EXHIBIT 4.6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 21,
2001, between the investor or investors signatory hereto (each an "Investor" and
together the "Investors"), and Acres Gaming Incorporated, a Nevada corporation
(the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Investors are purchasing from the Company, pursuant to the
Convertible Subordinated Debentures and Warrants Purchase Agreement, dated the
date hereof (the "Purchase Agreement") (CAPITALIZED TERMS NOT DEFINED HEREIN
SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE PURCHASE AGREEMENT), $5,000,000,
in the aggregate, principal amount of the Company's Convertible Subordinated
Debentures and Warrants; and
WHEREAS, the Company desires to grant to the Investors the
registration rights set forth herein with respect to the Conversion Shares of
Common Stock issuable upon conversion of, or as interest upon, the Convertible
Subordinated Debentures, shares of Common Stock issuable upon exercise of the
Warrants purchased pursuant to the Purchase Agreement and shares issuable in the
event of a registration default pursuant to Section 3(f) (the "Securities").
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Definitions.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Registration Statement" means a registration statement on
Form S-3 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies and
which counsel for the Company shall deem appropriate, and which
form shall be available for the resale by the Investors of the
Securities to be registered thereunder in accordance with the
provisions of this Agreement and in accordance with the intended
method of distribution of such securities), for the registration
of the resale by the Investors of the Securities under the
Securities Act.
"Rule 144" means Rule 144 promulgated by the SEC pursuant
to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
SEC having substantially the same effect as such Rule.
"Rule 416" means Rule 416 promulgated by the SEC pursuant
to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
SEC having substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as
amended.
Section 2. Restrictions on Transfer. Each Investor acknowledges
and understands that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144. Each
Investor understands that no disposition or transfer of the Securities may be
made by Investor in the absence of (i) an opinion of counsel to the Investor, in
form and substance reasonably satisfactory to the Company, that such transfer
may be made without registration under the Securities Act or (ii) such
registration.
With a view to making available to the Investors the
benefits of Rule 144 or any other similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration, the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule
144;
(b) file with the SEC in a timely manner all reports and other
documents required to be filed with the SEC pursuant to Section 13 or
15(d) under the Exchange Act by companies subject to either of such
sections, irrespective of whether the Company is then subject to such
reporting requirements; and
(c) upon request by the Transfer Agent, the Company shall
provide the Transfer Agent an opinion of counsel, which opinion shall be
reasonably acceptable to the Transfer Agent, that the Investor has
complied with the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act.
Section 3. Registration Rights With Respect to the Securities.
(a) The Company agrees that it will prepare and file with the
SEC, within 30 calendar days after the Closing Date, a registration
statement on Form S-3 (or such other appropriate registration statement
form) under the Securities Act at the sole expense of the Company
(except as provided in Section 3(c) hereof), in respect of the
Investors, so as to permit the resale of the Securities under the Act by
the Investors as selling stockholders and not as underwriters.
