**Exhibit 2.7**

 

**AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT**

 

THISAMENDMENT NO. 1 TO AMENDED AND RESTATED STOCKPURCHASE AGREEMENT (this “**Amendment**”)is dated as of December 30, 2004, and is being entered into by and amongAlliance Gaming Corporation, a Nevada corporation (“**Buyer**”), Sierra Design Group, a Nevada corporation (the “**Company**”), Robert Luciano (“**Luciano**”) and Robert Luciano, as trustee ofthe Robert Luciano Family Trust dated February 27, 1995, as amended, as solestockholder of the Company (“**Seller**”).

 

R E C I T A L S

 

WHEREAS,Buyer, the Company, Luciano and Seller are parties to that certain Amended andRestated Stock Purchase Agreement, dated as of March 2, 2004 (the “**Agreement**”);

 

WHEREAS,pursuant to the Agreement, the Seller Group may be entitled to certainadditional consideration (referred to therein as “Contingent Consideration” and“Bonus Contingent Consideration”) based on the Company reaching certainearnings and/or revenue targets (the “**EarnOut**”);

 

WHEREAS,the parties hereto desire to eliminate the Earn Out in its entirety and toagree to a superseding payment structure as set forth herein; and

 

WHEREAS,the parties hereto desire to enter into this Amendment to amend Article I,Sections 2.1, 2.3(c), 2.4, 2.7, 3.23(b), 6.5, 8.1(c) and Schedule A of theAgreement and to add Sections 2.9 and 7.3 to the Agreement, as set forth below.

 

NOW,THEREFORE, for good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, the parties agree as follows:

 

1.                                       The parties agree and acknowledge thatArticle I of the Agreement is hereby amended as follows:

 

(a)          The following defined terms are added:

 

“**Additional Cash Payment**”has the meaning set forth in Section 2.4(a) of the Agreement.

 

“**Additional Payment**” hasthe meaning set forth in Section 2.4 of the Agreement.

 

“**Additional Payment Closing Date**”has the meaning set forth in Section 2.4 of the Agreement.

 

“**LIBOR”** means the LondonInterbank Offered Rate, as reported in the *WallStreet Journal* on an applicable Payment Date.

 

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“**Maturity Date**” has themeaning set forth in Section 2.4(c) of the Agreement.

 

“**Note**” has the meaning setforth in Section 2.4(c) of the Agreement.

 

“**Outstanding Balance**” hasthe meaning set forth in Section 2.4(c) of the Agreement.

 

“**Payment Date**” has themeaning set forth in Section 2.4(c) of the Agreement.

 

“**Seller Group AcknowledgementAgreement**” has the meaning set forth in Section 2.9 of theAgreement.

 

(b)         the following defined term is hereby amendedand restated in its entirety to read as follows:

 

**“Optionees”**means thoseemployees and consultants of the Company who will receive proceeds from theClosing Payment and the Additional Payment, in consideration for (a) enteringinto the Stock Option Cancellation Agreements or the Warrant CancellationAgreements, or both, as the case may be, prior to the Closing and (b) enteringinto the Optionee Acknowledgement Agreements.

 

(c)          The following defined terms are deleted intheir entirety:

 

“**Bonus ContingentCash Payment**”

 

“**Bonus ContingentConsideration**”

 

“**Bonus ContingentStock Payment**”

 

“**Contingent CashPayment**”

 

“**ContingentConsideration**”

 

“**Contingent StockPayment**”

 

** “EBITDA”**

 

“**First ContingentInstallment**”

 

** “Objection Notice”**

 

“**SecondContingent Installment**”

 

“**Second ContingentInstallment Percentage**”

 

“**Third ContingentInstallment**”

 

 

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“**Third ContingentInstallment Percentage**”

 

“**Tranche 1 FirstInstallment Bonus**”

 

“**Tranche 2 FirstInstallment Bonus**”

 

“**Tranche 1 SecondInstallment Bonus**”

 

“**Tranche 1 SecondInstallment Bonus Percentage**”

 

“**Tranche 2 SecondInstallment Bonus**”

