SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
Acres Gaming Incorporated
(Name of Issuer)
Common Stock
(Title of Class of Securities)
004936100
(CUSIP Number)
Brian McKay
IGT
5270 Neil Road
Reno, Nevada 89502
(702) 448-1444
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 28, 1997
(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 the
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 13-d1(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).
<PAGE>
1. Name of Reporting Persons, S.S. or I.R.S.
Identification Nos. of Above Persons
IGT
2. Check the Appropriate Box if Member of a Group (See Instructions)
(a) X (b) ___
3. SEC Use Only
4. Source of Funds (See Instructions)
WC
5. Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) ____. Not Applicable
6. Citizenship or Place of Organization
Nevada
Number of Shares Beneficially Owned by each Reporting Person With:
7. Sole Voting Power 1,038,962 (1)
8. Shared Voting Power None
9. Sole Dispositive Power 1,038,962 (1)
10. Shared Dispositive Power None
11. Aggregate Amount Beneficially Owned by each Reporting Person
1,038,962 (1)
12. Check Box if the Aggregate Amount in Row 11 Excludes Certain Shares
(See Instructions _____ Not Applicable
13. Percent of Class Represented by Amount in Row 11
10.6%
14. Type of Reporting Person (See Instructions)
CO
(1) On 1/28/97 IGT, a wholly owned subsidiary of
International Game Technology, purchased 519,481 of Issuer's
Series A Convertible Preferred Stock. The shares of
Convertible Preferred Stock are convertible one-for-one into
shares of Common Stock of the Issuer under the average
closing price of the Issuer's Common Stock for the period of
thirty (30) days prior to the date of conversion of the
shares of Series A Preferred Stock (the "Average Trading
Price Per Share") is less than $9.625 per share in which
event the number of shares of Common Stock into which each
share of Series A Preferred Stock is convertible will be
equal to the quotient of (i) $9.625 and (ii) the Average
Trading Price Per Share. IGT has an option pursuant to a
Stock Purchase Agreement to acquire, on or before August 8,
1997, up to an additional 519,481 shares of the Issuer's
Series A Preferred Stock. The Series A Preferred Stock has
certain voting rights and the right to elect one member of
the Issuer's Board of Directors, but is not entitled to vote
with the Common Stock until conversion of the Series A
Preferred Stock into Common Stock.
<PAGE>
Item 1. Security and Issuer
This Statement on Schedule 13D (this "Statement") relates to
the Series A Convertible Preferred Stock, $.01 par value per
share, (the "Issuer Preferred Stock"), of Acres Gaming
Incorporated, a Nevada corporation (the "Issuer"), which has
its principal executive offices located at 815 NW Ninth
Street, Corvallis, Oregon 97730.
Item 2. Identity and Background
This Statement is filed on behalf of IGT, a Nevada
corporation ("IGT"). IGT designs, develops and manufactures
microprocessor-based gaming products and software systems,
and has its principal business address and its principal
offices at 5270 Neil Road, Reno, Nevada 89502.
<TABLE>
<CAPTION>
The directors and executive officers of IGT are set forth as
follows:
<S> <C> <C> <C>
Home or Name & Address of
Business Principal Occupation Corp. or other Org.
Name Address or Employment In Which Employed
Charles N. Mathewson 5270 Neil Rd. CEO/Chairman IGT
Reno, NV 89502 5270 Neil Rd.
Reno, NV 89502
G. Thomas Baker 5270 Neil Rd. President/COO/CFO, IGT
Reno, NV 89502 Director 5270 Neil Rd.
Reno, NV 89502
Brian McKay 5270 Neil Rd. V.P./General Counsel IGT
Reno, NV 89502 Counsel/Secretary/ 5270 Neil Rd.
Treasurer Reno, NV 89502
Raymond D. Pike 5270 Neil Rd. Director IGT
Reno, NV 89502 5270 Neil Rd.
Reno, NV 89502
</TABLE>
During the last five years, no person named above has been
(a) convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or (b) was a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to federal or state securities laws or
finding any violation with respect to such laws.
<PAGE>
All of the directors and executive officers of IGT are
citizens of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
Amount: $5,000,004.60
Source: Working Capital of IGT
Item 4. Purpose of Transaction.
Investment Purposes
Item 5. Interest in the Securities of the Issuer.
(a) Number and Percentage of Shares IGT owns 519,481 and
the option to purchase an additional 519,481 shares of
Issuer's Series A Convertible Preferred Stock or 10.6% of
the outstanding stock of Issuer as of January 27, 1997.
(b) Power to Vote; Dispose of Shares IGT has the sole
power to direct the disposition of and vote 519,481 shares
of Series A Convertible Preferred Stock.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Each of the summaries set forth below is qualified in its
entirety by reference to the Stock Purchase Agreement, the
Registration Rights Agreement and the Certificate of
Designation of Preferred Stock, each of which is filed as an
exhibit hereto and is hereby incorporated by reference in
its entirety.
In connection with the acquisition of shares of Series A
Preferred Stock of the Issuer, IGT entered into, among other
things, a Stock Purchase Agreement and Registration Rights
Agreement with the Issuer. The shares of Series A Preferred
Stock are convertible one-for-one into shares of Common
Stock of the Issuer unless the average closing price of the
Issuer's Common Stock for the period of thirty (30) days
prior to the date of conversion of the shares of Series A
Preferred Stock (the "Average Trading Price Per Share") is
less than $9.625 per share in which event the number of
shares of Common Stock into which each share of Series A
Preferred Stock is convertible will be equal to the quotient
of (i) $9.625 and (ii) the Average Trading Price Per Share.
As part of the Stock Purchase Agreement, IGT agreed that
neither it nor any of its affiliates would acquire more than
20% of the then outstanding shares of Issuer's Common Stock
(including shares into which the Series A Preferred Stock is
convertible) prior to the earlier of (i) five years after
January 28, 1997 and (ii) the date when the number of shares
of Common Stock owned by John F. Acres is less than
1,000,000 shares (adjusted for any stock splits or stock
dividends effected after
<PAGE>
January 28, 1997). In addition, IGT agreed that it would
not, without the prior written consent of the Issuer, such
consent not to be unreasonably withheld, directly or
indirectly sell or transfer any shares of the Series A
Convertible Preferred Stock. This restriction does not
extend to the shares of any shares of Common Stock that may
be acquired upon conversion of the Series A Convertible
Preferred Stock. In addition, any sale of the shares of
Series A Convertible Preferred Stock is subject to a right
of first refusal on the part of the Issuer.
The shares of Series A Convertible Preferred Stock entitle
IGT to elect one director of the Issuer. In addition, so
long as 130,000 shares of Series A Convertible Preferred
Stock (such number is to be increased by one share for each
additional four shares of Series A Convertible Preferred
Stock acquired by IGT anytime after January 28, 1997) the
Issuer shall not, without the vote or written consent of the
holder of the Series A Convertible Preferred Stock, approve
any amendments to its Certificate of Incorporation or do any
of the following: (a) alter or change the rights,
preferences or privileges of the shares of Series A
Convertible Preferred Stock; (b) increase the number of
authorized shares of Series A Convertible Preferred Stock or
issue any shares of stock with rights, including liquidation
preferences, superior to the Series A Convertible Preferred
Stock; (c) effect any sale, lease, assignment, transfer or
other conveyance of all or substantially all of the assets
of the Issuer or any of its subsidiaries or any
consolidation or merger involving the Issuer or any of its
subsidiaries if the Issuer or its subsidiary is not the
surviving corporation, or any consolidation or merger
involving the Issuer or any of its subsidiaries if the
Issuer or its subsidiaries is the surviving corporation but
the holders of the capital stock of the Issuer before the
consolidation or merger own less than 50% of the Issuer
after the consolidation or merger, or any reclassification
or other change of any stock, or any recapitalization of the
Issuer, or any voluntary dissolution, liquidation or winding
up with the Issuer; or (d) permit any direct or indirect
subsidiary or other entity owned by the Issuer to sell any
equity security or similar interest or any right to acquire
any equity security or similar interest in such entity.
Under the terms of the Registration Rights Agreement, the
Issuer granted to IGT three demand registration rights.
Such rights may not be exercised until the earlier of the
conversion of the Series A Convertible Preferred Stock or
December 31, 1997, and any demand for registration must
cover at least 35% of the Series A Convertible Preferred
Stock. The second demand for registration may not be made
until at least twelve months after the first demand was made
and the third demand may not be made until at least twelve
months after the second demand is made. In addition, the
Issuer granted to IGT certain piggy-back registration rights
and certain rights to registration on Form S-3.
<PAGE>
Item 7. Material To Be Filed as Exhibits.
Purchase Contract
Registration Rights Agreement
Certificate of Designation of Preferred Stock
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: February 6, 1997
IGT
By /s/ Brian McKay
Brian McKay
Vice President, General Counsel,
Secretary, Treasurer
<PAGE>
EXHIBIT INDEX
1. Purchase Contract
2. Registration Rights Agreement
3. Certificate of Designation of Preferred Stock
CERTIFICATE OF DESIGNATION
OF
PREFERENCES OF PREFERRED STOCK
OF
ACRES GAMING INCORPORATED
a Nevada corporation
1. The undersigned, Joseph A. Huseonica and Robert W.
Brown hereby certify that:
2. They are the duly elected and acting President and
Secretary, respectively, of Acres Gaming Incorporated, a
Nevada corporation (the "Corporation").
Pursuant to authority given by the Corporation's Articles
of Incorporation, the Board of Directors of the Corporation
has duly adopted the following recitals and resolutions:
WHEREAS, the Board of Directors of the Corporation is
authorized to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock, to fix the number
of shares constituting any such series and to determine the
designation thereof, or any of them, and
WHEREAS, the Corporation has not issued any shares of
such Preferred Stock and the Board of Directors of the
Corporation desires, pursuant to its authority as aforesaid,
to determine and fix the rights, preferences, privileges and
restrictions relating to the initial series of said Preferred
Stock and the number of shares constituting and the
designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of
Directors hereby fixes and determines the designation of, the
number of shares constituting, and the rights, preferences,
privileges and restrictions relating to, said initial series
of Preferred Stock as follows:
1.1 Designations
The initial series of Preferred Stock shall be designated
"Series A Convertible Preferred Stock." The term "Preferred
Stock" as used herein refers to the Series A Convertible
Preferred Stock.