(b) The Company shall cause such Registration Statement to
become effective within 60 calendar days (120 calendar days in the event
of a "full review" by the SEC) after the Closing Date and shall request
acceleration of effectiveness within 5 days of SEC clearance. The number
of shares designated in the Registration Statement to be registered
shall include all the Warrant Shares, 100% of the already converted
Conversion Shares held by any Investor on the filing date and at least
200% of the greater of the number of shares which would be issuable upon
the conversion of the principal amount of the Convertible Subordinated
Debentures issued and to be issued at the Mandatory Conversion Price in
effect (i) on the Closing Date, or (ii) on the date of the filing of the
Registration Statement, and such number of shares as the Company deems
prudent for the purpose of issuing shares of Common Stock as interest on
the Convertible
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Subordinated Debentures, and shall include appropriate language
regarding reliance upon Rule 416 to the extent permitted by the SEC. The
Company will notify the Investors and its transfer agent of the
effectiveness of the Registration Statement within 1 Trading Day of such
event. After the Effective Date, within 15 days after the day on which
the number of Securities registered for resale by the Investors,
notwithstanding the limitation on conversion herein and in the Purchase
Agreement, is less than 125% of the number of Securities (calculated at
the Mandatory Conversion Price on such date) held by the Investors on
such date (the "Further Registration Date"), the Company shall file a
further registration statement registering a number of shares of Common
Stock to the extent that at least 200% of the shares which would be
required to be issued upon the conversion of the remaining Convertible
Subordinated Debentures at the Mandatory Conversion Price on the date of
the filing of such further registration statement are registered and
shall prosecute such additional registration statement to effectiveness
within 90 calendar days (120 calendar days in the event of a "full
review" by the SEC) of the Further Registration Date and shall request
acceleration of effectiveness within 5 days of SEC clearance. Each
Investor shall have the right to convert all or any of its Convertible
Subordinated Debentures into up to a number of registered shares of
Common Stock equal to such Investor's fraction of the aggregate Purchase
Price multiplied by the initially registered and, if applicable,
subsequently registered Securities, subject to any limitation on such
conversion herein or in the Purchase Agreement; provided, however, in no
event shall this provision limit each Investor's right to convert its
Convertible Subordinated Debenture into unregistered shares of Common
Stock. Notwithstanding anything herein to the contrary, if the only
reason for the delay in effectiveness relates to an Investor's
affiliation with a registered broker-dealer, the failure of such
Investor to disclose the individuals that exercise voting and/or
investment powers over the shares of Common Stock to be sold by such
Investor or the failure of such Investor to disclose the Investor's
beneficial ownership of the Common Stock, the aforementioned time
periods as to effectiveness shall be tolled accordingly.
(c) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 effective under the
Securities Act until the earlier of (i) the date that none of the
Securities covered by such Registration Statement are or may become
issued and outstanding, (ii) the date that all of the Securities have
been sold pursuant to such Registration Statement, (iii) the date the
Investors receive an opinion of counsel to the Company, which counsel
shall be reasonably acceptable to the Investors, that the Securities may
be sold under the provisions of Rule 144 without limitation as to
volume, (iv) the date that all Securities have been otherwise
transferred to persons who may trade such shares without restriction
under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not
bearing a restrictive legend, or (v) three (3) years from the Effective
Date.
(d) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and
filing of the Registration Statement hereunder and in complying with
applicable securities and Blue Sky laws (including, without limitation,
all attorneys' fees of the Company) shall be borne by the Company. The
Investors shall bear the cost of underwriting and/or brokerage
discounts, fees and
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commissions, if any, applicable to the Securities being registered and
the fees and expenses of their counsel. The Investors and their counsel
shall have a reasonable period, not to exceed 5 Trading Days, to review
the proposed Registration Statement or any amendment thereto, prior to
filing with the SEC, and the Company shall provide each Investor with
copies of any comment letters received from the SEC staff with respect
to the Registration Statement that pertain specifically to this
transaction or the selling shareholders and their plan of distribution
within 2 Trading Days of receipt thereof. The Company shall qualify any
of the securities for sale in such states as any Investor reasonably
designates and shall furnish indemnification in the manner provided in
Section 6 hereof. However, the Company shall not be required to qualify
in any state which will require an escrow or other restriction relating
to the Company and/or the sellers, or which will require the Company to
qualify to do business in such state or require the Company to file
therein any general consent to service of process. The Company at its
expense will supply the Investors with copies of the applicable
Registration Statement and the prospectus included therein and other
related documents in such quantities as may be reasonably requested by
the Investors.
(e) The Company shall not be required by this Section 3 to
include an Investor's Registrable Securities in any Registration
Statement which is to be filed if, in the opinion of counsel for both
the Investor and the Company (or, should they not agree, in the opinion
of another counsel experienced in securities law matters acceptable to
counsel for the Investor and the Company) the proposed offering or other
transfer as to which such registration is requested is exempt from
applicable federal and state securities laws and would result in all
purchasers or transferees obtaining securities which are not "restricted
securities", as defined in Rule 144 under the Securities Act.
