David Robbins Chairman of the Board, Director August 20, 1997
- -----------------
David Robbins
/s/ Jacques Andre Director August 20, 1997
- --------------------
Jacques Andre
/s/ Anthony DiCesare Director August 20, 1997
- --------------------
Anthony L. DiCesare
/s/ Joel Kirschbaum Director August 20, 1997
- --------------------
Joel Kirschbaum
Director August 20, 1997
- --------------------
Alfred H. Wilms
-8-
<PAGE> 31
EXHIBIT INDEX
No. Description Page No.
---- ----------- --------
5.1 Opinion of Schreck Morris.
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Schreck Morris (included in Exhibit 5.1).
24.1 Power of Attorney (included in signature page to this
registration statement).
<PAGE> 1
Exhibit 5.1
August 19, 1997
Alliance Gaming Corporation
6601 S. Bermuda Road
Las Vegas, Nevada 89121
RE: ALLIANCE GAMING CORPORATION
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel for Alliance Gaming Corporation, a Nevada
corporation (the "Company") in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of an aggregate of 3,000,000
shares of the Company's Common Stock, par value $.10 per share ("the Shares")
issuable upon the exercise by certain directors, employees and designated paid
consultants of the Company and its subsidiaries (collectively, "Stockholders")
of certain options and stock appreciation rights granted under the Company's
1996 Long Term Incentive Plan ( the "Plan"), pursuant to the Company's
Registration Statement on Form S-8 about to be filed with the Securities and
Exchange Commission (the "Commission").
In rendering the opinions hereinafter expressed, 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 all such documents, records, agreements and other
instruments, including the Registration Statement, and we have obtained from
officers and agents of the Company and from public officials, and have relied
upon, such certificates, representations and assurances, as we have deemed
necessary and appropriate for the purpose of this opinion.
Without limiting the generality of the foregoing, in our examination, we
have assumed without independent verification, that (i) each natural person
executing any instrument, document, or agreement is legally competent to do so,
(ii) all documents submitted to us as originals are authentic, the signatures on
all documents that we examined are genuine, and all documents submitted to us as
certified, conformed, photostatic or facsimile copies conform to the original
documents, and (iii) all corporate records made available to us by the Company
and all public records we reviewed are accurate and complete.
Based upon the foregoing, and having regard to legal considerations and
other information that we deem relevant, we are of the opinion that, when the
Shares have been registered under the Act, and when issued and sold by the
Stockholders in accordance with the plan of distribution and Prospectus covering
the Shares and forming a part of the Registration Statement, the Shares will be
duly authorized, validly issued, fully paid and non-assessable.
We are qualified to practice law in the State of Nevada. The opinions
set forth herein are expressly limited to the laws of the State of Nevada and we
do not purport to be experts on, or to express any opinion herein concerning, or
to assume any responsibility as to the applicability to or the effect on any of
the matters covered herein of, the laws of any other jurisdiction. We express no
opinion concerning, and we assume no responsibility as to laws or judicial
decisions related to, any federal law, including any federal securities law, or
any state securities or Blue Sky laws.
We hereby consent to this filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm therein. In giving this
consent, we do not admit that we are in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder.
<PAGE> 2
Yours very truly,
SCHRECK MORRIS
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<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS'
The Board of Directors
Alliance Gaming Corporation
We consent to the use of our report incorporated herein by reference.
KPMG Peat Marwick LLP
Las Vegas, Nevada
August 20, 1997