 

“**Tranche 2 SecondInstallment Bonus Percentage**”

 

“**Tranche 1 ThirdInstallment Bonus**”

 

“**Tranche 1 ThirdInstallment Bonus Percentage**”

 

“**Tranche 2 ThirdInstallment Bonus**”

 

“**Tranche 2 ThirdInstallment Bonus Percentage**”

 

**“Warrant Holder Bonus ContingentConsideration Payment”**

 

**“Warrant Holder ContingentConsideration Payment”**

 

2.                                       The parties agree and acknowledge thatSection 2.1 of the Agreement is hereby amended and restated in its entirety toread as follows:

 

“**Section 2.1****                            ****Sale of Shares; PurchasePrice****.**  Onthe terms and subject to the conditions of this Agreement, at the Closing,Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller all ofthe Shares.  The purchase price for theShares (the “**Purchase Price**”)shall consist of the Base Purchase Price plus the Additional Payment.”

 

3.                                       The parties agree and acknowledge that thefirst sentence of Section 2.3(c) of the Agreement is hereby deleted in itsentirety.

 

4.                                       The parties agree and acknowledge thatSection 2.4 of the Agreement is hereby amended and restated in its entirety toread as follows:

 

“**Section 2.4****                            ****Additional Payment****.**  Inconsideration for Seller entering into this Amendment, Buyer shall pay to theSeller Group additional consideration (the “**AdditionalPayment**”) on or before January 31, 2005, subject to Seller’ssatisfaction of the conditions set forth in Section 7.3 hereof (the “**Additional Payment Closing Date**”), asfollows:

 

(a)                                  Buyer shall deliver to Seller Twelve MillionDollars ($12,000,000) in cash (the “**AdditionalCash Payment**”), to be distributed to the Seller Group in accordancewith the amounts set forth on Schedule I attached hereto.

 

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(b)                                 Buyer shall deliver to Seller an unsecured,subordinated promissory note, substantially in the form of Exhibit Hhereto (the “**Note**”), in aprincipal amount of Twenty-Eight Million Dollars ($28,000,000), to bedistributed to the Seller Group in accordance with the amounts set forth on ScheduleII attached hereto.

 

(c)                                  Intereston the unpaid principal balance (such balance, the “**Outstanding Balance**”) will accrue from the Additional PaymentClosing Date at the rate of LIBOR + two percent (2%) per annum, calculated onthe basis of a 360 day year and actual days elapsed.  Subject to any prepayments provided herein,Buyer shall repay the Outstanding Balance in five (5) equal annualinstallments, together with any accrued and unpaid interest due and payable onsuch installment, with the first installment of principal and accrued interestdue and payable on the date which is one year following the Additional PaymentClosing Date, and the remaining installments to be paid on each subsequentanniversary of the Additional Payment Closing Date (each, a “**Payment Date**”) until the OutstandingBalance is repaid in full.  To the extentnot previously repaid in full on an earlier Payment Date, Buyer shall repay theOutstanding Balance plus all accrued and unpaid interest thereon on the finalPayment Date (the “**Maturity Date**”).  All or any portion of the Outstanding Balanceand all accrued and unpaid interest thereon and any and all other sums payableto Seller hereunder may be, in Buyer’s sole discretion, (i) prepaid in whole orin part without penalty at any time and from time to time, prior to theMaturity Date, and (ii) paid in cash or by the delivery of such number ofAlliance Shares equal to the amount of such portion of the Outstanding Balanceand all accrued and unpaid interest thereon otherwise payable to Seller dividedby the average per share closing price of the Company’s common stock on thestock exchange in which the stock is principally traded for the 20 businessdays immediately prior to the date of delivery of such Alliance Shares.  Prior to delivery of any Alliance Sharespursuant to this Section 2.4(c), (A) Alliance shall have filed a registrationstatement (the “**Shelf Registration Statement**”)with the Securities and Exchange Commission in order to register such AllianceShares, and (B) the Shelf Registration Statement shall have been declaredeffective by the Securities and Exchange Commission.  Alliance shall bear all fees associated withthe filing of the Shelf Registration Statement including: (i) all registrationand filing fees, (ii) all fees and expenses of compliance with federalsecurities laws and state “blue sky or securities laws, (iii) all expenses ofprinting, (iv) all fees and disbursements of legal counsel to Alliance, (v) allapplication fees in connection with the listing of the Alliance Shares on anational securities exchange, (vi) all fees and disbursements of independentpublic accountants for Alliance and (vii) the reasonable fees and disbursementsof not more than one law firm or counsel to act as counsel for the SellingGroup Members.  Alliance shall use itsbest efforts to keep the Shelf Registration Statement continuously effective,supplemented and amended as required by the Securities Act of 1933, as amended,and the rules and regulations adopted thereunder (the “**Act**”),in order to permit the Shelf Registration Statement to be usable by the SellerGroup Members for a period from the date the Shelf Registration Statement isdeclared effective by the Securities Exchange Commission until the earlier of(i) the second anniversary thereof or (ii) the date upon which there are noAlliance Shares outstanding.  The Companyshall cause the Shelf Registration Statement and any amendment or supplement,(i) to comply in all material respects with the applicable requirements of theAct; and (ii) not to contain any untrue statement of a material fact or omit tostate a material fact required to be stated therein or necessary in order tomake the statements therein not misleading. If required under the Act or other applicable laws, Alliance shall, atits sole expense, and within a reasonable time of receiving a written requestfrom a Seller Group Member (at no time later than 