<PAGE>
2.1 Number of Shares
The number of shares constituting the Preferred Stock
shall be 1,038,961 shares.
3.1 Conversion and Sale Price
The term "Conversion Price" as used herein shall mean the
price per share at which the Preferred Stock is convertible
into Common Stock, initially equal to the lesser of (i) the
Sale Price (as defined), and (ii) the average closing price of
the Corporation's Common Stock for the period of thirty (30)
consecutive trading days prior to the date of conversion of
shares of the Preferred Stock. The term "Sale Price" shall
mean $9.625, which is the price at which the Preferred Stock
is originally to be issued.
4.1 Dividends
In addition to the adjustments for certain dividends and
distributions covered by Sections 4.4(c) and 4.4(d), the
holders of the Preferred Stock shall be entitled to receive
non-cumulative dividends at a rate per share equal to 3% of
the Sale Price. Any dividends declared and not paid in cash
may be paid in the form of either (i) the issuance of
additional shares of Preferred Stock based on the Conversion
Price or (ii) credit(s) to the holder's account with the
Corporation for products, if any, of the Corporation that such
holder purchases from the Corporation by mutual agreement
between the Corporation and the holder.
4.2 Liquidation Preference
In the event of any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, the
holders of the Preferred Stock shall be entitled to receive,
prior and in preference to any distribution of any of the
assets of the Corporation to the holders of the Common Stock,
an amount per share equal to the Sale Price, plus a further
amount equal to any declared but unpaid dividends thereon
before any payment shall be made or any assets distributed to
the holders of Common Stock. If upon such liquidation,
dissolution or winding up of the Corporation, the assets thus
distributed among the holders of the Preferred Stock shall be
insufficient to permit the payment in full of the aforesaid
preferential amounts, the entire assets of the Corporation to
be distributed shall be distributed among the holders of the
Preferred Stock so that the holder of each share of Preferred
Stock shall receive the same percentage of the Sale Price of
such share as is received by every other holder of Preferred
Stock.
<PAGE>
Following the completion of the distribution of the
stated liquidation preferences to be paid to the holders of
the Preferred Stock, any remaining assets shall be distributed
to the holders of the Common Stock of the Corporation;
provided, however, if no shares of Common Stock are
outstanding at the time of such distribution, the holders of
the Preferred Stock shall be entitled to receive, ratably
(assuming conversion of all shares of Preferred Stock to
Common Stock), all assets of the Corporation remaining after
the payment of the stated liquidation preferences of the
Preferred Stock as set forth herein.
4.3 Conversion Rights
The holders of the Preferred Stock shall have the option,
upon notice to the Corporation, at any time and from time to
time, to convert the shares of Preferred Stock into fully paid
and nonassessable shares of Common Stock based upon the
applicable Conversion Price in effect at the time of
conversion. Each share of Preferred Stock shall be
convertible into that number of shares of Common Stock which
results from dividing the Sale Price by the Conversion Price
in effect at the time of conversion. The Corporation shall
pay or make adjustment for any declared but unpaid dividends
on the shares of Preferred Stock surrendered for conversion.
4.4 Conversion Procedure
(a) Before a holder of the Preferred Stock shall be
entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates
therefor, duly endorsed in blank or accompanied by proper
instruments of transfer, at the office of the Corporation or
of any transfer agent for the shares of the Preferred Stock,
and shall give written notice to the Corporation at such
office that such holder elects to convert the same and shall
state in writing therein the name or names in which such
holder wishes the certificate or certificates for shares of
Common Stock to be issued. The Corporation shall, as soon as
practicable thereafter, issue and deliver at the address of
the holder of the Preferred Stock, or to the holder's nominee
or nominees, certificates for the number of full shares of
Common Stock to which the holder shall be entitled, as
aforesaid, together with cash in lieu of any fraction of a
share as hereinafter provided in Section 4.4(i). Such
conversion shall be deemed to have been made as of the date of
such surrender of the shares of the Preferred Stock to be
converted, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of
such shares of Common Stock on said date.
<PAGE>
(b) Adjustment for Stock Splits and Combinations
If the Corporation shall at any time after the filing of
this Certificate of Designation (the "Filing Date") effect a
subdivision or combination of the outstanding Common Stock,
the Conversion Price then in effect immediately before such
subdivision or combination shall be proportionately decreased
or increased. Any adjustment under this subsection shall
become effective at the close of business on the effective
date of the subdivision or combination.
(c) Adjustment for Certain Dividends and
Distributions
If the Corporation at any time after the Filing Date
shall issue additional shares of Common Stock, by reason of
the declaration or payment of a dividend or other distribution
on the Common Stock payable in additional shares of Common
Stock, then and in each such event, the Conversion Price then
in effect shall be decreased as of the time of such issuance
or, if such a record date shall have been fixed, as of the
close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction:
(i) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the
close of business on such record date, and
(ii) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the
close of business on such record date plus the number of
shares of Common Stock issuable in payment of such
dividend or distribution;
provided, however, that if such record date shall have been
fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the
Conversion Price shall be adjusted pursuant to this subsection
as of the time of actual payment of such dividends or
distributions.
(d) Adjustments for Other Dividends and
Distributions
If the Corporation at any time after the Filing Date
shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive,
a dividend or other distribution payable in securities of the
Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of
the Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable
thereupon, the amount of securities
<PAGE>
of the Corporation which the holders would have received
had the holders' Preferred Stock been converted into Common
Stock on the date of such event and had thereafter, during the
period from the date of such event to and including the
conversion date, retained such securities (together with any
distributions payable thereon during such period) receivable
by them as aforesaid during such period, giving application to
all adjustments called for during such period under Section
4.4 with respect to the rights of the holders of the Preferred
Stock.
(e) Adjustment for Reclassification, Exchange or
Substitution
If the Common Stock issuable upon the conversion of the
Preferred Stock shall be changed into the same or different
number of shares of any class or classes of stock, by capital
reorganization, involving exchange, substitution,
reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend provided for above, or
a reorganization, merger, consolidation or sale of assets
provided for below), then the holders of the shares of
Preferred Stock shall have the right thereafter to convert
each such share into the same kind and amount of shares of
stock and other securities and property receivable upon such
exchange, reclassification or other change, as a holder of the
number of shares of Common Stock into which such shares of
Preferred Stock might have been converted immediately prior to
such substitution, reclassification or other change, all
subject to further adjustment as provided herein.
(f) Reorganization, Merger, Consolidation or Sale
of Assets
If at any time there shall be a capital reorganization of
the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere
in this Section 4.4) or a merger or consolidation of the
Corporation with or into another corporation, or the sale of
all or substantially all of the Corporation's properties and
assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall
be made so that the holders of the Preferred Stock shall
thereafter be entitled to receive upon conversion of such
Preferred Stock, the number of shares of stock or other
securities or property of the Corporation, or of the successor
corporation resulting from such reorganization, merger,
consolidation or sale, to which a holder of Common Stock
deliverable upon conversion would have been entitled upon such
capital reorganization, merger, consolidation or sale.
(g) Minimum Adjustment
No adjustment of the Conversion Price shall be made in an
amount less than $0.02, but any such lesser adjustments shall
<PAGE>
be carried forward and shall be made at the time together with
the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $0.02 or more.
(h) Certificate of Adjustment
Upon the occurrence of each adjustment or readjustment of
the Conversion Price of the Preferred Stock pursuant to this
Section 4.4, the Corporation shall promptly compute such
adjustment or readjustment in accordance with the terms hereof
and prepare and furnish to the holders of the Preferred Stock,
as applicable, a certificate, signed by the Chairman of the
Board, the President or the Chief Financial Officer, setting
forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based.
(i) Fractional Shares
No fractional shares of Common Stock shall be issued upon
conversion of Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to the product of such
fraction multiplied by the fair market value of one share of
the Corporation's Common Stock on the date of conversion, as
determined reasonably and in good faith by the Board.
(j) Reservation of Stock Issuable Upon Conversion
The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock,
solely for the purpose of effecting the conversion of the
Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all shares of the Preferred
Stock from time to time outstanding. The Corporation shall
from time to time, in accordance with the laws of the State of
Nevada, use its best efforts to increase the authorized amount
of its Common Stock if at any time the authorized number of
shares of Common Stock remaining unissued shall not be
sufficient to permit the conversion of all of the shares of
the Preferred Stock at the time outstanding.
(k) Payment of Taxes
The Corporation shall pay any and all issuance and other
taxes that may be payable in respect of any issuance or
delivery of Common Stock upon conversion of the Preferred
Stock pursuant hereto. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of Common Stock
in a name other than that in which the Preferred Stock so
converted was registered, and no such issuance or delivery
shall be
<PAGE>
made unless and until the person requesting such issuance
has paid to the Corporation the amount of any such tax.
(l) No Dilution or Impairment
The Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale
of securities or any other voluntary action, avoid or seek to
avoid the observance of performance of any of the terms to be
observed or performed hereunder by the Corporation, but will
at all times in good faith assist in the carrying out of all
the provisions of this Section 4.4 and in the taking of all
such action as may be necessary or appropriate in order to
protect the conversion rights of the holder of the Preferred
Stock against impairment.
4.5 Redemption
On or at any time after the earlier of (i) five years
from the date of issuance of the Preferred Stock and (ii) the
date that the number of shares of the Corporation's Common
Stock owned by John F. Acres is less than 1,000,000 (such
number to be adjusted for any stock dividend or stock split
effected after the date hereof), the Preferred Stock will be
subject to redemption at any time and from time to time, in
whole or in part, at the option of the holders of the
Preferred Stock or the Corporation. Any such redemption shall
be at the Sale Price of the Preferred Stock to be redeemed
plus all declared but unpaid dividends on the shares of
Preferred Stock to be redeemed. The redemption procedure
shall be as set forth in this Section 4.5.
