**Exhibit2.2**

 

**AMENDMENTNO. 1 TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT**

 

THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (this “**Amendment**”) is dated as of December 30,2004, and is being entered into by and among Alliance Gaming Corporation, aNevada corporation (“**Buyer**”),Sierra Design Group, a Nevada corporation (the “**Company**”), Robert Luciano (“**Luciano**”)and Robert Luciano, as trustee of the Robert Luciano Family Trust dated February 27,1995, as amended, as sole stockholder of the Company (“**Seller**”).

 

R E C I T A LS

 

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

 

WHEREAS, pursuant to the Agreement, the SellerGroup may be entitled to certain additional consideration (referred to thereinas “Contingent Consideration” and “Bonus Contingent Consideration”) based onthe Company reaching certain earnings and/or revenue targets (the “**Earn Out**”);

 

WHEREAS, the parties hereto desire toeliminate the Earn Out in its entirety and to agree to a superseding paymentstructure as set forth herein; and

 

WHEREAS, the parties hereto desire to enterinto 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 the Agreement and to addSections 2.9 and 7.3 to the Agreement, as set forth below.

 

NOW, THEREFORE, for good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties agree as follows:

 

1.                                       The partiesagree and acknowledge that Article I of the Agreement is hereby amended asfollows:

 

(a)  Thefollowing defined terms are added:

 

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

 

“**Additional Payment**” has the meaning setforth in Section 2.4 of the Agreement.

 

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

 

“**LIBOR”** means the London Interbank Offered Rate, as reported inthe *Wall Street Journal* on an applicablePayment Date.

 

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

 

“**Note**” has the meaning set forth in Section 2.4(c) ofthe Agreement.

 

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

 

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

 

“**Seller Group Acknowledgement Agreement**” has the meaning setforth in Section 2.9 of the Agreement.

 

(b)  thefollowing defined term is hereby amended and restated in its entirety to readas follows:

 

**“Optionees”**means those employees and consultants of theCompany who will receive proceeds from the Closing Payment and the AdditionalPayment, in consideration for (a) entering into the Stock OptionCancellation Agreements or the Warrant Cancellation Agreements, or both, as thecase may be, prior to the Closing and (b) entering into the OptioneeAcknowledgement Agreements.

 

(c)  Thefollowing defined terms are deleted in their entirety:

 

“**Bonus Contingent Cash Payment**”

 

“**Bonus Contingent Consideration**”

 

“**Bonus Contingent Stock Payment**”

 

“**Contingent Cash Payment**”

 

“**Contingent Consideration**”

 

“**Contingent Stock Payment**”

 

** “EBITDA”**

 

“**First Contingent Installment**”

 

** “Objection Notice”**

 

“**Second Contingent Installment**”

 

“**Second Contingent Installment Percentage**”

 

“**Third Contingent Installment**”

 

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“**Third Contingent Installment Percentage**”

 

“**Tranche 1 First Installment Bonus**”

 

“**Tranche 2 First Installment Bonus**”

 

“**Tranche 1 Second Installment Bonus**”

 

“**Tranche 1 Second Installment Bonus Percentage**”

 

“**Tranche 2 Second Installment Bonus**”

 

“**Tranche 2 Second Installment Bonus Percentage**”

 

“**Tranche 1 Third Installment Bonus**”

 

“**Tranche 1 Third Installment Bonus Percentage**”

 

“**Tranche 2 Third Installment Bonus**”

 

“**Tranche 2 Third Installment Bonus Percentage**”

 

**“Warrant Holder Bonus Contingent Consideration Payment”**

 

**“Warrant Holder Contingent Consideration Payment”**

 

2.                                       The partiesagree and acknowledge that Section 2.1 of the Agreement is hereby amendedand restated in its entirety to read as follows:

 

“**Section 2.1****                             Saleof Shares; Purchase Price.**  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 partiesagree and acknowledge that the first sentence of Section 2.3(c) ofthe Agreement is hereby deleted in its entirety.

 

4.                                       The partiesagree and acknowledge that Section 2.4 of the Agreement is hereby amendedand restated in its entirety to read as follows:

 

“**Section 2.4****                             AdditionalPayment.**  In consideration forSeller entering into this Amendment, Buyer shall pay to the Seller Groupadditional 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)                                  Buyershall deliver to Seller Twelve Million Dollars ($12,000,000) in cash (the “**Additional Cash Payment**”), to bedistributed to the Seller Group in accordance with the amounts set forth on Schedule Iattached hereto.