 

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10 business days from Alliance receiving thewritten request from a Seller Group Member) file with the Securities ExchangeCommission a post-effective amendment to the Shelf Registration Statement or,as required by law, file a supplement or an amendment to the Shelf RegistrationStatement or any document incorporated therein by reference such that theSeller or such person as designated by Seller shall be named as a sellingshareholder in the Shelf Registration Statement or related prospectus.

 

5.                                       The parties agree and acknowledge thatSection 2.7 of the Agreement is hereby deleted in its entirety.

 

6.                                       The parties agree and acknowledge theaddition of Section 2.9 of the Agreement to read in its entirety as follows:

 

“**Section 2.9****                            ****Additional Payment ClosingDate Deliveries****.**  On the Additional Payment Closing Date:

 

(a)          Seller will deliver, or cause to bedelivered, to Buyer:

 

(i)  for each member of theSeller Group, an acknowledgment, substantially in the form attached hereto as Exhibit I(a “**Seller Group Acknowledgement Agreement**”),duly executed by such Person, acknowledging that the Earn Out is no longerpayable and that the Additional Payment and the Additional Contingent TaxPayment are Buyer’s sole remaining obligation to the Seller Group as a resultof the transactions contemplated hereunder; and

 

(ii)  a certificate,substantially in the form attached hereto as Exhibit J, dulyexecuted by Seller representing and warranting to Buyer that (A) therepresentations and warranties of Seller contained in Section 3.23 of theAgreement were true and correct at and as of the date hereof and as of theAdditional Payment Closing Date as if made at and as of such time and(B) that Seller’s covenants and obligations required to be complied withprior to Additional Payment Closing Date have been so complied with in allmaterial respects.

 

(b)         Buyer will deliver, or cause to be delivered,to Seller:

 

(i)  the Additional Cash Paymentby wire transfer to the Seller Group’s Account pursuant to the wire transferinstructions set forth on Schedule III hereto;

 

(ii)  the Note, executed onbehalf of Buyer; and

 

(iii)  a certificate,substantially in the form attached hereto as Exhibit K, dulyexecuted by Buyer representing and warranting to Seller that each of Buyer’scovenants and obligations required to be complied with prior to AdditionalPayment Closing Date have been so complied with in all material respects.”

