WARRANT AGREEMENT
BY AND BETWEEN
SILICON GAMING, INC.
AND
THE PURCHASER NAMED HEREIN
DATED AS OF NOVEMBER 24, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I WARRANT CERTIFICATES.................................................1
Section 1.1 Forms of Warrant Certificates...............................1
Section 1.2 Execution of Warrant Certificates...........................2
Section 1.3 Registration of Warrant Certificates........................2
Section 1.4 Exchange and Transfer of Warrant Certificates...............2
Section 1.5 Lost, Stolen, Mutilated or Destroyed Warrant Certificates...2
Section 1.6 Cancellation of Warrant Certificates........................3
ARTICLE II WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS.....................3
Section 2.1 Exercise Price..............................................3
Section 2.2 Registration of Warrants and Conversion Shares..............3
Section 2.3 Exercise and Expiration of Warrants.........................3
Section 2.4 Procedure for Exercise of Warrants..........................4
Section 2.5 Issuance of Series E Preferred Stock........................5
Section 2.6 Certificates for Unexercised Warrants.......................5
Section 2.7 Reservation of Shares.......................................5
Section 2.8 No Impairment...............................................6
ARTICLE III MISCELLANEOUS......................................................6
Section 3.1 Covenants of the Company....................................6
Section 3.2 Payment of Taxes and Charges................................6
Section 3.3 Changes to Agreement........................................7
Section 3.4 Assignment..................................................7
Section 3.5 Successor to Company........................................7
Section 3.6 Notices.....................................................7
Section 3.7 Defects in Notice...........................................8
Section 3.8 Governing Law...............................................8
Section 3.9 Standing....................................................8
Section 3.10 Headings....................................................9
Section 3.11 Counterparts................................................9
Section 3.12 Availability of the Agreement...............................9
Section 3.13 Entire Agreement............................................9
WARRANT AGREEMENT COMPANY SIGNATURE PAGE......................................10
WARRANT AGREEMENT PURCHASER SIGNATURE PAGE....................................11
EXHIBIT A - FORM OF WARRANT CERTIFICATE......................................A-1
(i)
WARRANT AGREEMENT
THIS WARRANT AGREEMENT, dated as of November 24, 1999 (this "Agreement"),
is entered into by and between Silicon Gaming, Inc., a California corporation
(the "Company"), and the undersigned purchaser (the "Purchaser").
WITNESSETH:
WHEREAS, the Company and the Purchaser have entered into the Restructuring
Agreement dated as of November 24, 1999 (the "Restructuring Agreement"), whereby
the Purchaser has agreed to convert $39.75 million of its Senior Discount Notes
to 39,750 shares of Series D Convertible Preferred Stock (the "Series D
Preferred Stock") which is convertible into 57% of the equity of the Company on
a fully-diluted basis (the "Restructuring");
WHEREAS, concurrent with the Restructuring, the Company will conduct an
exchange offer (the "Exchange Offer") with the public holders of the common
stock, par value $.001 per share (the "Common Stock") of the Company offering to
exchange each share of common stock for a unit (the "Units") consisting of one
share of Common Stock and one warrant to purchase 3.59662 shares of Common Stock
(the "Old Equity Warrants") and appoint a warrant agent (the "Warrant Agent")
for the exercise of such Old Equity Warrants;
WHEREAS, the Purchaser and the Company have agreed that the issuance of the
Common Stock upon the exercise of the Old Equity Warrants shall not dilute the
equity represented by the Shares of Series D Preferred Stock then held by the
Purchaser or its successors and assigns; and
WHEREAS, to prevent such dilutive effects of the issuance of the Common
Stock issuable upon exercise of the Old Equity Warrants, the Company has agreed
to issue warrants (the "Warrants") to purchase up to an aggregate of 60,807.731
shares of Series E Preferred Stock (the "Warrant Shares").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
WARRANT CERTIFICATES
Section I.1 FORMS OF WARRANT CERTIFICATES. The Warrant certificates (the
"Warrant Certificates") shall be issued in registered form only and, together
with the form of the election to purchase (the "Election to Purchase"), and
assignment (the "Assignment") to be attached thereto, shall be substantially in
the form of EXHIBIT A attached hereto and, in addition, may have such letters,
numbers or other marks of identification or designation and such legends,
summaries, or endorsements stamped, printed, lithographed or engraved thereon as
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the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as, in any particular case, may be required in the opinion
of counsel for the Company, to comply with any law or with any rule or
regulation of any regulatory authority or agency, or to conform to customary
usage.