(f) In the event that (i) the Registration Statement is not
filed by the Company in a timely manner as set forth in Section 3(a),
(ii) the Registration Statement is not declared effective by the SEC
within the period of time set forth in Section 3(b) herein, (iii) such
Registration Statement is not maintained as effective by the Company for
the period set forth in Section 3(c) above, or (iv) the additional
registration statement referred to in Section 3(b) is not filed or
declared effective within the time periods set forth in Section 3(b)
herein (each a "Registration Default"), then the Company will pay each
Investor (pro-rata on a monthly basis), for each Registration Default
then in effect, as liquidated damages and not as a penalty, during any
period in which a Registration Default is occurring, as to the first
month, 1% per month and as to each month thereafter, 2% per month, of
(i) the value of any outstanding Convertible Subordinated Debentures
(valued at the average of the VWAPs during the applicable month
multiplied by the number of Conversion Shares the Convertible
Subordinated Debentures are convertible into based on (A) prior to 6
months from the Closing Date, the Set Price, and (B) following 6 months
after the Closing Date, the Mandatory Conversion Price as to such
month), (ii) the value of any outstanding Warrants (valued at the
difference between the average VWAP during the applicable month and the
Exercise Price multiplied by the number of Warrant Shares the Warrants
are exercisable into), and (iii) the value of any Conversion Shares and
Warrant Shares (valued at the average of the VWAPs during the applicable
month multiplied by the number of such securities), held
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by such Investor until such corresponding Registration Default no longer
exists ("Liquidated Damages"). Notwithstanding anything herein to the
contrary, Liquidated Damages shall not accrue and be payable to an
Investor to the extent that the only reason for the delay in
effectiveness relates to such Investor's affiliation with a registered
broker-dealer, such Investor's failure to disclose the individuals that
exercise voting and/or investment powers over the shares of Common Stock
to be sold by such Investor or the Investor's failure to disclose its
beneficial ownership of the Common Stock. Such payment of the Liquidated
Damages shall be made to the Investors in cash, or, at the option of the
Company, in registered shares of Common Stock (based on the Mandatory
Conversion Price) on the Trading Day prior to the date of payment) on
the last day of each month during which a Registration Default occurred
or was continuing, without demand therefor by the Investor; provided,
however, that the payment of the Liquidated Damages shall not relieve
the Company from its obligations to register the Securities pursuant to
this Section.
If the Company does not remit the payment to the Investors as set
forth above, the Company will pay the Investors reasonable costs of
collection, including attorneys' fees, in addition to the Liquidated
Damages and interest of 12% per annum on any liquidated damage payments
not made in a timely manner as set forth above. The registration of the
Securities pursuant to this provision shall not affect or limit the
Investors' other rights or remedies as set forth in this Agreement.
(g) Except for any rights pursuant to the Registration Rights
Agreement, dated January 28, 1997, entered into between the Company and
IGT and the registration rights to be granted to Xxxx Capital Partners,
LLC pursuant to the warrants issued to it in connection with this
transaction: (i) the Company shall be precluded from including in any
registration statement which it is required to file pursuant to this
Section 3 any other securities apart from the Registrable Securities,
without the prior written consent of a majority in interest of the
Investors, and (ii) the Company shall not file any registration
statement other than the Registration Statement until after the
Effective Date, without the consent of the Investors.