 

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(b)                                 Buyershall deliver to Seller an unsecured, subordinated promissory note,substantially in the form of Exhibit H hereto (the “**Note**”), in a principal amount ofTwenty-Eight Million Dollars ($28,000,000), to be distributed to the Seller Groupin accordance with the amounts set forth on Schedule II attachedhereto.

 

(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 inwhole or in part without penalty at any time and from time to time, prior tothe Maturity Date, and (ii) paid in cash or by the delivery of such numberof Alliance Shares equal to the amount of such portion of the OutstandingBalance and all accrued and unpaid interest thereon otherwise payable to Sellerdivided by the average per share closing price of the Company’s common stock onthe stock 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 aregistration statement (the “**ShelfRegistration Statement**”) with the Securities and Exchange Commissionin order to register such Alliance Shares, and (B) the Shelf RegistrationStatement shall have been declared effective by the Securities and ExchangeCommission.  Alliance shall bear all feesassociated with the filing of the Shelf Registration Statement including: (i) allregistration and filing fees, (ii) all fees and expenses of compliancewith federal securities laws and state “blue sky or securities laws, (iii) allexpenses of printing, (iv) all fees and disbursements of legal counsel toAlliance, (v) all application fees in connection with the listing of theAlliance Shares on a national securities exchange, (vi) all fees anddisbursements of independent public accountants for Alliance and (vii) thereasonable fees and disbursements of not more than one law firm or counsel toact as counsel for the Selling Group Members. Alliance shall use its best efforts to keep the Shelf RegistrationStatement continuously effective, supplemented and amended as required by theSecurities Act of 1933, as amended, and the rules and regulations adoptedthereunder (the “**Act**”), in order to permit theShelf Registration Statement to be usable by the Seller Group Members for aperiod from the date the Shelf Registration Statement is declared effective bythe Securities Exchange Commission until the earlier of (i) the secondanniversary thereof or (ii) the date upon which there are no AllianceShares outstanding.  The Company shallcause the Shelf Registration Statement and any amendment or supplement, (i) tocomply in all material respects with the applicable requirements of the Act;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 the writtenrequest 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.                                       Theparties agree and acknowledge that Section 2.7 of the Agreement is herebydeleted in its entirety.

 

6.                                       The partiesagree and acknowledge the addition of Section 2.9 of the Agreement to readin its entirety as follows:

 

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

 

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

 

(i)  foreach member of the Seller Group, an acknowledgment, substantially in the formattached hereto as Exhibit I (a “**SellerGroup Acknowledgement Agreement**”), duly executed by such Person,acknowledging that the Earn Out is no longer payable and that the AdditionalPayment and the Additional Contingent Tax Payment are Buyer’s sole remainingobligation to the Seller Group as a result of the transactions contemplatedhereunder; and

 

(ii)  acertificate, substantially in the form attached hereto as Exhibit J,duly executed 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) thatSeller’s covenants and obligations required to be complied with prior toAdditional Payment Closing Date have been so complied with in all materialrespects.

 

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

 

(i)  theAdditional Cash Payment by wire transfer to the Seller Group’s Account pursuantto the wire transfer instructions set forth on Schedule III hereto;

 

(ii)  theNote, executed on behalf of Buyer; and

 

(iii)  acertificate, substantially in the form attached hereto as Exhibit K,duly executed 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.                                       Theparties agree and acknowledge that Section 3.23(b) of the Agreementis hereby amended and restated to read in its entirety as follows:

 

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“(b)                           Selleracknowledges receipt of (a) the Annual Report on Form 10-K, asamended, of Buyer for its fiscal year ended June 30, 2004, (b) theQuarterly Report on Form 10-Q of Buyer for the quarter ended September 30,2004, (c) the Proxy Statement for the Annual Meeting of Buyer held on December 8,2004 and (d) any current reports on Form 8-K of Buyer filed with theSecurities and Exchange Commission since September 30, 2004.”

 

8.                                       Theparties agree and acknowledge that Section 6.5 of the Agreement is herebyamended and restated to read in its entirety as follows:

 

“**Section 6.5****                             ExchangeListing.**

 

(a)                                  ClosingDate.  On or before the Closing Date,Buyer shall cause that number of Alliance Shares to be issued as the ClosingStock Payment pursuant to the terms of this Agreement to be approved forlisting on the New York Stock Exchange (the “**NYSE**”),subject to official notice of issuance.