Section I.2 EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be executed on behalf of the Company by its Chairman or President or any
Vice President and attested to by its Secretary or Assistant Secretary, either
manually or by facsimile signature printed thereon. In case any authorized
officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be an officer of the Company either before or after delivery
thereof by the Company to any Purchaser, the signature of such person on such
Warrant Certificates shall be valid nevertheless and such Warrant Certificates
may be issued and delivered to those persons entitled to receive the Warrants
represented thereby with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be an officer of the Company.
Section I.3 REGISTRATION OF WARRANT CERTIFICATES. The Company shall number
and register the Warrant Certificates in a register as necessary. The Company
may deem and treat the registered Holder(s) of the Warrant Certificates as the
absolute owner(s) thereof for all purposes. "Holder" shall, for the purposes of
this Agreement, mean the Purchaser, any transferee or assignee of the Purchaser
and any successive transferee or assignee thereof.
Section I.4 EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES. The Warrants
(and any Warrant Shares issued upon exercise thereof) shall bear such
restrictive legend or legends as may be required by law and shall be
transferable only in accordance with the terms of this Agreement and the
Restructuring Agreement.
The Company may from time to time register the transfer of any outstanding
Warrant Certificates in a warrant register to be maintained by the Company upon
surrender thereof accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company duly executed by the Holder or Holders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s).
Warrant Certificates may be exchanged at the option of the Holder(s)
thereof, when surrendered to the Company at the address set forth in Section 4.5
hereof for another Warrant Certificate or Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrant Shares.
Section I.5 LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES. If
any Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Company shall issue, execute and deliver, in exchange and substitution for and
upon cancellation of a mutilated Warrant Certificate, or in lieu of or in
substitution for a lost, stolen or destroyed Warrant Certificate, a new Warrant
Certificate representing an equivalent number of Warrants or shares of Series E
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Preferred Stock. If required by the Company, the Holder of the mutilated, lost,
stolen or destroyed Warrant Certificate must provide indemnity sufficient to
protect the Company from any loss which it may suffer if the Warrant Certificate
is replaced. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
Section I.6 CANCELLATION OF WARRANT CERTIFICATES. Any Warrant Certificate
surrendered upon the exercise of Warrants or for exchange or transfer, or
purchased or otherwise acquired by the Company, shall be canceled and shall not
be reissued by the Company; and, except as provided in Section 2.6 hereof in the
case of the exercise of less than all of the Warrants evidenced by a Warrant
Certificate or in an exchange or transfer as set forth in Section 1.4 above, no
Warrant Certificate shall be issued hereunder in lieu of such canceled Warrant
Certificate. Any Warrant Certificate so canceled shall be destroyed by the
Company.
ARTICLE II
WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS
Section II.1 EXERCISE PRICE. Each Warrant Certificate shall, when signed by
the Chairman or President or any Vice President and attested to by the Secretary
or Assistant Secretary of the Company, entitle the Holder thereof to purchase
from the Company, subject to the terms and conditions of this Agreement, the
number of fully paid and nonassessable Warrant Shares evidenced thereby at a
purchase price of $0.01 per share (the "Exercise Price"), payable in full in
accordance with Section 2.3 hereof, at the time of exercise of the Warrant.