(a) Redemption Procedure for Preferred Stock Holder
Either the holders of the Preferred Stock or the
Corporation may initiate redemption of the Preferred Stock in
accordance with this Section 4.5, by mailing written notice
(the "Redemption Notice"), postage prepaid, to the other at
least 30 days but not more that 60 days prior to the date
fixed for redemption (the "Redemption Date"). The Redemption
Notice shall state (A) the number of shares of Preferred Stock
to be redeemed, (B) the Redemption Date and the total
Redemption Price, and (C) that the holders will surrender to
the Corporation, in the manner and at the place designated by
the Corporation, the certificate or certificates representing
the shares of Preferred Stock to be redeemed. Thereupon the
Redemption Price of such shares shall be payable to the entity
whose name appears on such certificate or certificates of
Preferred Stock as the owner thereof, and each surrendered
certificate shall be canceled.
<PAGE>
If at the time of any redemption required pursuant to
this Section 4.5 the aggregate of (a) the funds of the
Corporation legally available for the redemption of Preferred
Stock plus (b) the funds of all subsidiaries legally available
for the payment of dividends to the Corporation (directly, or
indirectly through one or more subsidiaries) and which, upon
receipt by the Corporation, would be legally available for the
redemption of Preferred Stock is insufficient to redeem the
Preferred Stock, such aggregate funds shall be used to redeem
the maximum possible number of shares of Preferred Stock, if
any, pro rata based on the number of shares of Preferred Stock
held by each of the holders thereof. Thereafter, any
additional such funds shall immediately be so used by the
Corporation to redeem the balance of the shares which the
Corporation has become obligated to redeem, but which it has
not redeemed.
4.6 Voting Rights of Preferred Stock
So long as 130,000 shares (such number shall be increased
by one share for each additional four shares of Preferred
Stock sold by the issuer pursuant to Section 4 of that certain
Stock Purchase Agreement dated January 23, 1997 between IGT, a
Nevada corporation, and the Corporation (the "Stock Purchase
Agreement")) or more of the Preferred Stock are outstanding,
the holders of the Preferred Stock shall be entitled, as a
class, to elect one director.
4.7 Protective Provisions of Preferred Stock
So long as 130,000 shares (such number shall be increased
by one share for each additional four shares of Preferred
Stock sold by the issuer pursuant to Section 4 of the Stock
Purchase Agreement) or more of the Preferred Stock are
outstanding, the Corporation shall not, without the vote or
written consent of the holders of the Preferred Stock approve
any amendments to the articles of incorporation of the
Corporation to do any of the following or to otherwise do any
of the following:
(a) alter or change the rights, preferences or
privileges of the shares of Preferred Stock;
(b) increase the authorized number of shares of
Series A Preferred Stock or issue any shares of stock
with rights, including liquidation preferences, superior
to the Preferred Stock;
(c) effect any sale, lease, assignment, transfer,
or other conveyance of all or substantially all of the
assets of the Corporation or any of its subsidiaries, or
any consolidation or merger involving the Corporation or
<PAGE>
any of its subsidiaries if the Corporation or its
subsidiary is not the surviving corporation, or any
consolidation or merger involving the Corporation or any
of its subsidiaries if the Corporation or its
subsidiary is the surviving corporation but the holders
of the capital stock of the Corporation before the
consolidation or merger own less than 50% of the
Corporation after the consolidation or merger, or any
reclassification or other change of any stock, or any
recapitalization of the Corporation, or any voluntary
dissolution, liquidation or winding up of the
Corporation;
(d) permit any direct or indirect subsidiary or
other entity owned by the Corporation to sell any equity
security or similar interest or any right to acquire an
equity security or similar interest in such entity.
4.8 Status of Converted Stock
In case any shares of Preferred Stock shall be converted
pursuant to Section 4.3 hereof, the shares so converted shall
assume the status of authorized but undesignated and unissued
shares of Preferred Stock.
4.9 Notices
Any notice required herein except as otherwise
specifically provided herein, to be given to a holder of the
Preferred Stock shall be in writing and may be delivered by
personal service, sent by overnight professional courier
service, sent by telegraph or cable or sent by United States
registered or certified mail, return receipt requested, with
postage thereon fully prepaid. All such communications shall
be addressed to such holder of record at its address appearing
on the books of the Corporation. If sent by telegraph or
cable, a confirmed copy of such telegraphic or cabled notice
shall promptly be sent by mail (in the manner provided above)
to the holders. Service of any such communication made only
by mail shall be deemed complete on the date of actual
delivery as shown by the addressee's registry or certification
receipt or at the expiration of the third business day after
the date of mailing, whichever is earlier in time.
RESOLVED FURTHER, that the Chairman of the Board, the
President or any Vice President and the Secretary or any
Assistant Secretary of the Corporation are each authorized to
execute, verify and file a certificate of designation of
preferences of preferred stock in accordance with the General
Corporation Law of the State of Nevada.
3. The authorized number of shares of preferred stock
of the Corporation is 20,000,000 shares, and the number of
shares constituting Series A Convertible Preferred Stock, none
of which has been issued, is 1,038,961 shares.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on January 23, 1997.
/s/ Joseph A. Huseonica
Joseph A. Huseonica
/s/ Robert W. Brown
Robert W. Brown
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is dated
this 28th day of January, 1997 by and between IGT, a Nevada
corporation (the "Buyer"), and Acres Gaming, Inc., a Nevada
corporation (the "Seller").
WHEREAS, the Buyer desires to purchase and the Seller
desires to sell certain amounts of its Series A Convertible
Preferred Stock (the "Preferred Stock"), as hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the Buyer and the Seller agree as
follows:
1. PURCHASE AND SALE
Subject to the terms and conditions set forth in this
Agreement, at the closing referred to in Section 5 hereof, the
Seller will initially sell and transfer to the Buyer, and the
Buyer may purchase a maximum of 519,481 shares of the Preferred
Stock.
2. TERMS OF THE PREFERRED STOCK
The rights and preferences of the Preferred Stock (including
any Preferred Stock issued in connection with the payment of
dividends, as contemplated below) shall be as set forth in the
Seller's Certificate of Designation, a copy of which is attached
hereto as Exhibit "A".
3. PURCHASE PRICE
The Buyer shall pay to the Seller, as the purchase price for
the Preferred Stock (the "Stock Purchase Price") $9.62 per share.
The stock purchase price shall be paid in the manner provided in
Section 5 hereof.
4. BUYER'S PURCHASE OF ADDITIONAL SHARES
The Buyer may purchase from Seller on the same terms and
conditions set forth in Sections 2 and 3 above, up to 519,480
additional shares of the Preferred Stock, in increments not less
than 103,896 shares, as determined solely by the Buyer, if
purchased on or before August 8, 1997.
5. CLOSING
5.1 Time and Place
The Closing of the transfer and delivery of the documents
<PAGE>
and instruments necessary to consummate the purchase and sale
contemplated by this Agreement (the "Closing") shall be held at
the offices of Seller's Counsel on January 28, 1997, or at such
other time or place as the Buyer and the Seller may agree. The
date on which the Closing is actually held hereunder is sometimes
referred to herein as the "Closing
Date". The date or dates, if any, on which the Closing with
respect to the additional shares of Preferred Stock shall occur
is referred to herein as the "Additional Shares Closing Date" and
shall occur five business days after Buyer gives Seller written
notice of its desire to purchase additional share of Preferred
Stock as permitted by Section 4 of this Agreement.
5.2 Conditions of Buyer's Obligations at Initial Closing
The obligations of Buyer under Section 1 of this Agreement
are subject to the fulfillment at or before the Closing Date of
each of the following conditions:
5.2A Representations and Warranties True at Series A Closing
Except for changes contemplated by this Agreement, the
representations and warranties of Seller contained in Section 6
hereof shall be true when made and shall be true on and as of the
Closing Date with the same effect as though such representations
had been made on and as of the Closing Date.
5.2B Performance
Seller shall have performed and complied with all
agreements and conditions contained herein required to be
performed and complied with by it on or before the Closing Date,
and, without limiting the generality of the foregoing, shall have
obtained all consents, approvals, authorizations, registrations
and qualifications required to complete the transactions
contemplated hereby.
5.2C Compliance Certificate
There shall have been delivered to Buyer a certificate,
dated the Closing Date, signed by Seller's President, certifying
that the conditions specified in Sections 5.2A and 5.2B have been
performed and complied with in all respects.
5.2D Proceedings and Documents
All corporate and other proceedings in connection with
the transactions contemplated at the closing and all documents
incident thereto shall be reasonably satisfactory in form and
substance to Buyer.
<PAGE>
5.2E Registration Rights Agreement
Buyer and Seller shall enter into a Registration
Rights Agreement in the form of Exhibit "B" hereto.
5.2F Blue Sky
Seller shall have obtained all necessary Blue Sky law
permits and qualifications, or secured an exemption therefrom,
required by any state for the offer and sale of the Preferred
Stock, and the Common Stock issuable upon conversion of the
Preferred Stock.
5.2G Opinion of Counsel
There shall have been delivered to Buyer the opinion of
Seller's counsel dated the Closing Date in the form attached
hereto as Exhibit "C".
5.2H Employment Contract
The Employment Contract dated as of July 1, 1996
between Seller and John Acres shall be in full force and effect
and shall not have been amended or modified.
5.2I Amendment of Articles of Incorporation
The Articles of Incorporation of Seller shall have been
amended to authorize the issuance of the Preferred Stock and such
amendment shall have received the required approval of the
shareholders of Seller. Seller shall have delivered to Buyer
stock certificate(s) representing 519,481 shares of Preferred
Stock.
5.2J No Prohibition
Neither the consummation nor the performance of this
Agreement will, directly or indirectly (with or without notice or
lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Seller or any person
or entity affiliated with Seller to suffer any material adverse
consequence under (a) any applicable legal requirement or order,
or (b) any legal requirement or order that has been published,
introduced, or otherwise formally proposed by or before any
governmental body, and no proceeding challenging the transaction
contemplated herein shall be pending or threatened.