 

(b)                                 PaymentDate.  On or before the applicablePayment Date or date of prepayment of the Note, to the extent that Buyerexercises its right under Section 2.4 hereof to pay all or any portion ofthe Note in Alliance Shares, Buyer shall cause such number of Alliance Sharesto be issued pursuant to the terms of this Agreement to be approved for listingon the NYSE, subject to official notice of issuance.”

 

9.                                       The partiesagree and acknowledge the addition of Section 7.3 of the Agreement to readin its entirety as follows:

 

“**Section 7.3****                             Conditionsto Obligations of Buyer and Seller on Additional Payment Closing Date.**  The obligations of Buyer and Seller toconsummate the transactions contemplated by the Additional Payment are subjectto Buyer’s and Seller’s receipt of all of the deliveries required pursuant to Section 2.9hereof, or a waiver thereof. In the event Buyer and Seller do not receive alldeliveries required pursuant to Section 2.9 hereof, or waive therequirement to receive the deliveries, this Amendment shall become void and ofno further force or effect, and Buyer’s and Seller’s obligations under theAgreement shall remain in full force and effect without modification by thisAmendment or the exhibits and schedules attached hereto.”

 

10.                                 The parties agree andacknowledge that Section 8.1(c) of the Agreement is hereby amendedand restated to read in its entirety as follows:

 

“(c)                            Any claims of any naturewhatsoever made against the Company or Buyer or any of its affiliates withrespect to the Stock Option Cancellation Agreements, Warrant CancellationAgreements or Seller Group Acknowledgment Agreements or the arrangementscontemplated thereby; provided, however, that this Section 8.1(c) willnot apply to any claims with respect to the Stock Option CancellationAgreements, Warrant Cancellation Agreements or Seller Group AcknowledgmentAgreements or the arrangements contemplated thereby that result from:

 

(i)                                     grossnegligence, recklessness, willful misconduct or fraud on the part of Buyer orany of its representatives; or

 

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(ii)                                  Buyer’stax treatment of the Stock Option Cancellation Agreements, Warrant CancellationAgreements or Seller Group Acknowledgment Agreements or the arrangementscontemplated thereby.”

 

11.                                 The parties agree andacknowledge that Sections A and B of Schedule A to the Agreement arehereby deleted in their entirety.

 

Except as expressly modified herein, theAgreement is affirmed by the parties hereto in its entirety and shall remain infull force and effect.  Capitalized termsnot otherwise defined herein shall have the meanings ascribed to them in theAgreement.  This Amendment may beexecuted 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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**IN WITNESS WHEREOF,**each of the parties has executed this Amendment as of the date first abovewritten.

 

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

 

 

[Signature Page toAmendment No. 1 to Amended and Restated Stock Purchase Agreement of SierraDesign Group]

 

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**Exhibit H**

 

Form ofUnsecured Subordinated Promissory Note

 

# **UNSECUREDSUBORDINATED PROMISSORY NOTE**

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

 

FOR VALUE RECEIVED, the undersigned, AllianceGaming Corporation, a Nevada corporation (“**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 benefitof the 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 this UnsecuredSubordinated Promissory Note (the “**Note**”)and not otherwise defined herein shall have the meanings set forth in thisParagraph or in that certain Amended and Restated Stock Purchase Agreement (the“**Agreement**”), dated as of March 2,2004, and as amended by that certain Amendment No. 1 dated as of December 30,2004, by and among Maker, Sierra Design Group, a Nevada corporation (the “**Company**”), Luciano and Holder, as solestockholder of the Company.

 

“**ApplicableRate**” means LIBOR plus two percent (2%) per annum, calculated onthe basis of a 360 day year and actual days elapsed.

 

“**Eventof Default**” means the occurrence or happening, at any time andfrom time to time, of any one or more of the following:

 

(a)**                                 **Paymentof Indebtedness.  If Maker fails topay, in full, all of the indebtedness evidenced by this Note on the MaturityDate hereof or any installment or portion of the indebtedness evidenced by thisNote as and when the same shall become due and payable, and such failurecontinues for a period of five (5) days following written notice of suchfailure by Holder to Maker.