 

7.                                       The parties agree and acknowledge thatSection 3.23(b) of the Agreement is hereby amended and restated to read in itsentirety as follows:

 

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“(b)                           Seller acknowledges receipt of (a) theAnnual Report on Form 10-K, as amended, of Buyer for its fiscal year ended June30, 2004, (b) the Quarterly Report on Form 10-Q of Buyer for the quarterended September 30, 2004, (c) the Proxy Statement for the Annual Meetingof Buyer held on December 8, 2004 and (d) any current reports onForm 8-K of Buyer filed with the Securities and Exchange Commission sinceSeptember 30, 2004.”

 

8.                                       The parties agree and acknowledge thatSection 6.5 of the Agreement is hereby amended and restated to read in itsentirety as follows:

 

“**Section 6.5****                            ****Exchange Listing****.**

 

(a)                                  Closing Date.  Onor before the Closing Date, Buyer shall cause that number of Alliance Shares tobe issued as the Closing Stock Payment pursuant to the terms of this Agreementto be approved for listing on the New York Stock Exchange (the “**NYSE**”), subject to official notice ofissuance.

 

(b)                                 Payment Date.  Onor before the applicable Payment Date or date of prepayment of the Note, to theextent that Buyer exercises its right under Section 2.4 hereof to pay all orany portion of the Note in Alliance Shares, Buyer shall cause such number ofAlliance Shares to be issued pursuant to the terms of this Agreement to beapproved for listing on the NYSE, subject to official notice of issuance.”

 

9.                                       The parties agree and acknowledge theaddition of Section 7.3 of the Agreement to read in its entirety as follows:

 

“**Section 7.3****                            ****Conditions to Obligations ofBuyer and Seller on Additional Payment Closing Date****.**  Theobligations of Buyer and Seller to consummate the transactions contemplated bythe Additional Payment are subject to Buyer’s and Seller’s receipt of all ofthe deliveries required pursuant to Section 2.9 hereof, or a waiver thereof. Inthe event Buyer and Seller do not receive all deliveries required pursuant toSection 2.9 hereof, or waive the requirement to receive the deliveries, thisAmendment shall become void and of no further force or effect, and Buyer’s andSeller’s obligations under the Agreement shall remain in full force and effectwithout modification by this Amendment or the exhibits and schedules attachedhereto.”

 

10.                                 The parties agree and acknowledge thatSection 8.1(c) of the Agreement is hereby amended and restated to read in itsentirety as follows:

 

“(c)                            Any claims of any nature whatsoever madeagainst the Company or Buyer or any of its affiliates with respect to the StockOption Cancellation Agreements, Warrant Cancellation Agreements or Seller GroupAcknowledgment Agreements or the arrangements contemplated thereby; provided,however, that this Section 8.1(c) will not apply to any claims withrespect to the Stock Option Cancellation Agreements, Warrant CancellationAgreements or Seller Group Acknowledgment Agreements or the arrangementscontemplated thereby that result from:

 

(i)                                     gross negligence, recklessness, willfulmisconduct or fraud on the part of Buyer or any of its representatives; or

 

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(ii)                                  Buyer’s tax treatment of the Stock OptionCancellation Agreements, Warrant Cancellation Agreements or Seller GroupAcknowledgment Agreements or the arrangements contemplated thereby.”

 

11.                                 The parties agree and acknowledge thatSections A and B of Schedule A to the Agreement are hereby deleted in theirentirety.

 

Exceptas expressly modified herein, the Agreement is affirmed by the parties heretoin its entirety and shall remain in full force and effect.  Capitalized terms not otherwise defined hereinshall have the meanings ascribed to them in the Agreement.  This Amendment may be executed in two or morecounterparts, each of which shall be an original and all of which, takentogether, shall be deemed to be one and the same instrument.

 

***[Signature Page follows]***

 

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**INWITNESS WHEREOF,** eachof the parties has executed this Amendment as of the date first above written.