5.2K Other Agreement(s)
The Seller and Buyer shall have entered into an appropriate
technology agreement(s), which shall be reasonably satisfactory
in form and substance to both parties.
5.3 Conditions of the Seller's Obligations at Initial Closing
The obligations of Seller under Section 1 of this Agreement
are subject to the fulfillment at or before the Closing Date of
each of the following conditions:
<PAGE>
5.3A Representations and Warranties True at Series A Closing
The representations and warranties of the Buyer
contained in Section 7 hereof shall be true when made and shall
be true on and as of the Closing Date with the same effect as
though said representations and warranties had been made on and
as of the Closing Date.
5.3B Payment
Buyer shall have made payment to Seller by check or
wire transfer in the amount of $5,000,004.60.
5.3C Performance
Buyer shall have performed and complied with all
agreements and conditions contained herein required to be
performed and complied with by it on or before the Closing Date,
and, without limiting the generality of the foregoing, shall have
obtained all consents, approvals, authorizations, registrations
and qualifications required to complete the transactions
contemplated hereby.
5.3D Compliance Certificate
There shall have been delivered to Seller a
certificate, dated the Closing Date, signed by Buyer's President,
certifying that the conditions specified in Sections 5.3A and
5.3C have been performed and complied with in all respects.
5.3E Proceedings and Documents
All corporate and other proceedings to be conducted by
Buyer in connection with the transactions contemplated at the
closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to Seller.
5.3F No Prohibition
Neither consummation nor the performance of this
Agreement will, directly or indirectly (with or without notice or
lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Seller or any person
or entity affiliated with Seller to suffer any material adverse
consequence under (a) any applicable legal requirement or order,
or (b) any legal requirement or order that has been published,
introduced, or otherwise formally proposed by or before any
governmental body, and no proceeding challenging the transaction
contemplated herein shall be pending or threatened.
5.3G Other Agreement(s)
The Seller and Buyer shall have entered into an appropriate
technology agreement(s), which shall be reasonably satisfactory
<PAGE>
in form and substance to both parties.
5.4 Conditions of Buyer's Obligations at Additional Shares
Closing Date(s)
The obligations of the Buyer to purchase additional shares
of Preferred Stock after giving notice of its intention to do so
is subject to the fulfillment at or before the Additional Shares
Closing Date of each of the following conditions each of which
may be waived at its sole discretion.
5.4A Representations and Warranties True at Additional
Shares Closing Date
The representations and warranties of Seller contained
in Section 6 hereof shall be true when made and shall be true on
and as of the Additional Shares Closing Date with the same effect
as though such representations and warranties had been made on
and as of the initial Closing Date, except for changes occurring
since the initial Closing Date, none of which changes shall have
had a material and adverse affect on the business, properties or
prospects of the Seller, and for changes in the capitalization of
Seller occurring as a result of the issuance of the Preferred
Stock.
5.4B Performance
Seller shall have performed and complied with all
agreements and conditions contained herein required to be
performed and complied with by it on or before the Additional
Shares Closing Date.
5.4C Blue Sky
Seller shall have obtained all necessary Blue Sky law
permits and qualifications, or secured an exemption therefrom
required by any state for the offer and sale of the additional
shares of Preferred Stock, and Common Stock issuable upon
conversion of such shares of Preferred Stock.
5.4D Opinion of Counsel
There shall have been delivered to Buyer the opinion of
counsel to Seller, dated the Additional Shares Closing Date,
substantially in the form attached hereto as Exhibit C with
appropriate changes to reflect the fact that additional shares of
Preferred Stock are being issued.
6. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Schedule of Exceptions, attached
hereto as Schedule 6.0, Seller represents and warrants to Buyer
as follows:
6.1 Organization of the Seller; Authority
<PAGE>
The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. The
Seller has all requisite power, authority, and capacity to
execute and deliver this Agreement and all other agreements,
documents, and instruments contemplated hereby and to carry out
all actions required of it pursuant to the terms of this
Agreement, and this Agreement has been duly executed and
delivered by the Seller and constitutes the legal, valid, and
binding obligation of the Seller, enforceable against the Seller
in accordance with its terms.
6.2 Title to Preferred Stock
All of the shares of the Preferred Stock, when duly
authorized and issued to Buyer, will be free and clear of any
security interest, liens, claims, charges, encumbrances of any
kind, or restrictions against the transfer or assignment thereof
imposed by Seller, except as imposed by applicable securities
laws, gaming laws and Section 7.7 and Section 9.2.
6.3 No Conflict
After giving effect to the proposed amendment to the
Articles of Incorporation, and after Seller authorizes the
issuance of the Preferred Stock, neither the execution and
delivery of this Agreement nor the consummation or performance of
it will, directly or indirectly (with or without notice or lapse
of time), contravene, conflict with or result in a violation of
(A) any provision of the organizational documents of the Seller,
or (B) any resolution adopted by the board of directors or the
stockholders of Seller, or (C) any mortgage, indenture, contract,
agreement, instrument, judgment, decree or order, to which Seller
is bound or any statute, rule or regulation applicable to Seller.
6.4 Conformity to Law
The Seller has materially complied with, and is in material
compliance with, (a) all material laws, statutes, governmental
regulations, and all material judicial or administrative tribunal
orders, judgments, writs, injunctions, decrees, or similar
commands applicable to its business (including, without
limitation, any labor, environmental, occupational health,
zoning, or other law, regulation or ordinance); (b) all material
unwaived terms and provisions of all material contracts,
agreements, and indentures to which the Seller is a party, or by
which the Seller is subject; and (c) its charter documents and
Bylaws, each as amended to date. The Seller has not committed,
been charged with, or been under investigation with respect to,
nor does there exist, any material violation of any material
provision of any federal, state, or local law or administrative
regulation in respect of its business.
<PAGE>
6.5 Patents, Trademarks, etc.
Seller owns or has the right to use, free and clear of all
liens, charges, claims and restrictions, all trademarks, service
marks, trade names, copyrights, proprietary information, licenses
and rights necessary to its business as now conducted, and will
not, to Seller's knowledge, when so acting, infringe upon or
otherwise act adversely to the right or claimed right of any
person under or with respect to any of the foregoing. Seller has
not received any communications alleging that Seller has violated
or, by conducting its business as proposed, would violate, the
proprietary or intellectual property rights of any other person
or entity and Seller is not aware of any violation or
infringement by a third party of any of Seller's licenses,
trademarks, service marks, trade names, copyrights, trade secrets
or other proprietary rights.
6.6 Registration Rights
Except as set forth in Schedule 6.0 and contemplated by
Section 5.2E of this Agreement, Seller is not under any
obligation to "register" any of its outstanding securities or any
of its securities which may hereafter be issued. For purposes of
this Agreement, the term "register" refers to a registration
effected by filing a registration statement in compliance with
the Securities Act of 1933, as amended or the securities laws of
any state.
6.7 Capitalization
The authorized capital of Seller consists of (or will
consist of prior to the initial Closing Date):
(a) Preferred Stock: 20,000,000 shares of preferred stock, $.01
par value, 1,038,961 of which will have been designated Series A
Convertible Preferred Stock. The rights, privileges and
preferences of the Series A Convertible Preferred Stock will be
as stated in the Certificate of Designation.
(b) Common Stock: 50,000,000 shares of Common Stock, $.01 par
value. As of December 6, 1996, there are 8,071,856 issued and
outstanding shares of Seller's Common Stock.
Except (i) as set forth on Schedule 6.0 hereto and (ii)
with regard to the Preferred Stock to be sold hereunder, no
options, calls, warrants, conversion on privileges, preemptive
rights, rights of first refusal or other commitments or rights,
of any character whatsoever, are outstanding or in existence with
respect to the purchase or other acquisition of any of the
authorized but unissued capital stock of Seller.
6.8 Financial Statements
Seller has delivered to Buyer: (a) audited consolidated
balance sheets as at June 30 in each of the years 1993 through
1996, and the related audited consolidated statements of
operations, stockholders' equity, and cash flows for each of the
fiscal years then ended, together with the reports thereon of
Arthur Andersen, independent certified public accountants; and
<PAGE>
(b) an unaudited consolidated balance sheet as of September 30,
1996 (the "Interim Balance Sheet") and the related unaudited
statements of operations, stockholders' equity and cash flow for
the nine months then ended, including in each case the notes
thereto. Such financial statements and notes fairly present the
financial condition and the results of operations, changes in
stockholders' equity, and cash flow as at the respective dates of
and for the period referred to in such financial statements, all
in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate,
be materially adverse) and the absence of notes.
6.9 Books and Records
The books of account, minute books, stock record books, and
other records of the Seller, all of which have been made
available to Buyer, are complete and correct and have been
maintained in accordance with sound business practices, including
the maintenance of an adequate system of internal controls. The
minute books contain accurate and complete records of all
meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Board
of Directors, and no meeting of any such stockholders, Board of
Directors, or committee has been held for which minutes have not
been prepared and are not contained in such minute books.
6.10 No Undisclosed Liabilities
The Seller has no material liabilities or obligations of any
nature which are required to be disclosed in financial
statements, including footnotes thereto, prepared in accordance
with GAAP (whether known or unknown and whether absolute,
accrued, contingent, or otherwise ) except for liabilities or
obligations reflected or reserved against in the Balance Sheet as
of June 30, 1996 and current liabilities incurred in the ordinary
course of business since the date thereof.
6.11 Brokers
Except as set forth in the Schedule of Exceptions, the
Seller has not retained, utilized, or been represented by any
broker or finder in connection with the transaction contemplated
by this Agreement.
6.12 Disclosure
(a) The representations and warranties of Seller in this
Agreement, and the reports filed with the Securities and
Exchange Commission ("SEC") since January 1, 1995, taken as
a whole and in light of the circumstances in which they were
made, do not omit to state a material fact necessary to make
the statements herein or therein, not misleading.
<PAGE>
(b) There is no fact known to Seller that has specific
application to Seller (other than general economic or
industry conditions) and that materially adversely affects
the business, financial condition, or results of operations
of the Seller (on a consolidated basis) that has not been
set forth in this Agreement or reflected in the SEC filings
of the Seller.