 

(b)**                                **VoluntaryBankruptcy.  If Maker shall (i) seekentry of any order for relief as a debtor in a proceeding under the bankruptcylaws of the United States or any other competent jurisdiction; (ii) file apetition seeking relief under the bankruptcy, arrangement, reorganization orother debtor relief laws of the United States or any other competentjurisdiction; (iii) call a meeting of its creditors or any one of them forthe purpose of requesting a rearrangement or restructuring of its debts or anyconcessions with respect to such debt; or (iv) make a general assignmentfor the benefit of its creditors.

 

(c)**                                 **InvoluntaryBankruptcy.  If a petition is filedagainst Maker seeking relief under the bankruptcy, arrangement, reorganizationor other debtor relief

 

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laws of the United States orother competent jurisdiction and such petition is not dismissed within ninety(90) days following the date of its filing.

 

(d)                                 Appointmentof a Receiver.  If a court ofcompetent jurisdiction enters an order, judgment or decree appointing, withoutthe consent of Maker, a receiver for it, or for all or any material part of itsproperty, and such order, judgment or decree shall not be and remain vacated,reversed or stayed or such receiver shall not otherwise be removed within aperiod of thirty (30) days following entry of such order.

 

“**LIBOR”** means the London Interbank Offered Rate, as reported inthe *Wall Street Journal* on anapplicable Payment Date.

 

“**MaturityDate**” means the earlier of (i) the fifth anniversary of thedate of this Note or (ii) an Event of Default.

 

2.                                       Interest;Payments; Prepayment.

 

(a)                                  Interest Payments.  Interest shall accrue on the OutstandingBalance of this Note at the Applicable Rate from the date of this Note.

 

(b)                                 Principal Payments.  Subject to any prepayments as providedherein, Maker shall repay the initial Outstanding Balance in five (5) equalannual installments, together with any accrued and unpaid interest due andpayable on such installment, with the first installment of principal andaccrued interest due and payable on the date which is one year following thedate hereof, and the remaining installments to be paid on each subsequentanniversary of the date hereof until the Outstanding Balance is repaid infull.  The Outstanding Balance and accruedbut unpaid interest on this Note shall be due and payable on the Maturity Date.

 

(c)                                  Form ofPayment.  At Maker’s sole election,all and any portion of the Outstanding Balance may be paid in cash or by thedelivery of such number of Alliance Shares equal to the amount of such portionof the Outstanding Balance and accrued but unpaid interest thereon otherwisepayable to Holder divided by the average per share closing price of the Company’scommon stock on the stock exchange in which the stock is principally traded forthe 20 business days immediately prior to the date of delivery of such AllianceShares.

 

(d)                                 Application ofPayments.  All payments hereundershall be first applied to any accrued but unpaid interest and then toprincipal.  If any payment due date fallson a Saturday, Sunday or holiday observed by Holder, the due date of thepayment shall automatically be extended to the next following business day.

 

(e)                                  Prepayment.  Maker may prepay the Outstanding Balance inwhole or in part at any time without penalty or premium.

 

3.                                       Default;Remedies.  If an Event of Defaultoccurs, the Outstanding Balance, together with all accrued but unpaid interestowing hereon, shall at once become due and payable, at the option of Holder,effective upon written notice of acceleration by Holder to Maker.  Upon an Event of Default, for so long as anEvent 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 Noteshall be subordinate to Maker’s obligations under the Loan Agreement dated asof September 5, 2003, as amended by that certain Amendment No. 1 toLoan Agreement dated as of February 18, 2004 and that certain Amendment No. 2to Loan Agreement dated as of December 10, 2004, among Maker, the Lenders,the Syndication Agent, the Documentation Agent, Banc of America Securities LLCand CIBC World Markets Corp., as Joint Lead Arrangers and Joint Book Managers,and Bank of America, N.A., as Administrative Agent.

 

5.                                       Miscellaneous.

 

(a)                                  Makerhereby waives presentment, demand, protest, notice of dishonor, diligence andall other notices, any release or discharge arising from any extension of time,discharge of a prior party, release of any or all of any security given fromtime to time for this Note, or other cause of release or discharge other thanactual payment in full hereof.

 

(b)                                 Nodelay or omission of Holder to exercise any right, whether before or after adefault hereunder, shall impair any such right or shall be construed to be awaiver of any right or default, and the acceptance at any time by Holder of anypast-due amount shall not be deemed to be a waiver of the right to requireprompt payment when due of any other amounts then or thereafter due andpayable.

 

(c)                                  Timeis of the essence hereof.  Upon anydefault hereunder, Holder may exercise all rights and remedies provided forherein and by law or equity, including, but not limited to, the right toimmediate payment in full of this Note.

