-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PmkJ7ihOYF2qqgaSuWqUNowx/SF3VxYM1r72vXuepQ1dsLG5Lh2JTmfUyrxVsasl TpsuGj4h/hIRgwx2PtM+6w== 0000353944-97-000008.txt : 19970222 0000353944-97-000008.hdr.sgml : 19970222 ACCESSION NUMBER: 0000353944-97-000008 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970207 DATE AS OF CHANGE: 19970212 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL GAME TECHNOLOGY CENTRAL INDEX KEY: 0000353944 STANDARD INDUSTRIAL CLASSIFICATION: 3990 IRS NUMBER: 880173041 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-33876 FILM NUMBER: 97521177 BUSINESS ADDRESS: STREET 1: 520 S ROCK BLVD CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7026880100 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL GAME TECHNOLOGY CENTRAL INDEX KEY: 0000353944 STANDARD INDUSTRIAL CLASSIFICATION: 3990 IRS NUMBER: 880173041 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 520 S ROCK BLVD CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7026880100 SC 13D 1 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). 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. 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.
The directors and executive officers of IGT are set forth as follows: 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
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. 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 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. 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 EXHIBIT INDEX 1. Purchase Contract 2. Registration Rights Agreement 3. Certificate of Designation of Preferred Stock
EX-1 2 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. 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. 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. (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 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 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 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. 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 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. 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 EX-2 3 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 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. 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: 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 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 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. 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 (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. (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 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. 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. 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 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. 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. 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. 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. 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 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 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. EX-3 4 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; (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 (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. 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 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 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. 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 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 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. 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 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 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 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 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. 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. 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 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 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 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. 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. 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
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