6.13 Consents of Third Parties
Except as set forth in the Schedule of Exceptions, the
Seller has no obligation to secure any consent from any third
party in order to permit the consummation of the transaction
contemplated by this Agreement.
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
7.1 Organization and Standing of Buyer
The Buyer is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada. The
Buyer has full power and authority under its Certificate of
Incorporation and Bylaws and applicable laws to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. Buyer has taken all corporate action
necessary for the authorization, execution, and delivery of this
Agreement and the other agreements and transactions contemplated
herein, the performance of all obligations of Buyer hereunder and
thereunder and the authorization and delivery of this Agreement
and the other agreements contemplated herein, and this Agreement
and the other agreements constitute valid and legally binding
obligations of Buyer, enforceable in accordance with its and
their terms.
7.2 No Conflict
Neither the execution and delivery of this Agreement nor the
consummation or performance of it will, directly or indirectly
(with or without notice or lapse of time), contravene, conflict
with or result in a violation of (A) any provision of the
organizational documents of Buyer, (B) any resolution adopted by
the board of directors or the stockholders of Buyer, or (C) any
mortgage, indenture, contract, agreement, instrument, judgment,
decree or order, to which Buyer is bound or any statute, rule or
regulations applicable to Buyer.
7.3 Purchase Entirely For Own Account
This Agreement is made with Buyer in reliance upon Buyer's
representation to the Seller, which, by Buyer's execution of this
Agreement, Buyer hereby confirms, that the Preferred Stock to be
received by the Buyer and the Common Stock issuable upon
conversion of the Preferred Stock will be acquired for investment
for Buyer's own account and not with a view to the distribution
of any part thereof, and that Buyer has no present intention of
<PAGE>
selling, granting any participation in, or otherwise distributing
the same in a manner contrary to the Securities Act of 1933, as
amended (the "Act"), or applicable state securities laws.
7.4 Certain Proceedings
There is no pending proceeding that has been commenced
against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with this transaction. To Buyer's knowledge, no such proceeding
has been threatened.
7.5 Investment Experience
Buyer represents that it is an "accredited investor" as
defined in Regulation D promulgated under the Act.
7.6 Restricted Securities
Buyer understands that the Preferred Stock and the Common
Stock issuable upon conversion of the Preferred Stock are
characterized as "restricted securities" under the federal
securities laws inasmuch as it is being acquired from the Seller in a
transaction not involving a public offering and that under such laws
and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances and
in accordance with the terms and conditions set forth in the legend
described in Section 7.7 below. In this connection, the Buyer
represents that it is familiar with SEC Rule 144, as in effect,
and understands the resale limitations imposed thereby and by the Act.
7.7 Legend
It is understood that the certificates evidencing the
Preferred (and the Common Stock issuable upon conversion of the
Preferred Stock) may bear the following legends:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY BE
SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS (IF
REQUIRED) COVERING ANY SUCH TRANSACTION INVOLVING SAID
SECURITIES; (ii) THIS CORPORATION RECEIVES AN OPINION OF LEGAL
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION; OR (iii) THIS CORPORATION OTHERWISE
SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO REDEMPTION BY THE COMPANY IN ACCORDANCE WITH ARTICLE
IX OF THE COMPANY'S ARTICLES OF INCORPORATION.
<PAGE>
7.8 Residence
For purposes of the application of state securities laws,
the Buyer represents that it is a resident of Nevada.
7.9 No Seller Securities
Neither Buyer nor any affiliate owns any debt or equity
securities, including bank and trade debt, of the Seller.
8. COVENANTS OF SELLER PRIOR TO CLOSING DATE
8.1 Access and Investigation
Between the date of this Agreement and the Closing Date,
Seller will (a) afford Buyer and its affiliates and
representatives full and free access to Seller's personnel,
contracts, books and records, and other documents and data, (b)
furnish Buyer with copies of all such contracts, books and
records, and other existing documents and data as Buyer may
reasonably request, and (c) furnish Buyer with such additional
financial, operating, and other data and information as Buyer may
reasonably request.
8.2 Operation of Seller's Business
Between the date of this Agreement and the Closing Date,
Seller will conduct its business only in the ordinary course of
business.
8.3 Required Approvals
As promptly as practicable after the date of this Agreement,
Seller will make all filings required to be made by it in order
to consummate this Agreement. Between the date of this Agreement
and the Closing Date, Seller will, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required
to make in connection with the purchase, and (b) cooperate with
Buyer in obtaining all consents.
8.4 Notification
Between the date of this Agreement and the Closing Date,
Seller will promptly notify Buyer in writing if Seller becomes
aware of any fact or condition that causes or constitutes a
breach of any of Seller's representations and warranties as of
the date of this Agreement, or if Seller becomes aware of the
occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such fact
or condition.
<PAGE>
9. COVENANTS OF BUYER
9.1 Approvals of Governmental Bodies
As promptly as practicable after the date of this Agreement,
Buyer will make all filings required to be made by it to
consummate this Agreement. Between the date of this Agreement and
the Closing Date, Buyer will cooperate with Seller with respect
to all filings that Seller is required to make in connection with
this Agreement, and cooperate with Seller in obtaining all
required consents; provided that this Agreement will not require
Buyer to dispose of or make any change in any portion of its
business or to incur any other burden to obtain a governmental
authorization.
9.2 Purchase of Additional Seller Securities
Except as set forth in Section 4. of this Agreement, after
the date hereof, the Buyer agrees that neither it nor any
affiliate will purchase, directly or indirectly, before the
earliest of (a) five years from the Closing Date or (b) the date
when the number of shares of the Common Stock owned by John F
Acres is less than 1,000,000 shares (adjusted for any stock
splits or stock dividends after the date hereof), any debt or
equity securities including bank and trade debt, of Seller
without the prior written consent of Seller, such consent not to
be unreasonably withheld. Notwithstanding this provision, the
Buyer may at any time purchase additional equity securities of
the Seller provided that Buyer shall not, without the consent of
the Seller, own more than 20% of the then outstanding Common
Stock of the Seller, including for calculation of the Buyer's
interest, the shares of Common Stock into which the Preferred
Stock owned by the Buyer is convertible at the time of such
purchase.
9.3 Sale of Seller Securities
Buyer shall not, without the prior written consent of
Seller, such consent not to be unreasonably withheld, directly or
indirectly sell, transfer, assign, exchange, convey, donate,
pledge, hypothecate or otherwise dispose of any debt or shares of
the Preferred Stock of Seller. Any such sale shall be of all
shares of the Preferred Stock of Seller then owned by Buyer, and
Seller shall have the right to purchase said securities on the
same terms and conditions Buyer proposes to sell such securities
to a third party. Seller shall have 30 days in which to approve
any sale after receipt of written notice from Buyer (which shall
contain the name of the buyer(s), price and terms) or in which to
exercise its right to purchase said securities.
10. COVENANTS OF SELLER AFTER THE INITIAL CLOSING DATE
Until Buyer owns less than Ten Percent (10%) of the
Preferred Stock or the shares of Common Stock into which such
<PAGE>
Preferred is convertible, Seller hereby covenants and agrees as
follows:
10.1 Financial Information
Seller will furnish the following reports to Buyer:
(a) Within 90 days after the end of each fiscal year, a balance
sheet of Seller, as of the end of such fiscal year, and
statements of operations, stockholders' equity and cash flows for
such year, prepared in accordance with generally accepted
accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail and certified by independent public accountants
of reputable and recognized national standing selected by Seller;
(b)
Within 45 days after the end of each fiscal quarter, financial statements
of Seller as at the end of such quarter (including a balance sheet,
statements of operations, shareholders' equity and cash flows, in form
prepared in accordance with generally accepted accounting principles
(except for the absence of accompanying notes and subject to normal year-end
adjustments).
(c) Copies of all filings made with the SEC, NASDAQ or any
exchange on which Seller's securities are traded.
10.2 Maintenance of Insurance and Licenses
Seller shall maintain insurance covering its operations that
is customary in scope and amount for entities engaged in similar
businesses. Seller shall maintain its trademarks, service marks,
trade names, copyrights, proprietary information, licenses and
rights necessary to its business as now conducted.
10.3 Compliance with Law
Seller will comply with all laws, statutes, governmental
regulations, and all judicial or administrative tribunal orders,
judgments, writs, injunctions, decrees, or similar commands
applicable to its business (including, without limitation, any
labor, environmental, occupational health, zoning or other law,
regulation or ordinance).
10.4 Indemnification
Seller will indemnify, defend and hold harmless each
representative of Buyer that serves as a director of Seller who
is a party to or is threatened to be made a party in any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, from
all liabilities arising therefrom, including attorneys' fees,
judgments, fines and amounts paid in settlement actually incurred
by the director in connection with any such action, suit or
proceeding; provided, however, that the action of such director
is not determined (by a final judicial determination) to have
been the result of bad faith or deliberately wrongful conduct.
<PAGE>
The director shall have the right to select counsel to defend
such action, suits or proceedings, which counsel shall be
reasonably acceptable to Seller. Seller will cause the Bylaws and
Articles of Incorporation of Seller to contain provisions with
respect to limitation of liability and indemnification of
directors to the maximum extent permitted by law.
11. TERMINATION
11.1 Termination Events
This Agreement may, by notice given prior to or at the
Closing, be terminated:
(a) By either Buyer or Seller if a material breach of any
provision of this Agreement has been committed by the other
party and such breach has not been waived;
(b) (i) By Buyer if any of the conditions in Section 5.2
has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible
(other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived
such condition on or before the Closing Date; or (ii) by
Seller, if any of the conditions in Section 5.3 has not been
satisfied as of the scheduled Closing or if satisfaction of
such a condition is or becomes impossible (other than
through the failure of Seller to comply with its obligations
under this Agreement) and Seller has not waived such
condition on or before the scheduled Closing;
(c) By mutual consent of Buyer and Seller; or
(d) By either Buyer or Seller if the Closing has not
occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before January 31,
1997, or such later date as the parties may agree upon.