Section II.2 REGISTRATION OF WARRANTS AND CONVERSION SHARES. The Company
shall secure the effective registration of the shares of Common Stock issuable
upon conversion of the Series E Preferred Stock (the "Conversion Shares") for
resale under the Securities Act upon the terms and subject to the conditions set
forth in the Stockholders Agreement dated as of November 24, 1999 (the
"Stockholders Agreement") by and among the Company, the Purchaser, and certain
other stockholders of the Company. Promptly after a registration statement under
the Securities Act covering the Warrant Shares has become effective, the Company
shall cause notice thereof together with a copy of the prospectus covering the
Warrant Shares to be mailed to each registered Holder.
Section II.3 EXERCISE AND EXPIRATION OF WARRANTS. (a) The Warrants shall
upon issuance not be exercisable and shall become immediately exercisable solely
upon and to the extent of the exercise of Old Equity Warrants. To the extent
that less than all of the Old Equity Warrants are exercised, than that fraction,
the numerator of which is the number of shares of Common Stock for which the Old
Equity Warrants are exercised and the denominator of which is product of the
total number of shares of Common Stock into which one Old Equity Warrant is
initially exercisable multiplied by the total number of Old Equity Warrants
issued upon the closing of the Exchange Offer, of each Warrant shall become
exercisable by the Holder of the Warrant.
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The Warrant Agent (or upon the failure of the Warrant Agent to take the
following actions in accordance with this Section 2.3, the Company) shall within
5 business days after the exercise of any of the Old Equity Warrants, or, the
Company shall in the case of a transaction or series of transactions in which
(i) a merger, reorganization or consolidation in which a majority of the
outstanding voting power of the surviving or consolidated corporation
immediately following such event is held by persons or entities who were not
stockholders of the Company immediately prior to such event, (ii) the sale of
all or substantially all of the assets of the Company and its subsidiaries or
(iii) the redemption or repurchase of shares representing a majority of the
voting power of the outstanding shares of capital stock of (in each case, a
"Change of Control"), not less than 10 nor more than 60 days prior to the
consummation of such Change of Control, give written notice to the Holder(s) of
the Warrants stating (1) that all or some portion of the Old Equity Warrants
have been exercised by the holder(s) thereof or a Change of Control is to occur,
(2) the date upon which the Warrants or a fraction thereof became or are
expected to become exercisable or the date upon which the Change of Control is
to occur, and (3) that number or fraction of Warrants that have or may become
exercisable as a result of such exercise of Old Warrants or Change of Control
(the "Old Equity Exercise Notice").
(b) A Warrant or fraction thereof shall terminate and become void,
with respect to that portion of the Warrant which has become exercisable, as of
the 180th day after which such Warrant or fraction thereof becomes exercisable
in accordance with Section 2.3(a) above (the "Expiration Date"); provided,
however, that if such Warrant or fraction thereof is exercisable for less than
100 shares of Series E Preferred Stock, then such Warrant(s) will remain
exercisable until the 180th day following the date upon which such exercisable
Warrants may be exercised for 100 or more shares of Series E Preferred Stock.
Section II.4 PROCEDURE FOR EXERCISE OF WARRANTS. Warrants may be exercised
prior to the Expiration Date at the Exercise Price in accordance with Section
2.3. The Warrants may be exercised by surrendering the Warrant Certificates
representing such Warrants to the Company at its address set forth in Section
3.5 hereof, together with the Election to Purchase duly completed and executed,
accompanied by payment in full, as set forth below, to the Company of the
Exercise Price for each share of Series E Preferred Stock or fraction thereof in
respect of which such Warrants are being exercised. Such Exercise Price shall be
paid in full by (i) cash or a certified check or a wire transfer in same day
funds in an amount equal to the Exercise Price multiplied by the number of
shares of Series E Preferred Stock or fraction thereof then being purchased or
(ii) delivery to the Company of that number of shares of Common Stock having a
Fair Market Value (as hereinafter defined) equal to the Exercise Price
multiplied by the number of shares of Series E Preferred Stock or fraction
thereof then being purchased. In the alternative, the Holder of a Warrant
Certificate may exercise its right to purchase all or a portion of the shares of
Series E Preferred Stock subject to such Warrant Certificate, on a net basis,
such that, without the exchange of any funds, such Holder receives that number
of shares of Series E Preferred Stock or fraction thereof subscribed to pursuant
to such Warrant Certificate LESS that number of shares of Series E Preferred
Stock convertible into shares of Common Stock having an aggregate Fair Market
Value at the time of exercise equal to the aggregate Exercise Price that would
otherwise have been paid by such Holder for the number of shares of Series E
Preferred Stock or fraction thereof subscribed to pursuant to such Warrant
Certificate (hereinafter, a "Net Cashless Exercise").