(h) If at any time or from time to time after the effective
date of any Registration Statement, the Company notifies the Investors
in writing of the existence of a Potential Material Event (as defined in
Section 3(i) below), the Investors shall not offer or sell any
Securities or engage in any other transaction involving or relating to
Securities or convert or exercise any of the Securities (except that, an
Investor may elect to convert or exercise the Securities during such
period provided such Investor enters into a confidentiality agreement
with the Company pertaining only to the information requiring such
blackout period, the Company discloses such information to such
Investor, and such information shall be publicly disclosed at the end of
such blackout period), from the time of the giving of notice with
respect to a Potential Material Event until the Investors receive
written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a
Potential Material Event; provided, however, that the Company may not so
suspend the right to such holders of Securities for more than twenty
(20) calendar days in the aggregate during any twelve month period,
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during the period the Registration Statement is required to be in
effect, and if such period is exceeded, such event shall be a
Registration Default and subject to Liquidated Damages as set forth in
Section 3(f) hereof. THE COMPANY MUST GIVE THE INVESTORS NOTICE IN
WRITING PROMPTLY UPON KNOWLEDGE THAT SUCH A BLACKOUT PERIOD (WITHOUT
INDICATING THE NATURE OF SUCH BLACKOUT PERIOD) WILL OCCUR BUT IN NO
EVENT LESS THAN ONE (1) TRADING DAY PRIOR TO THE FIRST DAY OF THE
BLACKOUT PERIOD AND SUCH NOTICE MUST BE ACKNOWLEDGED IN WRITING BY THE
INVESTORS. FAILURE TO PROVIDE THE INVESTORS WITH SUCH NOTICE SHALL
CONSTITUTE A REGISTRATION DEFAULT DURING THE ENTIRE APPLICABLE PERIOD
THAT THE REGISTRATION STATEMENT IS SUSPENDED. Compliance by the Company
with this Section 3(h) will not result in or be deemed a breach of any
of the Company's obligations set forth in the Purchase Agreement not to
disclose non-public information to the Investors.
(i) "Potential Material Event" means any of the following: (a)
the possession by the Company of material information not ripe for
disclosure in a registration statement, as determined in good faith by
the Chief Executive Officer or the Board of Directors of the Company
that disclosure of such information in a Registration Statement would be
detrimental to the business and affairs of the Company; or (b) any
material engagement or activity by the Company which would, in the good
faith determination of the Chief Executive Officer or the Board of
Directors of the Company, be adversely affected by disclosure in a
registration statement at such time, which determination shall be
accompanied by a good faith determination by the Chief Executive Officer
or the Board of Directors of the Company that the applicable
Registration Statement would be materially misleading absent the
inclusion of such information.
Section 4. Cooperation with Company. The Investors will cooperate
with the Company in all respects in connection with this Agreement, including
timely supplying all information reasonably requested by the Company (which
shall include all information regarding the Investors and proposed manner of
sale of the Registrable Securities required to be disclosed in any Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing their obligations under any underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. Nothing
in this Agreement shall obligate any Investor to consent to be named as an
underwriter in any Registration Statement. The obligation of the Company to
register the Registrable Securities shall be absolute and unconditional as to
those Securities which the SEC will permit to be registered without naming the
Investors as underwriters. Any delay or delays caused by the Investors by
failure to cooperate as required hereunder shall not constitute a Registration
Default.
Section 5. Registration Procedures. If and whenever the Company
is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Act, the Company
shall (except as otherwise provided in this Agreement), as expeditiously as
possible, subject to the Investors' assistance and cooperation as reasonably
required with respect to each Registration Statement:
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(a) (i)prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the Act with
respect to the sale or other disposition of all Registrable Securities
covered by such Registration Statement whenever the Investors shall
desire to sell or otherwise dispose of the same (including prospectus
supplements with respect to the sales of Registrable Securities from
time to time in connection with a registration statement pursuant to
Rule 415 promulgated under the Act) and (ii) take all lawful action such
that each of (A) the Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (B) the
prospectus forming part of the Registration Statement, and any amendment
or supplement thereto, does not at any time during the Registration
Period include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(b) (i)prior to the filing with the SEC of any Registration
Statement (including any amendments thereto) and the distribution or
delivery of any prospectus (including any supplements thereto), provide
draft copies thereof to the Investors as required by Section 3(d) and