11.2 Effect of Termination
Each party's right of termination under Section 11.1 is in
addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant
to Section 11.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in
Sections 12.1 and 12.13 will survive; provided, however, that if
this Agreement is terminated by a party because of the breach of
the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's
failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
<PAGE>
12. GENERAL
12.1 Expenses
All expenses of the preparation, execution, and consummation
of this Agreement and of the transactions contemplated hereby,
including, without limitation, attorneys', accountants' and
outside advisors' fees and disbursements, shall be borne by the
party incurring such expenses.
12.2 Notices
All notices, demands, and other communications hereunder
shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally, or if
mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
If to the Seller, to:
Acres Gaming, Inc.
815 N.W. 9th Street
Corvallis, Oregon 97330
Attention: John Acres, Chairman
with a copy to:
PERKINS COIE
1211 S.W. 5th Avenue, Suite 1500
Portland, OR 97204
Attention: Patrick J. Simpson
If to the Buyer, to:
IGT
5270 Neil Road
Reno, Nevada 89502
Attention: G. Thomas Baker, President/Chief Operating Officer
with a copy to:
IGT
5270 Neil Road
Reno, Nevada 89502
Attention: Brian McKay, Vice President/General Counsel
12.3 Entire Agreement
This Agreement contains the entire understanding of the
parties, supersedes all prior agreements and understandings
relating to the subject matter hereof, and shall not be amended
except by a written instrument hereafter signed by all of the
parties hereto.
<PAGE>
12.4 Governing Law
The validity and construction of this Agreement shall be
governed by the laws of the State of Nevada.
12.5 Sections and Section Headings
All enumerated subdivisions of this Agreement are herein
referred to as "section" or "subsection." The headings of
sections and subsections are for reference only and shall not
limit or control the meaning hereof.
12.6 Assigns
This Agreement shall be binding upon and inure to the
benefit of the heirs and successors of each of the parties.
Neither this Agreement nor the obligations of any party hereunder
shall be assignable or transferable by such party without the
prior written consent of the other party hereto.
12.7 Survival and Materiality of Representations and Warranties
The representations and warranties of the parties hereto
contained in this Agreement or otherwise made in writing in
connection with the transactions contemplated hereby (in each
case except as affected by the transactions contemplated by this
Agreement) shall be deemed to have been relied on by the other
parties hereto and shall survive the Closing and the consummation
of the transactions contemplated hereby for a period of one year.
12.8 Further Assurances
The Seller and the Buyer shall execute and deliver to the
appropriate other party such other instruments as may be
reasonably required in connection with the performance of this
Agreement, and each shall take all such further actions as may be
reasonably required to carry out the transactions contemplated by
this Agreement.
12.9 No Implied Rights or Remedies
Except as otherwise expressly provided herein, nothing
herein expressed or implied is intended or shall be construed to
confer upon or to give any person, firm, or corporation, other
than the Seller and the Buyer and their respective shareholders,
any rights or remedies under or by reason of this Agreement.
12.10 Counterparts
This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
12.11 Jurisdiction; Service of Process
Any action or proceeding seeking to enforce any provision
of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of
Nevada, County of Washoe, or, if it has or can acquire
jurisdiction, in the United States District Court for the
District of Nevada, and each of the parties consents to the
jurisdiction of such, courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection
to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party
anywhere in the world.
12.12 Severability
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and
effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
12.13 Confidential Information
Any information concerning Buyer and its affiliates
furnished to the Seller, or by Seller to Buyer, or any of their
respective officers, attorneys, accountants, consultants,
representatives or agents (collectively, such party's
"Representatives"), in connection with the transactions
contemplated by this Agreement shall be treated as confidential
information. The party so furnished the information (the
"Recipient") shall not disclose such information and shall use
its best efforts to keep its Representatives from disclosing such
information, except that the Recipient may disclose the
confidential information or portions thereof (i) to Recipient's
Representatives who need to know such information for the purpose
of advising the Recipient in connection with the transactions
contemplated by this Agreement; (ii) if, at the time of the
disclosure, the confidential information is generally available
to and known by the public (other than as a result of disclosure
directly or indirectly in violation of any duty of
confidentiality); or (iii) if the information has been
independently acquired or developed by the Recipient without
violating a duty of confidentiality. To the extent that the
Recipient or one of its Representatives may become legally
compelled to disclose any confidential information not
encompassed by (i), (ii), or (iii) above, the Recipient or its
Representative may disclose such information if the Recipient has
used its commercially reasonable efforts, and has afforded the
delivering party the opportunity, to obtain an appropriate
protective order or other satisfactory assurance of confidential
treatment for the information required to be disclosed. In the
event that the transactions contemplated by this Agreement are
not consummated, the Recipient and its Representatives shall
return to the delivering party all written information furnished
<PAGE>
by the delivering party.
12.14 No Publicity
Except as provided herein, neither Buyer nor Seller shall
make any public disclosure or publicity release pertaining to the
existence of this Agreement or of the subject matter contained
herein without the consent of the other parties hereto.
Notwithstanding the foregoing, each party shall be permitted to
make such specific disclosures to the public or to governmental
agencies as its counsel shall deem necessary to maintain
compliance with and to prevent violation of applicable federal or
state laws. In the event that either party proposes to issue,
make or distribute any press release, public announcement or
other written publicity or disclosure prior to the Closing Date
that refers to the transaction(s) contemplated herein, the party
proposing to make such disclosure shall provide a copy of such
disclosure to the other parties and shall afford the other
parties reasonable opportunity (subject to any legal obligation
of prompt disclosure) to comment on such disclosure or the
portion thereof which refers to the transactions contemplated
herein prior to making such disclosure.
IN WITNESS WHEREOF, and intending to be legally bound
hereby, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized
officers as an instrument under seal as of the date and year
first above written.
SELLER: ACRES GAMING INCORPORATED
By:/s/ Joseph A. Huseonica
Its:President
BUYER: IGT
By:/s/ G. Thomas Baker
Its:President
<PAGE>
SCHEDULE 6.0
6.6 Registration Rights
Seller issued Ladenburg, Thalmann & Co. Inc. ("Ladenburg") a
warrant dated October 9, 1995 (the "Warrant") to purchase 125,000
shares of Seller's common stock at a purchase price of $9.00 per
share. Pursuant to Section 5 of the Warrant, Seller has granted
Ladenburg demand registration rights, and piggy-back registration
rights for the period from September 15, 1998 to September 15,
2000. Seller must pay all expenses incurred in connection with
any registration pursuant to Section 5 of the Warrant, including
attorneys' fees and expenses incurred in connection with such
registration other than underwriting discounts and applicable
transfer taxes.
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agree
ment") which shall be effective as of January 28, 1997, is
made and entered into by and among Acres Gaming
Incorporated, a Nevada corporation (the "Company"), and IGT,
a Nevada Corporation, (the "Investor").
RECITALS
WHEREAS, the Company and the Investor are parties
to that certain Stock Purchase Agreement, dated as of
September __, 1997 (the "Purchase Agreement"), pursuant to
which the Investor proposes to purchase Series A Convertible
Preferred Stock (the "Preferred Stock"); and
WHEREAS, in order to induce the Investor to enter
into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement
with respect to the "Registrable Securities" (as such term
is defined in Section 1);
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants and agreements herein
contained, the parties, intending to be legally bound,
hereby agree as follows:
1. Definitions. For purposes of this Agreement:
(a) the term "Common Stock" means the Company's
authorized voting common stock, $.01 par value, and any
class of securities issued in exchange for the Common Stock
or into which the Common Stock is converted;
(b) the term "Holder" means any person owning of
record Registrable Securities or any permitted assignee
thereof in accordance with Section 11 hereof;
<PAGE>
(c) the term "Initiating Holders" means the Holders of
25% or more of the Registrable Securities then outstanding;
(d) the term "Registrable Securities" means: (i) the
Common Stock issued upon conversion of the Preferred Stock
purchased pursuant to the Purchase Agreement, and (ii) any
Common Stock of the Company issued as a dividend or other
distribution with respect to, or in exchange for or in
replacement of, such Preferred Stock or Common Stock;
(e) the term "Registration Expenses" means all
expenses incurred by the Company in complying with
Sections 2, 3 and 14 hereof, including, without limitation,
all registration and filing fees, underwriters' expense
allowances (but not including non-accountable or other fixed
percentage allowances), printing expenses, fees and disburse
ments of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to
or required by any such registration (but not including the
compensation of regular employees of the Company which shall
be paid in any event by the Company);
(f) the terms "register," "registered" and
"registration" refer to a registration effected by preparing
and filing a registration statement or similar document in
compliance with the 1933 Act, and the declaration or or
dering of the effectiveness of such registration statement
or document by the Securities and Exchange Commission;
(g) the term "Selling Expenses" means all fees and
disbursements of counsel to the Holders (as a group) and all
underwriting discounts and selling commissions applicable to
the sale of Registrable Securities, and all non-accountable
underwriters' expense allowances that constitute a fixed
percentage of the proceeds of the offering or of the
offering price; and
<PAGE>
(h) the number of shares of Registrable Securities
"then outstanding" shall be the number of shares of Common
Stock outstanding which are, and the number of shares of
Common Stock which upon issuance of then exercisable or
convertible securities will be, Registrable Securities.
<PAGE>
2. Demand Registration Rights.
(a) If the Company shall receive, at any time
commencing on the earlier of (i) the conversion of the
Preferred Stock purchased pursuant to the Purchase Agreement
or (ii) December 31, 1997, a written request from the Initi
ating Holders with respect to the Registrable Securities,
that the Company file a registration statement under the
1933 Act covering the registration of at least 35% of the
Registrable Securities (or any remaining smaller balance or
any lesser percentage if the anticipated aggregate offering
price to public would exceed $5,000,000), the Company shall
promptly give written notice of such request (together with
a list of the jurisdictions in which the Initiating Holders
intend to attempt to qualify such securities under
applicable state securities laws) to all Holders and shall
as soon as practicable, subject to the limitations of this
Section 2, effect the registration under the 1933 Act of all
such Registrable Securities which the Initiating Holders
request to be registered, together with all of the
Registrable Securities of any other Holder or Holders who so
request by notice to the Company which is given within 30
days after the notice from the Company described above.