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As used herein: (a) the term "Fair Market Value," on a per share basis,
means the average of the daily Closing Prices (as hereinafter defined) of the
Common Stock for the five (5) consecutive Trading Days (as hereinafter defined)
ending the Trading Day immediately preceding the Date of Exercise; (b) the term
"Date of Exercise" with respect to any Warrant means the date on which such
Warrant is exercised as provided herein; (c) the term "Closing Price" for any
date shall mean the last sale price reported in THE WALL STREET JOURNAL regular
way or, in case no such reported sale takes place on such date, the average of
the last reported bid and asked prices regular way, in either case on the
principal national securities exchange on which the Common Stock is admitted to
trading or listed if that is the principal market for the Common Stock or, if
not listed or admitted to trading on any national securities exchange or if such
national securities exchange is not the principal market for the Common Stock,
the last sale price as reported on The Nasdaq National Market ("Nasdaq"), the
New York Stock Exchange or a national securities exchange or, if not quoted on
Nasdaq or listed on the New York Stock Exchange or other national securities
exchange, then the average of the high bid and the low ask prices on the
over-the-counter market or, if not so quoted, then the fair value thereof
determined in good faith by the Company's Board of Directors as of a date which
is within 15 days of the date as of which the determination is to be made; and
(d) the term "Trading Days" with respect to the Common Stock means (i) if the
Common Stock is quoted on Nasdaq, the New York Stock Exchange or a national
securities exchange, days on which trades may be made on such system or (ii) if
the Common Stock is listed or admitted for trading on any national securities
exchange, days on which such national securities exchange is open for business.
Section II.5 ISSUANCE OF SERIES E PREFERRED STOCK. Immediately upon the
exercise of any Warrants, the Company shall issue, or cause its transfer agent
to issue, a certificate or certificates for the number of shares of Series E
Preferred Stock or fraction thereof, registered in accordance with the
instructions set forth in the Election to Purchase. All shares of Series E
Preferred Stock or fraction thereof issued upon the exercise of any Warrants
shall be validly authorized and issued, fully paid, non-assessable, free of
preemptive rights and (subject to Section 3.1 hereof) free from all taxes,
liens, charges and security interests in respect of the issuance thereof. Each
person in whose name any such certificate for Series E Preferred Stock or
fraction thereof is issued shall be deemed for all purposes to have become the
holder of record of the Series E Preferred Stock represented thereby on the Date
of Exercise of the Warrants resulting in the issuance of such shares,
irrespective of the date of issuance or delivery of such certificate for shares
of Series E Preferred Stock or fraction thereof.
Section II.6 CERTIFICATES FOR UNEXERCISED WARRANTS. In the event that,
prior to the Expiration Date, a Warrant Certificate is exercised in respect of
fewer than all of the shares of Series E Preferred Stock or fraction thereof
issuable on such exercise, a new Warrant Certificate representing the remaining
shares of Series E Preferred Stock or fraction thereof calculated to the nearest
one-tenthousandth of a share shall be issued and delivered pursuant to the
provisions hereof.
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Section II.7 RESERVATION OF SHARES. The Company shall at all times reserve
and keep available, free from preemptive rights, for issuance upon the exercise
of Warrants, the maximum number of its authorized but unissued shares of Series
E Preferred Stock and Common Stock which may then be issuable upon the exercise
in full of all outstanding Warrants and conversion of the Series E Preferred
Stock, respectively.