reflect in such documents all such comments as the Investors (and their
counsel) reasonably may propose respecting the Selling Shareholders and
Plan of Distribution sections (or equivalents); (ii) furnish to each
Investor such numbers of copies of a prospectus including a preliminary
prospectus or any amendment or supplement to any prospectus, as
applicable, in conformity with the requirements of the Act, and such
other documents, as such Investor may reasonably request in order to
facilitate the public sale or other disposition of the Registrable
Securities owned by such Investor; and (iii) provide to each Investor
copies of any comments and communications from the SEC relating to the
Registration Statement, if lawful to do so;
(c) register and qualify the Registrable Securities covered by
the Registration Statement under such other securities or blue sky laws
of such jurisdictions as the Investors shall reasonably request (subject
to the limitations set forth in Section 3(d) above), and do any and all
other acts and things which may be necessary or advisable to enable each
Investor to consummate the public sale or other disposition in such
jurisdiction of the Registrable Securities owned by such Investor;
(d) list such Registrable Securities on the Principal Market,
if the listing of such Registrable Securities is then permitted under
the rules of such Principal Market;
(e) notify each Investor at any time when a prospectus
relating thereto covered by the Registration Statement is required to be
delivered under the Act, of the happening of any event of which it has
knowledge as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to
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make the statements therein not misleading in the light of the
circumstances then existing, subject to Section 3(h), and the Company
shall prepare and file a curative amendment under Section 5(a) as
quickly as commercially possible and during such period, the Investors
shall not make any sales of Registrable Securities pursuant to the
Registration Statement and during such period; provided, however, any
period during which the Investors are precluded from making sales of the
Registrable Securities shall be included in the 20 calendar day period
in Section 3(h) and any such days herein which exceed, or cause the
Company to exceed, such 20 calendar day period shall be deemed a
Registration Default and the Company shall be subject to Liquidated
Damages as set forth in Section 3(f).
(f) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities subject to
the Registration Statement (or, in the event of an underwritten
offering, the managing underwriters) of the issuance by the SEC of any
stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time and take all lawful action to
effect the withdrawal, recession or removal of such stop order or other
suspension;
(g) cooperate with the Investors to facilitate the timely
preparation and delivery of certificates for the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates for the Registrable Securities to be in such denominations
or amounts, as the case may be, as the Investors reasonably may request
and registered in such names as the Investors may request; and, within 3
Trading Days after a Registration Statement which includes Registrable
Securities is declared effective by the SEC, deliver and cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to the Investors) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their
Registrable Securities in accordance with the intended methods therefor
provided in the prospectus which are customary for issuers to perform
under the circumstances;
(i) in the event of an underwritten offering, promptly include
or incorporate in a prospectus supplement or post-effective amendment to
the Registration Statement such information as the managers reasonably
agree should be included therein and to which the Company does not
reasonably object and make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after it
is notified of the matters to be included or incorporated in such
Prospectus supplement or post-effective amendment; and
(j) maintain a transfer agent and registrar for its Common
Stock.
Section 6. Indemnification.
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(a) To the maximum extent permitted by law, the Company agrees
to indemnify and hold harmless the Investors and each person, if any,
who controls an Investor within the meaning of the Securities Act (each
a "Distributing Investor") against any losses, claims, damages or
liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of
defense and investigation and all reasonable attorneys' fees and
expenses), to which the Distributing Investor may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, or any related final
prospectus or amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be
liable in any such case to the extent, and only to the extent, that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon,
and in conformity with, written information furnished to the Company by
the Distributing Investor, its counsel, affiliates or any underwriter,
specifically for use in the preparation thereof or by such Investor's
failure to deliver to the purchaser a copy of the most recent prospectus
(including any amendments or supplements thereto). This indemnity
agreement will be in addition to any liability, which the Company may
otherwise have.