Notwithstanding the foregoing, if the Company shall furnish
to the Initiating Holders a certificate signed by the
President of the Company stating that in the good faith
judgment of the Board of Directors it would be seriously
detrimental to the Company for a registration statement to
be filed in the near future, then the Company's obligation
to use its best efforts to file a registration statement
shall be deferred for a period not to exceed 120 days;
provided, however, that the Company shall not obtain such a
deferral more than once in any 12-month period.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of
an underwriting, they shall so advise the Company as a part
of their request made pursuant to this Section 2 and the
Company shall include such information in the written notice
<PAGE>
referred to in Section 2(a). In such event, the right of
any Holder to include its Registrable Securities in such
registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the
Initiating Holders, by the underwriter, by the Company, and
by such Holder) to the extent provided herein.
(c) All Holders proposing to distribute their
securities through such underwriting (together with the
Company as provided in Section 4(e)) shall enter into an
underwriting agreement in customary form with the repre
sentative of the underwriter or underwriters selected for
such underwriting by a majority in interest of the
Initiating Holders and reasonably acceptable to the Company.
Notwithstanding any other provisions of this Section 2, if
the underwriter advises the Initiating Holders in writing
that marketing factors require a limitation of the number of
shares to be underwritten, the Initiating Holders shall so
advise all Holders of Registrable Securities, and the number
of shares of Registrable Securities that may be included in
the registration and underwriting shall be allocated among
all Holders thereof pro rata based on the number of shares
held by such Holders at the time of filing of the
registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the underwriter
and, unless otherwise provided, the Initiating Holders. The
securities so withdrawn shall also be withdrawn from
registration. If the underwriter has not limited the number
of Registrable Securities to be underwritten, the Company
may include its securities for its own account in such
registration if the underwriter so agrees and if the number
of Registrable Securities which would otherwise have been
<PAGE>
included in such registration and underwriting will not
thereby be limited.
(d) The Company is obligated to effect only three
demand registrations for the Holders pursuant to this
Section 2. The second demand for registration may not be
made until at least 12 months after the first demand for
registration was made and the third demand may not be made
until at least 12 months after the second demand was made.
3. Piggy-back Registration Rights. If, at any time
the Company proposes to register (including for this purpose
a registration effected by the Company for shareholders
other than the Holders) any of its securities under the 1933
Act in connection with the public offering of such
securities solely for cash (other than a registration form
relating to: (a) a registration of a stock option, stock
purchase or compensation or incentive plan or of stock
issued or issuable pursuant to any such plan, or a dividend
investment plan; (b) a registration of securities proposed
to be issued in exchange for securities or assets of or in
connection with a merger or consolidation with, another
corporation; or (c) a registration of securities proposed to
be issued in exchange for other securities of the Company),
the Company shall, each such time, promptly give each Holder
written notice of such registration together with a list of
the jurisdictions in which the Company intends to attempt to
qualify such securities under applicable state securities
laws. Upon the written request of any Holder given within
30 days after written notice from the Company in accordance
with Section 17, the Company shall, subject to the
provisions of Section 7 (in the case of an underwritten
offering), cause to be registered under the 1933 Act all of
the Registrable Securities that each such Holder has
requested to be registered; provided, however, in the event
and to the extent such a Holder may freely sell his
Registrable Securities without registration under the 1933
Act without regard to any restrictions set forth in Rule 144
under the 1933 Act and the person acquiring the securities
does not acquire "restricted Securities" within the meaning
of Rule 144, the Company may elect not to register such
Registrable Securities.
<PAGE>
4. Obligations of the Company. Whenever required
under this Agreement to effect the registration of any
Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the Securities and Exchange
Commission ("SEC") a registration statement with respect to
such Registrable Securities and use its best efforts to
cause such registration statement to become effective, and,
upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such
registration statement effective for up to one year unless
all Registrable Securities to be distributed pursuant to
such registration statement have been sold prior to the
expiration of such one-year period;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection with such registration
statement as may be necessary to comply with the provisions
of the 1933 Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such
other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned
by them;
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under the
securities laws of such jurisdictions as the Company
believes shall be reasonably appropriate for the
distribution of the securities covered by the registration
statement and such jurisdictions as the Holders
participating in the offering shall reasonably request,
provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to
<PAGE>
do business or to file a general consent to service of
process in any such jurisdiction, and further provided that
(anything in this Agreement to the contrary notwithstanding
with respect to the bearing of expenses) if any jurisdiction
in which the securities shall be qualified shall require
that expenses incurred in connection with the qualification
of the securities in that jurisdiction be borne by selling
shareholders and provided there is no exemption from such
requirement by reason of the Company's obligation to pay
such expenses pursuant to the foregoing provisions of this
Section 4, such expenses shall be payable by the selling
Holders pro rata, to the extent required by such
jurisdiction; and
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement with terms generally satisfactory to the managing
underwriter of such offering. Each Holder participating in
such underwriting shall also enter into and perform its
obligations under such an agreement.
5. Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any ac
tion pursuant to this Agreement that the selling Holders
shall furnish to the Company such information regarding them
selves, the Registrable Securities held by them, and the in
tended method of disposition of such securities as shall be
required to effect the registration of their Registrable Se
curities. In that connection, each selling Holder shall be
required to represent to the Company that all such informa
tion which is given is both complete and accurate in all ma
terial respects.
6. Expenses of Registration. All Registration
Expenses incurred in connection with any registration, quali
fication or compliance pursuant to this Agreement shall be
borne by the Company except that Registration Expenses
incurred by the Company in complying a request for (i) a
second and third demand for registration under Section 2
hereof and (ii) any registration made under Section 14
hereof shall be borne by the Holders of the securities so
<PAGE>
registered pro rata on the basis of the number of shares so
registered, and in all cases all Selling Expenses shall be
borne by the Holders of the securities so registered pro
rata on the basis of the number of shares so registered.
7. Underwriting Requirements. The right of any
Holder to "piggyback" in an underwritten public offering of
the Company's securities pursuant to Section 3 shall be con
ditioned upon such Holder's participation in such underwrit
ing and the inclusion of such Holder's Registrable Securi
ties in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through
such underwriting shall (together with the Company and any
other holders distributing their securities through such
underwriting) enter into an underwriting agreement in custom
ary form with the underwriter or underwriters selected for
underwriting by the Company. Notwithstanding any other
provision of Section 3 and this Section 7, if the under
writer determines that marketing factors require a limita
tion of the number of shares to be underwritten the under
writer may exclude some or all of the Registrable Securities
from such registration and underwriting, provided that the
Holders are allowed to participate in the offering in the
same proportion (based on the total number of securities
held by such Holders at the time of filing of the
registration statement) as any other shareholder of the
Company existing as of the date of this Agreement partici
pating in the offering. Any reduction in the number of
Registrable Securities included in such registration shall
be borne equally by the Holders as a group pro rata based on
the number of shares held by such Holders at the time of
filing of the registration statement. If any Holder
disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice to the Company
and the underwriter. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from
such registration.
8. Delay of Registration. No Holder shall have any
right to obtain or seek an injunction restraining or oth
erwise delaying any such registration as the result of any
controversy that might arise with respect to the interpreta
tion or implementation of this Agreement.
<PAGE>
9. Indemnification. If any Registrable Securities
are included in a registration statement under this
Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers,
directors and partners of each Holder, any underwriter (as
defined in the 1933 Act) for such Holder and each person, if
any, who controls such Holder or underwriter within the
meaning of the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 Act"), against any losses,
claims, damages, or liabilities (joint or several) to which
they or any of them may become subject under the 1933 Act,
the 1934 Act or any other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereof) arise from or are based upon any of the
following statements, omissions or violations (collectively
a "Violation") (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or
supplements thereto; (ii) the omission or alleged omission
to state therein a material fact required to be stated
therein, or necessary to make the statements therein not mis
leading; or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any state securities
law or any rule or regulation promulgated under the 1933
Act, the 1934 Act or any state securities law, each as
applicable to the subject registration statement; and the
Company will reimburse each such Holder, officer, director
or partner, underwriter or controlling person for any legal
or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 9 shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not
<PAGE>
be unreasonably withheld), nor shall the Company be liable
in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises from or is
based upon a violation which occurs in reliance upon and in
conformity with written information furnished expressly for
use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the
registration statement, each person, if any, who controls
the Company within the meaning of the 1933 Act, any
underwriter (within the meaning of the 1933 Act) for the
Company, any person who controls such underwriter, any other
Holder selling securities in such registration statement or
any of its directors or officers or any person who controls
such Holder against any losses, claims, damages or liabili
ties (joint or several) to which the Company or any such
director, officer, controlling person, or underwriter or
other such Holder or director, officer or controlling person
may become subject, under the 1933 Act, the 1934 Act or any
other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto)
arise from or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling
person, underwriter or controlling person, other Holder,
officer, director or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity
agreement contained in this Section 9 shall not apply to
amounts paid in settlement of any such loss, claim damage,
liability or action if such settlement is effected without
the consent of the Holder which consent shall not be
unreasonably withheld; provided, that in no event shall any
<PAGE>
indemnity under this Section 9(b) exceed the gross proceeds
from the offering received by the Holder.
(c) In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in this Section 9 is applicable but for any
reason is held to be unavailable from the Company or any
Holder, the Company and the Holders participating in the
registration shall contribute to the aggregate losses,
claims, damages and liabilities (including any
investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted) to which
the Company and the participating Holders may be subject
based on (i) the relative fault of the indemnifying party
and indemnified parties in connection with the actions that
resulted in the claims and (ii) the ratio of the proceeds
received by the participating Holders on the one hand and
the Company and all selling shareholders (other than the
participating holders) on the other hand and, with respect
to the second factor, the Company shall be responsible for
the portion represented by the ratio of proceeds received by
the Company to the total proceeds received by the Company
and all selling shareholders (other than participating
Holders); provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section
9(c), each person, if any, who controls the Company or any
Holder within the meaning of the Securities Act, each
officer of the Company who shall have signed the
registration statement and each director of the Company
shall have the same rights to contribution as the Company.