Section II.8 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of the Warrants, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holders against impairment. Without limiting the generality of the
foregoing, the Company shall (a) not increase the par value of the Series E
Preferred Stock receivable upon the exercise of the Warrants above the amount
payable therefor upon such exercise immediately prior to such increase in par
value or otherwise amend or alter the terms, rights, preferences and privileges
of the Series E Preferred Stock, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares of Series E Preferred Stock or fraction thereof upon
the exercise of any Warrant, and (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under the Warrants. Notwithstanding the foregoing paragraph, the
Company shall not be required to issue any Series E Preferred Stock upon the
exercise of any Warrant if such issuance would result in a violation by the
Company of any applicable law.
ARTICLE III
MISCELLANEOUS
Section III.1 COVENANTS OF THE COMPANY. So long as any of the Warrants
remain outstanding, the Company hereby agrees:
(1) to maintain the services of the Warrant Agent with respect to the Old
Equity Warrants and to cause such Warrant Agent to provide notice to
the Holder(s) of the Warrants in accordance with Section 2.3 herein;
(2) to allow the Holder(s), upon reasonable notice, to examine the
register of Old Equity Warrants; and
(3) not to amend the Series E Certificate of Determination or the Series D
Certificate of Determination.
Section III.2 PAYMENT OF TAXES AND CHARGES. The Company will pay all taxes
(other than income taxes) and other government charges in connection with the
issuance or delivery of the Warrants and the initial issuance or delivery of
shares of Series E Preferred Stock upon the exercise of any Warrants and payment
of the Exercise Price. The Company shall not, however, be required to pay any
7
additional transfer taxes in connection with the subsequent transfer of Warrants
or any transfer involved in the issuance and delivery of shares of Series E
Preferred Stock or fraction thereof in a name other than the name in which the
Warrants to which such issuance relates were registered, and, if any such tax
would otherwise be payable by the Company, no such issuance or delivery shall be
made unless and until the person requesting such issuance has paid to the
Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
Section III.3 CHANGES TO AGREEMENT. The Company, when authorized by its
Board of Directors, with the written consent of Holders of at least a majority
of the outstanding Warrants may amend or supplement this Agreement. The Company
may, without the consent or concurrence of any Holder, by supplemental agreement
or otherwise, make any changes or corrections in this Agreement that the Company
shall have been advised by counsel (a) are required to cure any ambiguity or to
correct any defective or inconsistent provision or clerical omission or mistake
or manifest error herein contained, (b) add to the covenants and agreements of
the Company in this Agreement such further covenants and agreements thereafter
to be observed, or (c) result in the surrender of any right or power reserved to
or conferred upon the Company in this Agreement, in each case which changes or
corrections do not and will not adversely affect, alter or change the rights,
privileges or immunities of the Holders.
Section III.4 ASSIGNMENT. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors and assigns.
Section III.5 SUCCESSOR TO COMPANY. In the event that the Company merges or
consolidates with or into any other corporation or sell or otherwise transfers
its property, assets and business substantially as an entirety to a successor
corporation, the Company shall use reasonable commercial efforts to have such
successor corporation assume each and every covenant and condition of this
Agreement to be performed and observed by the Company.
Section III.6 NOTICES. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given,
delivered and received (a) if delivered personally or (b) if sent by facsimile,
registered or certified mail (return receipt requested) postage prepaid, or by
courier guaranteeing next day delivery, in each case to the party to whom it is
directed at the following addresses (or at such other address for any party as
shall be specified by notice given in accordance with the provisions hereof,
provided that notices of a change of address shall be effective only upon
receipt thereof). Notices delivered personally shall be effective on the day so
delivered, notices sent by registered or certified mail shall be effective five
days after mailing, notices sent by facsimile shall be effective when receipt is
acknowledged, and notices sent by courier guaranteeing next day delivery shall
be effective on the earlier of the second business day after timely delivery to
the courier or the day of actual delivery by the courier:
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If to the Company:
Silicon Gaming, Inc.
0000 X. Xxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Vice President--Chief Financial Officer
With a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
Two Renaissance Square
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq.
If to the Purchaser:
DDJ Capital Management, LLC
000 Xxxxxx Xxxxxx, Xxxxx X-0
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx Xxxxxxx, Esq.