 

 
| **SELLER**      | Robert Luciano Family Trust dated February 27,   1995, as amended |
|-----------------|-------------------------------------------------------------------|
|            |                                                              |
|            |                                                              |
|            |                                                              |   |
|            | Name:                                                             | Robert  Luciano |
|            | Title:                                                            | Trustee |
|            |                                                              |   |
|            |                                                              |   |
| **LUCIANO**     |                                                              |   |
|            | Robert  Luciano                                                   |
|            |                                                              |   |
|            |                                                              |   |
| **BUYER**       | ALLIANCE GAMING CORPORATION,                                      |
|            | a  Nevada corporation                                             |
|            |                                                              |   |
|            | By:                                                               |   |   |
|            | Name:                                                             | Richard  Haddrill |
|            | Title:                                                            |  President  and CEO |
|            |                                                              |   |
|            |                                                              |   |
| **THE COMPANY** | SIERRA  DESIGN GROUP,                                             |
|            | a  Nevada corporation                                             |
|            |                                                              |   |
|            |                                                              |   |
|            | By:                                                               |   |   |
|            | Name:                                                             | Robert  Luciano |
|            | Title:                                                            |  President |
|                 |                                                                   |  |  |  |  |  |

 

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**Exhibit H**

 

Form of Unsecured Subordinated Promissory Note

 

# **UNSECURED SUBORDINATED PROMISSORYNOTE**

# ** **

| $28,000,000 |   | December 30, 2004 |
|-------------|--------|-------------------|

 

FORVALUE RECEIVED, the undersigned, Alliance Gaming Corporation, a Nevadacorporation (“**Maker**”),unconditionally promises to pay to the order of Robert Luciano, Jr. (“**Luciano**”), as trustee of the RobertLuciano Family Trust dated February 27, 1995, as amended, for the benefit ofthe Seller Group (“**Holder**”),at Holder’s address located at Sierra Design Group, 300 Sierra Manor Group,Reno, Nevada  89511, or at such otherplace as Holder may designate in writing, the principal sum of: Twenty-EightMillion Dollars ($28,000,000) in lawful money of the United States withinterest thereon at the rate described below, as follows:

 

1.                                       Definitions.  Terms which are used in thisUnsecured Subordinated Promissory Note (the “**Note**”) and not otherwise defined herein shall have themeanings set forth in this Paragraph or in that certain Amended and RestatedStock Purchase Agreement (the “**Agreement**”),dated as of March 2, 2004, and as amended by that certain Amendment No. 1 datedas of December 30, 2004, by and among Maker, Sierra Design Group, a Nevadacorporation (the “**Company**”),Luciano and Holder, as sole stockholder of the Company.

 

“**Applicable Rate**” means LIBOR plus twopercent (2%) per annum, calculated on the basis of a 360 day year and actualdays elapsed.

 

“**Event of Default**” means the occurrenceor happening, at any time and from time to time, of any one or more of thefollowing:

 

(a)**                                 **Payment of Indebtedness.  IfMaker fails to pay, in full, all of the indebtedness evidenced by this Note onthe Maturity Date hereof or any installment or portion of the indebtednessevidenced by this Note as and when the same shall become due and payable, andsuch failure continues for a period of five (5) days following written noticeof such failure by Holder to Maker.

 

(b)**                                **Voluntary Bankruptcy.  IfMaker shall (i) seek entry of any order for relief as a debtor in aproceeding under the bankruptcy laws of the United States or any othercompetent jurisdiction; (ii) file a petition seeking relief under thebankruptcy, arrangement, reorganization or other debtor relief laws of theUnited States or any other competent jurisdiction; (iii) call a meeting ofits creditors or any one of them for the purpose of requesting a rearrangementor restructuring of its debts or any concessions with respect to such debt; or(iv) make a general assignment for the benefit of its creditors.

 

(c)**                                 **Involuntary Bankruptcy.  If apetition is filed against Maker seeking relief under the bankruptcy,arrangement, reorganization or other debtor relief 

 

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laws of the United States or other competent jurisdiction and suchpetition is not dismissed within ninety (90) days following the date of itsfiling.

 

(d)                                 Appointment of a Receiver.  If acourt of competent jurisdiction enters an order, judgment or decree appointing,without the consent of Maker, a receiver for it, or for all or any materialpart of its property, and such order, judgment or decree shall not be andremain vacated, reversed or stayed or such receiver shall not otherwise beremoved within a period of thirty (30) days following entry of such order.