(b) To the maximum extent permitted by law, each Distributing
Investor agrees that it will indemnify and hold harmless the Company,
and each officer and director of the Company or person, if any, who
controls the Company within the meaning of the Securities Act, against
any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses) to which the Company or any such officer,
director or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, or any related final prospectus
or amendment or supplement thereto, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity
with, written information furnished to the Company by such Distributing
Investor, its counsel, affiliates or any underwriter, specifically for
use in the preparation thereof. This indemnity agreement will be in
addition to any liability, which the Distributing Investor may otherwise
have. Notwithstanding anything to the contrary herein, the Distributing
Investor shall be liable under this Section 6(b) for only that amount as
does not exceed
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the net proceeds to such Distributing Investor as a result of the sale
of Registrable Securities pursuant to the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action against such
indemnified party, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section
6, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any
indemnified party except to the extent the failure of the indemnified
party to provide such written notification actually prejudices the
ability of the indemnifying party to defend such action. In case any
such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 6 for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs
of investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified parties as a group shall
have the right to employ one separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel
reasonably satisfactory to the indemnified party unless (i) the
employment of such counsel has been specifically authorized in writing
by the indemnifying party, or (ii) the named parties to any such action
(including any impleaded parties) include both the indemnified party and
the indemnifying party and the indemnified party shall have been advised
by its counsel that there may be one or more legal defenses available to
the indemnifying party different from or in conflict with any legal
defenses which may be available to the indemnified party or any other
indemnified party (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying
party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable
only for the reasonable fees and expenses of one separate firm of
attorneys for the indemnified party, which firm shall be designated in
writing by the indemnified party). No settlement of any action against
an indemnified party shall be made without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld
so long as such settlement includes a full release of claims against the
indemnified party.
All fees and expenses of the indemnified party (including
reasonable costs of defense and investigation in a manner not
inconsistent with this Section and all reasonable attorneys' fees and
expenses) shall be paid to the indemnified party, as incurred, within
ten (10) Trading Days of written notice thereof to the indemnifying
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party; provided, that the indemnifying party may require such
indemnified party to undertake to reimburse all such fees and expenses
to the extent it is finally judicially determined that such indemnified
party is not entitled to indemnification hereunder.
Section 7. Contribution. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6 hereof
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 6 hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any indemnified party,
then the Company and the applicable Distributing Investor shall contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses), in either such case (after contribution from
others) on the basis of relative fault as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the applicable
Distributing Investor on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Investor agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 7 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. 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.
Notwithstanding any other provision of this Section 7, in no
event shall any Investor be required to undertake liability to any person under
this Section 7 for any amounts in excess of the dollar amount of the proceeds
received by such Investor from the sale of such Investor's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable
Securities are registered under the Securities Act.
Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) hand delivered,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by facsimile, addressed as set forth in the
Purchase Agreement or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be
11
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. Either party hereto may from time to time change its address or
facsimile number for notices under this Section 8 by giving at least ten (10)
days' prior written notice of such changed address or facsimile number to the
other party hereto.
Section 9. Assignment. This Agreement is binding upon and inures
to the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The rights granted the Investors under this Agreement may be
assigned to any purchaser of substantially all of the Registrable Securities (or
the rights thereto) from an Investor, as otherwise permitted by the Purchase
Agreement.
Section 10. Additional Covenants of the Company. The Company
agrees that, for so long as it shall be required to maintain the effectiveness
of the Registration Statement, it shall file all reports and information
required to be filed by it with the SEC in a timely manner and take all such
other action so as to maintain such eligibility for the use of such form.
Section 11. Counterparts/Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.
Section 12. Remedies/Severability. The remedies provided in this
Agreement are cumulative and not exclusive of any remedies provided by law. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction.
Section 13. Conflicting Agreements. The Company shall not enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement or
otherwise prevents the Company from complying with all of its obligations
hereunder.
Section 14. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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Section 15. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. The Company and each of the
Investors agree to submit themselves to the in personam jurisdiction of the
state and federal courts situated within the Southern District of the State of
New York with regard to any controversy arising out of or relating to this
Agreement. The non-prevailing party to any dispute hereunder shall pay the
expenses of the prevailing party, including reasonable attorneys' fees, in
connection with any such dispute.
***************************
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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed, as of the date first set forth above.
ACRES GAMING INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxx, Senior
Vice-President, CFO
INVESTORS:
RIVERVIEW GROUP, LLC
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Operating Officer
OMICRON PARTNERS, LP
By: Omicron Capital L.P., as subadvisor
By: Omicron Capital Inc., it general partner
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx, President
DEEPHAVEN PRIVATE PLACEMENT
TRADING LTD.
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Director Private Placement Trading
14