With a copy to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx Xxxxxx, P.C.
Any notice or demand required by this Agreement to be given or made by the
Company to or on any Holder shall be sufficiently given or made, whether or not
such holder receives the notice, five (5) days after mailing, if sent by
first-class or registered mail, postage prepaid, addressed to such Holder at its
last address as shown on the books of the Company. Otherwise, such notice or
demand shall be deemed given when received by the party entitled thereto.
Section III.7 DEFECTS IN NOTICE. Failure to file any certificate or notice
or to mail any notice, or any defect in any certificate or notice pursuant to
this Agreement shall not affect in any way the rights of any Holder or the
legality or validity of any action taken or to be taken by the Company.
Section III.8 GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be governed by the laws of the State of New York without
regard to principles of conflicts of laws thereof.
Section III.9 STANDING. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation other than the
Company and the Holders of any right, remedy or claim under or by reason of this
9
Agreement or of any covenant, condition, stipulation, promise or agreement
contained herein; and all covenants, conditions, stipulations, promises and
agreements contained in this Agreement shall be for the sole and exclusive
benefit of the Company and its successors, and the Holders.
Section III.10 HEADINGS. The descriptive headings of the articles and
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section III.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
and all of which together shall constitute one and the same instrument.
Section III.12 AVAILABILITY OF THE AGREEMENT. The Company shall keep copies
of this Agreement available for inspection by Holders during normal business
hours. Copies of this Agreement may be obtained upon written request addressed
to the Company at the address set forth in Section 3.5 hereof.
Section III.13 ENTIRE AGREEMENT. This Agreement, including the Exhibits
referred to herein and the other writings specifically identified herein or
contemplated hereby including, without limitation, the Restructuring Agreement,
the Series D Certificate of Determination and the Series E Certificate of
Determination and the Warrant Certificates, is complete, reflects the entire
agreement of the parties with respect to the issuance of the Warrants, and
supersedes all previous written or oral negotiations, commitments and writings.
[The remainder of this page has been intentionally left blank]
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WARRANT AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
parties as of the day and year first above written.
SILICON GAMING, INC.,
a California corporation
By:
-------------------------------------
Name:
Title:
Accepted and Agreed as of the date first written above.
B III CAPITAL PARTNERS, L.P.,
a Delaware limited partnership
By: DDJ CAPITAL III, LLC,
its General Partner
By: DDJ CAPITAL MANAGEMENT, LLC,
its Manager
By:
-------------------------------------
Name:
Title:
EXHIBIT A - FORM OF WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE SECURITIES OR "BLUE
SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER
SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH ACT, OR (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A RESTRUCTURING AGREEMENT DATED
AS OF NOVEMBER 24, 1999 AS AMENDED FROM TIME TO TIME, A COMPLETE AND CORRECT
COPY OF THE FORM OF WHICH WILL BE FURNISHED BY THE ISSUER TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE.
No. EW-1
SILICON GAMING, INC.
SERIES E PREFERRED STOCK WARRANT CERTIFICATE
Certificate for 60,807.731 Warrants
THIS CERTIFIES that BIII CAPITAL PARTNERS, L.P., a Delaware limited
partnership, or its registered assigns is the registered holder (the "Registered
Holder") of Warrants set forth above, each of which represents the right to
purchase 60,807.731 fully paid and non-assessable share of Series E Convertible
Preferred Stock, par value $.001 per share (the "Series E Preferred Stock"), of
Silicon Gaming, Inc., a California corporation (the "Company"), at the Exercise
Price (as defined in the Warrant Agreement) at the times specified in the
Warrant Agreement, by surrendering this Warrant Certificate, with the form of
Election to Purchase attached hereto duly executed and by paying in full the
Exercise Price. Payment of the Exercise Price shall be made as set forth in the
Warrant Agreement (as hereinafter defined). No Warrant may be exercised after
the earlier of (i) the close of business on the 180th day after the fourth
anniversary of the Issue Date or (ii) the date that such Warrant is exercised.