 

“**LIBOR”** means theLondon Interbank Offered Rate, as reported in the *Wall Street Journal* on an applicable Payment Date.

 

“**Maturity Date**” means the earlier of(i) the fifth anniversary of the date of this Note or (ii) an Event ofDefault.

 

2.                                       Interest; Payments; Prepayment.

 

(a)                                  Interest Payments. Interest shall accrue on the Outstanding Balance of this Note at theApplicable Rate from the date of this Note.

 

(b)                                 Principal Payments. Subject to any prepayments as provided herein, Maker shall repay theinitial Outstanding Balance in five (5) equal annual installments, togetherwith any accrued and unpaid interest due and payable on such installment, withthe first installment of principal and accrued interest due and payable on thedate which is one year following the date hereof, and the remaininginstallments to be paid on each subsequent anniversary of the date hereof untilthe Outstanding Balance is repaid in full. The Outstanding Balance and accrued but unpaid interest on this Noteshall be due and payable on the Maturity Date.

 

(c)                                  Form of Payment.  AtMaker’s sole election, all and any portion of the Outstanding Balance may bepaid in cash or by the delivery of such number of Alliance Shares equal to theamount of such portion of the Outstanding Balance and accrued but unpaidinterest thereon otherwise payable to Holder divided by the average per shareclosing price of the Company’s common stock on the stock exchange in which thestock is principally traded for the 20 business days immediately prior to thedate of delivery of such Alliance Shares.

 

(d)                                 Application of Payments.  Allpayments hereunder shall be first applied to any accrued but unpaid interestand then to principal.  If any paymentdue date falls on a Saturday, Sunday or holiday observed by Holder, the duedate of the payment shall automatically be extended to the next followingbusiness day.

 

(e)                                  Prepayment.  Maker may prepay theOutstanding Balance in whole or in part at any time without penalty or premium.

 

3.                                       Default; Remedies.  Ifan Event of Default occurs, the Outstanding Balance, together with all accruedbut unpaid interest owing hereon, shall at once become due and payable, at theoption of Holder, effective upon written notice of acceleration by Holder toMaker.  Upon an Event of Default, for solong as an Event of Default is occurring, the 

 

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Applicable Rate shall be increased to LIBOR plus four percent (4%) perannum, calculated on the basis of a 360 day year and actual days elapsed.

 

4.                                       Subordination. Maker and Holder acknowledge that this Note shall be subordinate toMaker’s obligations under the Loan Agreement dated as of September 5, 2003, asamended by that certain Amendment No. 1 to Loan Agreement dated as of February18, 2004 and that certain Amendment No. 2 to Loan Agreement dated as ofDecember 10, 2004, among Maker, the Lenders, the Syndication Agent, theDocumentation Agent, Banc of America Securities LLC and CIBC World MarketsCorp., as Joint Lead Arrangers and Joint Book Managers, and Bank of America,N.A., as Administrative Agent.

 

5.                                       Miscellaneous.

 

(a)                                  Maker hereby waives presentment, demand,protest, notice of dishonor, diligence and all other notices, any release ordischarge arising from any extension of time, discharge of a prior party,release of any or all of any security given from time to time for this Note, orother cause of release or discharge other than actual payment in full hereof.

 

(b)                                 No delay or omission of Holder to exerciseany right, whether before or after a default hereunder, shall impair any suchright or shall be construed to be a waiver of any right or default, and theacceptance at any time by Holder of any past-due amount shall not be deemed tobe a waiver of the right to require prompt payment when due of any otheramounts then or thereafter due and payable.

 

(c)                                  Time is of the essence hereof.  Upon any default hereunder, Holder mayexercise all rights and remedies provided for herein and by law or equity,including, but not limited to, the right to immediate payment in full of thisNote.

 

(d)                                 The remedies of Holder as provided herein, orany one or more of them, or in law or in equity, shall be cumulative andconcurrent, and may be pursued singularly, successively or together at Holder’ssole discretion, and may be exercised as often as occasion therefor shalloccur.