(d) No settlement of any action in which the Holders
participating in a registration are defendants shall be
effected without the prior written consent of such Holders
unless (i) the obligations of the Company for
indemnification or contribution pursuant to this Agreement
<PAGE>
survive and are not extinguished by reason of the settlement
and remain in full force and effect under applicable federal
and state laws, rules, regulations and orders or (ii) all
claims and actions against the participating Holders and
each person who controls a participating holder within the
meaning of Section 14 of the Securities Act or Section 20 of
the Exchange Act are extinguished by the settlement and the
indemnifying party obtains a full release of all claims and
actions against the participating Holders and each such
control person, which release shall be to the reasonable
satisfaction of the participating Holders.
(e) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 9, notify the
indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel selected
by the indemnifying party or parties and reasonably
acceptable to the indemnified party; provided, however, that
an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding (and provided
further that all indemnified parties similarly situated
shall be represented jointly by a single counsel). The
failure to notify an indemnifying party within a reasonable
time of the commencement of any such action, to the extent
prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 9, but the omission so
to notify the indemnifying party will not relieve it of any
<PAGE>
liability that it may have to any indemnified party
otherwise than under this Section 9.
(f) The obligations of the Company and the Holders
under this Section 9 shall survive through the completion of
any offering of Registrable Securities in a registration
statement made under the terms of this Agreement and
otherwise.
10. Reports Under Securities Exchange Act of 1934.
With a view of making available to the Holders the benefits
of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public
without registration or pursuant to a registration on
Form S-3, the Company agrees to:
(a) use its best efforts to make and keep public
information available, as those terms are understood and
defined in SEC Rule 144, at all times;
(b) use its best efforts to file with the SEC in a
timely manner all reports and other documents required of
the Company under the 1933 Act and the 1934 Act;
(c) furnish to any Holder so long as the Holder owns
any Registrable Securities, forthwith upon request: (i) a
written statement by the Company that it has complied with
the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act or that it qualifies as a Registrant where
securities may be resold pursuant to Form S-3; (ii) a copy
of the most recent annual or quarterly report of the Company
and all other reports and documents filed by the Company
with the SEC; and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such
securities without registration; and
(d) take such action as is necessary to enable the
Holders to use Form S-3 for the sale of their Registrable
Securities.
<PAGE>
11. Assignment of Registration Rights. [Reserved].
12. Limitations on Subsequent Registration Rights.
From and after the date of this Agreement, the Company shall
not, without the prior written consent of the Holders of at
least a majority of the then outstanding Registrable Securi
ties enter into any agreement with any holder or prospective
holder of any securities of the Company which would: (a)
allow such holder or prospective holder to include such secu
rities in any registration filed under Section 2 hereof if
such inclusion would adversely affect the rights of any Hold
er of Registrable Securities hereunder; or (b) not provide
for the conversion of such other holders from demand
registration to a piggyback registration in the event the
Holders elect to demand registration under this Agreement
within 30 days after a demand by such other holders; or
(c) permit such holder or prospective holder to "piggyback"
in a public offering of the Company's securities, except
where such "piggyback" rights would not cause the holders to
be able to sell in such offering a minimum of the greater of
(i) their pro rata share (based on shares held by all
shareholders participating in the offering) of the shares to
be included in the offering and (ii) 20% of the shares of
selling shareholders to be included in the offering.
13. "Market Stand-off" Agreement. Each Holder hereby
agrees that it shall not, to the extent requested by the
Company and an underwriter of Common Stock (or other
securities) of the Company, sell or otherwise transfer or
dispose of any Registrable Securities or any interest
therein in a market or other transaction during the 180-day
period following the effective date of a registration
statement of the Company filed under the 1933 Act; provided,
however, that all officers, directors and significant
shareholders (i.e., those shareholders who beneficially own
greater than 5% of the Company's outstanding stock) of the
Company and all other persons with registration rights
(other than pursuant to this agreement) enter into similar
agreements.
<PAGE>
In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect
to the Registrable Securities of each Holder (and the shares
or securities of every other person subject to the foregoing
restriction) until the end of such 180-day period.
14. Form S-3 Registration. If the Company shall
receive, at any time commencing on the earlier of (i) the
conversion of the Preferred Stock purchased pursuant to the
Purchase Agreement or (ii) December 31, 1997, a request or
requests from the Initiating Holders that the Company effect
a registration on Form S-3 (or any similar successor form)
and any related qualification or compliance with respect to
all or a part of the Registrable Securities owned by such
Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance,
to all other Holders; and
(b) as soon as practicable, effect such registration
and all such qualifications and compliance as may be so
requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such
request, together with all or such portion of the
Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written
request given within 15 days after receipt of such written
notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 14:
(i) if the Company is not qualified as a registrant entitled
to use Form S-3 (or the applicable successor form); or (ii)
if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and any
other securities at an aggregate price to the public of less
than $2,500,000; or (iii) if the Company has, within the
12-month period preceding the date of such request, already
<PAGE>
effected two registrations on Form S-3 (or applicable
successor form) for the Holders pursuant to this Section 14;
(iv) the number of securities proposed to be sold are then
eligible to be sold under Rule 144 in a single three month
period; or (v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to
execute a general consent to service of process in effecting
such registration, qualification or compliance.
Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities
and other securities so requested to be registered as soon
as practicable after receipt of the request or requests of
the Initiating Holders. Registrations effected pursuant to
this Section 14 shall not be counted as demands for
registration effected pursuant to Section 2. The Holders
agree that the maximum number of shares that they will sell
using an S-3 registration statement filed by the Company
pursuant to this Section 14 during any three month period
will not exceed the limit imposed by Rule 144(e)(1).
15. Remedies. Except as provided in Section 8 of this
Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific per
formance that a remedy of law would be adequate.
16. Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent
of Holders of at least a majority of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a
waiver or consent to departure from the provisions hereof
with respect to a matter which relates exclusively to the
rights of Holders of Registrable Securities whose securities
<PAGE>
are being sold pursuant to a registration statement and
which does not directly or indirectly affect the rights of
other holders of Registrable Securities may be given by the
holders of a majority of the Registrable Securities being
sold; provided, however, that the provisions of this
sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately
preceding sentence.
17. Notices. All notices, demands and requests
required by this Agreement shall be in writing and shall be
deemed to have been given for all purposes (a) upon personal
delivery, (b) one day after being sent, when sent by profes
sional overnight courier service from and to locations
within the continental United States, (c) five days after
posting when sent by registered or certified mail, or (d) on
the date of transmission when sent by telegram, telegraph,
telex or telecopier, addressed to the Company or an Investor
at its address set forth on the signature pages hereof. Any
party hereto may from time to time by notice in writing
served upon the others as provided herein, designate a
different mailing address or a different person to which
such notices or demands are thereafter to be addressed or
delivered.
18. Successors and Assigns. Except as otherwise
provided herein, this Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of
the parties, including, without limitation and without the
need for an express assignment, subsequent holders of
Registrable Securities to which the registration rights
granted by this Agreement have been assigned as permitted
herein.
19. Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be deemed to be
an original, and when executed, separately or together,
shall constitute a single original instrument, effective in
the same manner as if the parties hereto had executed one
and the same instrument.
20. Captions. Captions are provided herein for
convenience only and they are not to serve as a basis for
<PAGE>
interpretation or construction of this Agreement, nor as evi
dence of the intention of the parties hereto.
21. Cross-References. All cross-references in this
Agreement, unless specifically directed to another agreement
or document, refer to provisions within this Agreement.
22. Governing Law. This Agreement shall be governed
by and construed in accordance with, the laws of the State
of Nevada, without reference to conflicts of laws
provisions.
23. Severability. The provisions of this Agreement
are severable. The invalidity, in whole or in part, of any
provision of this Agreement shall not affect the validity or
enforceability of any other of its provisions. If one or
more provisions hereof shall be declared invalid or unen
forceable, the remaining provisions shall remain in full
force and effect and shall be construed in the broadest pos
sible manner to effectuate the purposes hereof. The parties
further agree to replace such void or unenforceable provi
sions of this Agreement with valid and enforceable
provisions which will achieve, to the extent possible, the
economic, business and other purposes of the void or
unenforceable provisions.
24. Entire Agreement. This Agreement is intended by
the parties hereto to be the final expression of their
agreement and constitutes and embodies the entire agreement
and understanding between the parties hereto with regard to
the subject matter hereof and is a complete and exclusive
statement of the terms and conditions thereof, and shall
supersede any and all prior oral and written correspondence,
conversations, negotiations, agreements and understandings
relating to the same subject matter.
<PAGE>
25. Attorneys' Fees. In any action at law or in
equity to enforce any of the provisions or rights under this
Agreement, the unsuccessful party to such litigation, as
determined by the court in a final judgement or decree,
shall pay the successful party all costs, expenses and
reasonable attorney's fees, as set by the court and not by a
jury, incurred by the successful party (including, without
limitation, costs, expenses and fees on any appeal).
26. Consideration for Approvals or Waivers. No
consideration shall be paid to any Holder to obtain such
Holder's approval for or waiver of any amendment of this
Agreement or any matter requiring the approval or consent of
the Holders hereunder unless such consideration is also
offered to all Holders, pro rata based upon the number of
Registrable Securities held by the Holders.
27.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have execut
ed this Registration Rights Agreement with the intent and
agreement that the same shall be effective as of the day and
year first above written.
THE COMPANY:
ACRES GAMING INCORPORATED,
a Nevada Corporation
815 N.W. Ninth Street
Corvallis, Oregon 97330
By:/s/ Joseph A. Huseonica
Joseph A. Huseonica
THE INVESTOR:
IGT,
a Nevada Corporation
P.O. Box 10120
5270 Neil Road
Reno, Nevada 89502
By:/s/ G. Thomas Baker
G. Thomas Baker