All Warrants evidenced hereby shall thereafter become void, subject to the terms
of the Warrant Agreement hereinafter referred to.
Prior to the Expiration Date, subject to any applicable laws, rules or
regulations restricting transferability and to any restriction on
transferability that may appear on this Warrant Certificate and in accordance
with the terms of the Warrant Agreement hereinafter referred to, the Registered
Holder shall be entitled to transfer this Warrant Certificate, in whole or in
part, upon surrender of this Warrant Certificate at the principal office of the
Company with the form of assignment set forth hereon duly executed. Upon any
such transfer, a new Warrant Certificate or Warrant Certificates representing
the same aggregate number of Warrants to purchase the shares of the Series E
Preferred Stock will be issued in accordance with instructions in the form of
assignment.
Upon the exercise of less than all of the Warrants to purchase the shares
of the Series E Preferred Stock evidenced by this Warrant Certificate, there
shall be issued to the Registered Holder a new Warrant Certificate in respect of
the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be entitled to
exchange this Warrant Certificate, with or without other Warrant Certificates,
for another Warrant Certificate or Warrant Certificates for the same aggregate
number of Warrants to purchase the shares of the Series E Preferred Stock, upon
surrender of this Warrant Certificate at the principal office of the Company.
This Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of November 24, 1999 (the "Warrant Agreement") by and among
the Company and the Purchaser (as defined in the Warrant Agreement) and is
subject to the terms and provisions contained in the Warrant Agreement. All
capitalized terms not defined herein shall have the meanings given such terms as
set forth in the Warrant Agreement.
This Warrant Certificate shall not entitle the Registered Holder to any of
the rights of a stockholder of the Company, including, without limitation, the
right to vote, to receive dividends and other distributions, or to attend or
receive any notice of meetings of stockholders or any other proceedings of the
Company other than as set forth in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its facsimile corporate seal.
SILICON GAMING, INC.
By:
-------------------------------------
Name:
Title:
[Seal] Attest:
By:
-------------------------------------
Name:
Title: Secretary
[Form of Assignment]
FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned
represented by the within Warrant Certificate, with respect to the number of
Warrants to purchase the shares of the Series E Convertible Preferred Stock set
forth below:
NAME OF ASSIGNEE ADDRESS NO. OF WARRANTS
---------------- ------- ---------------
and does hereby irrevocably constitute and appoint _____________________ true
and lawful Attorney, to make such transfer on the books of Silicon Gaming, Inc.,
maintained for that purpose, with full power of substitution in the premises.
Dated:
----------- ---, ---- ----------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
[Form of Election To Purchase]
The undersigned hereby irrevocably elects to exercise ____________ of the
Warrants represented by this Warrant Certificate and to purchase the shares of
Series E Convertible Preferred Stock issuable upon the exercise of said
Warrants, and requests that certificates for such shares be issued and delivered
as follows:
ISSUE TO:_______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER)
DELIVER TO:_____________________________________________________________________
(NAME)
at _____________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
In full payment of the purchase price with respect to the exercise of
Warrants to purchase shares of the Series E Preferred Stock, the undersigned:
* hereby tenders payment of $________ by cash, certified check,
cashier's check or money order payable in United States currency to
the order of the Company; or
* hereby delivers to the Company that number of shares of Common Stock
having a Fair Market Value (as defined in the Warrant Agreement) equal
to the Exercise Price multiplied by the number of share of Series E
Preferred stock or fraction thereof being purchased; or
* hereby makes a Net Cashless Exercise (as defined in the Warrant
Agreement).
If the number of Warrants to purchase the shares of the Series E
Convertible Preferred Stock hereby exercised is less than all the Warrants
represented by this Warrant Certificate, the undersigned requests that a new
Warrant Certificate representing the number of such Warrants or fraction thereof
not exercised be issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:_____________________________________________________________________
(NAME)
at _____________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
Date: __________ ___, ______
----------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
PLEASE INSERT SOCIAL SECURITY OR TAX
I.D. NUMBER OF HOLDER
----------------------------------------
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