 

(e)                                  If any provisions of this Note would requireMaker to pay interest hereon at a rate exceeding the highest rate allowed byapplicable law, Maker shall instead pay interest under this Note at the highestrate permitted by applicable law.

 

(f)                                    This Note shall be governed by and construedin accordance with and the laws of the State of Nevada applicable to contractswholly made and performed in the State of Nevada.

 

[Remainder of pageintentionally left blank.]

 

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**IN WITNESS WHEREOF,**Maker hasexecuted this Note as of the date first above written.

 

 
|   | **ALLIANCE GAMING CORPORATION** |
|--------|---------------------------------|
|   |                            |   |
|   |                            |   |
|   | By:                             |   |   |
|   | Name:                           |   |   |
|   | Title:                          |   |   |
|        |                                 |  |  |  |  |

 

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**Exhibit I**

 

Form of Seller Group Acknowledgment Agreement

 

THISACKNOWLEDGMENT (this “**Acknowledgment**”)is dated as of December     , 2004, and is being enteredinto by and between                               ,an individual and a member of the Seller Group referred to below (“**Seller Group Member**”), and Robert Luciano,as trustee of the Robert Luciano Family Trust dated February 27, 1995, asamended (“**Seller**”).

 

R E C I T A L S

 

WHEREAS,Alliance Gaming Corporation, a Nevada corporation (“**Buyer**”), Sierra Design Group, a Nevada corporation (the “**Company**”), Robert Luciano (“**Luciano**”) and Seller, as sole stockholderof the Company, are parties to that certain Amended and Restated Stock PurchaseAgreement, dated as of March 2, 2004 (the “**Agreement**”);

 

WHEREAS,pursuant to the Agreement, the Seller Group may be entitled to certainadditional consideration (referred to therein as “Contingent Consideration” and“Bonus Contingent Consideration”) based on the Company reaching certainearnings and/or revenue targets (the “**EarnOut**”); and

 

WHEREAS,Buyer, the Company, Luciano and Seller are contemplating an amendment to theAgreement (the “**Amendment**”; theAgreement and the Amendment are hereinafter collectively referred to as the “**Agreement**”) to eliminate the Earn Out inits entirety and to agree to a superseding payment structure as set forththerein.

 

NOW,THEREFORE, for good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, the parties agree as follows:

 

1.                                       Seller Group Member hereby acknowledges andagrees as follows:

 

(a)                                  The Earn Out contemplated by the Agreement iseliminated in its entirety, and further acknowledges and agrees that Buyer, theCompany, Luciano and Seller have agreed to the following consideration, payableon the Additional Payment Closing Date:

 

(i)  Buyer shall deliver toSeller Twelve Million Dollars ($12,000,000) in cash to be distributed to theSeller Group on a pro rata basis in accordance with the Agreement.

 

(ii)  Buyer shall deliver toSeller an unsecured, subordinated promissory note, substantially in the form ofExhibit A hereto (the “**Note**”),in a principal amount of Twenty-Eight Million Dollars ($28,000,000), to bedistributed to the Seller Group on a pro rata basis in accordance with theAgreement.

 

(b)                                 Upon Buyer’s delivery of the foregoingconsideration to Seller, Seller Group Member shall look solely to Seller forpayment of any amounts due it under the Agreement.

 

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2.                                       Seller hereby acknowledges and agrees to payto Seller Group Member its pro rata share of consideration paid under theAgreement promptly following its receipt thereof.

 

3.                                       Seller Group Member hereby acknowledges andagrees that the remaining provisions of the Stock Option Cancellation Agreementremain in full force and effect.

 

Capitalizedterms not otherwise defined herein shall have the meanings ascribed to them inthe Agreement.  This Acknowledgment maybe executed in two or more counterparts, each of which shall be an original andall of which, taken together, shall be deemed to be one and the sameinstrument.

 

***[Signature Page follows]***

 

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**INWITNESS WHEREOF,** eachof the parties has executed this Acknowledgment as of the date first abovewritten.

 

 
| **SELLER**              | Robert Luciano Family Trust dated February 27,   1995, as amended |
|-------------------------|-------------------------------------------------------------------|
|                    |                                                              |   |
|                    |                                                              |   |
|                    | Name:                                                             | Robert  Luciano |
|                    | Title:                                                            | Trustee |
|                    |                                                              |   |
|                    |                                                              |   |
| **SELLER GROUP MEMBER** |                                                              |   |
|                    | Name:                                                             |   |
|                         |                                                                   |  |  |

 

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**Exhibit J**

 

Form of

 

SELLER’S CERTIFICATE

 

Referenceis made to that certain Amendment No. 1 dated as of December 30, 2004 (the “Amendment”)to Amended and Restated Stock Purchase Agreement (the “Agreement”),dated as of March 2, 2004, by and among Alliance Gaming Corporation, a Nevadacorporation (“Buyer”), Sierra Design Group, a Nevada corporation (the “Company”),Robert Luciano (“Luciano”) and Robert Luciano, as trustee of the RobertLuciano Family Trust dated February 27, 1995, as amended, as sole stockholderof the Company (“Seller”).  Thiscertificate is being delivered pursuant to Section 2.9(a)(ii) of theAgreement.  The Amendment and theAgreement are collectively referred to herein as the “Agreement”.  Capitalized terms used herein withoutdefinition shall have the meaning specified in the Agreement.

Theundersigned, Robert Luciano, Jr., does hereby certify that he is the dulyelected, qualified and acting Trustee of Seller.  As such, he has access to Seller’s trustrecords and is familiar with the matters therein contained and hereincertified.  He further certifies:

1.                                       Each of the representations and warranties ofSeller contained in Section 3.23 of the Agreement were true and correct at andas of the date of the Amendment and are true and correct as of the date hereof.

2.                                       Seller’s covenants and obligations requiredto be complied with under the Agreement prior to the Additional Payment ClosingDate have been so complied with in all material respects.

INWITNESS WHEREOF, this certificate has been executed by the undersigned as ofDecember 30, 2004.

 

 
|   | THE  ROBERT LUCIANO FAMILY   TRUST, DATED FEBRUARY 27, 1995,   AS AMENDED |
|--------|---------------------------------------------------------------------------|
|   |                                                                      |
|   |                                                                      |
|   | By:                                                                       |   |   |
|   |                                                                      | Robert  Luciano, Jr., Trustee |

 

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**Exhibit K**

 

Form of

 

OFFICER’S CERTIFICATE

OF

ALLIANCE GAMING CORPORATION,a Nevada corporation

 

Referenceis made to that certain Amendment No. 1 dated as of December 30, 2004 (the “Amendment”)to Amended and Restated Stock Purchase Agreement (the “Agreement”),dated as of March 2, 2004, by and among Alliance Gaming Corporation, a Nevadacorporation (“Buyer”), Sierra Design Group, a Nevada corporation (the “Company”),Robert Luciano (“Luciano”) and Robert Luciano, as trustee of the RobertLuciano Family Trust dated February 27, 1995, as amended, as sole stockholderof the Company (“Seller”).  TheAmendment and the Agreement are collectively referred to herein as the “Agreement”.  This certificate is being delivered pursuantto Section 2.9(b)(iii) of the Agreement. Capitalized terms used herein without definition shall have the meaningspecified in the Agreement.

 

Theundersigned, Richard Haddrill, does hereby certify that he is the duly elected,qualified and acting President and Chief Executive Officer of Buyer.  As such, he has access to Buyer’s corporaterecords and is familiar with the matters therein contained and hereincertified.  He further certifies:

 

Buyer’scovenants and obligations required to be complied with under the Agreementprior to the Additional Payment Closing Date have been so complied with in allmaterial respects.

 

INWITNESS WHEREOF, this certificate has been executed by the undersigned as ofDecember 30, 2004.

 

 
|   |                                   |   |
|--------|----------------------------------------|--------|
|   | Richard  Haddrill                      |
|   | President  and Chief Executive Officer |

 

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