 

(d)                                 Theremedies of Holder as provided herein, or any one or more of them, or in law orin equity, shall be cumulative and concurrent, and may be pursued singularly,successively or together at Holder’s sole discretion, and may be exercised asoften as occasion therefor shall occur.

 

(e)                                  Ifany provisions of this Note would require Maker to pay interest hereon at arate exceeding the highest rate allowed by applicable law, Maker shall insteadpay interest under this Note at the highest rate permitted by applicable law.

 

(f)                                    ThisNote shall be governed by and construed in accordance with and the laws of theState of Nevada applicable to contracts wholly made and performed in the Stateof Nevada.

 

[Remainder of page intentionally left blank.]

 

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**IN WITNESS WHEREOF,**Makerhas executed this Note as of the date first above written.

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

 

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**Exhibit I**

 

Form of SellerGroup Acknowledgment Agreement

 

THIS ACKNOWLEDGMENT (this “**Acknowledgment**”) is dated as of December      ,2004, and is being entered into 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 LS

 

WHEREAS, Alliance Gaming Corporation, aNevada corporation (“**Buyer**”), SierraDesign Group, a Nevada corporation (the “**Company**”),Robert Luciano (“**Luciano**”) andSeller, as sole stockholder of the Company, are parties to that certain Amendedand Restated Stock Purchase Agreement, dated as of March 2, 2004 (the “**Agreement**”);

 

WHEREAS, pursuant to the Agreement, theSeller Group may be entitled to certain additional consideration (referred totherein as “Contingent Consideration” and “Bonus Contingent Consideration”)based on the Company reaching certain earnings and/or revenue targets (the “**Earn Out**”); and

 

WHEREAS, Buyer, the Company, Luciano andSeller are contemplating an amendment to the Agreement (the “**Amendment**”; the Agreement and the Amendmentare hereinafter collectively referred to as the “**Agreement**”) to eliminate the Earn Out in its entirety and toagree to a superseding payment structure as set forth therein.

 

NOW, THEREFORE, for good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties agree as follows:

 

1.                                       Seller Group Memberhereby acknowledges and agrees as follows:

 

(a)                                  The Earn Outcontemplated by the Agreement is eliminated in its entirety, and furtheracknowledges and agrees that Buyer, the Company, Luciano and Seller have agreedto the following consideration, payable on the Additional Payment Closing Date:

 

(i) Buyer shall deliver to Seller Twelve Million Dollars ($12,000,000) in cash tobe distributed to the Seller Group on a pro rata basis in accordance with theAgreement.

 

(ii) Buyer shall deliver to Seller an unsecured, subordinated promissory note,substantially in the form of Exhibit A hereto (the “**Note**”), in a principal amount ofTwenty-Eight Million Dollars ($28,000,000), to be distributed to the SellerGroup on a pro rata basis in accordance with the Agreement.

 

(b)                                 Upon Buyer’s deliveryof the foregoing consideration to Seller, Seller Group Member shall look solelyto Seller for payment of any amounts due it under the Agreement.

 

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2.                                       Seller herebyacknowledges and agrees to pay to Seller Group Member its pro rata share ofconsideration paid under the Agreement promptly following its receipt thereof.

 

3.                                       Seller GroupMember hereby acknowledges and agrees that the remaining provisions of theStock Option Cancellation Agreement remain in full force and effect.

 

Capitalized terms not otherwise definedherein shall have the meanings ascribed to them in the Agreement.  This Acknowledgment may be executed in two ormore counterparts, 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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**IN WITNESS WHEREOF,**each of 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

 

Reference is made to that certain Amendment No. 1dated as of December 30, 2004 (the “Amendment”) to Amended andRestated Stock Purchase Agreement (the “Agreement”), dated as of March 2,2004, by and among Alliance Gaming Corporation, a Nevada corporation (“Buyer”),Sierra Design Group, a Nevada corporation (the “Company”), Robert Luciano(“Luciano”) and Robert Luciano, as trustee of the Robert Luciano FamilyTrust dated February 27, 1995, as amended, as sole stockholder of theCompany (“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.

 

The undersigned, Robert Luciano, Jr.,does hereby certify that he is the duly elected, qualified and acting Trusteeof Seller.  As such, he has access toSeller’s trust records and is familiar with the matters therein contained andherein certified.  He further certifies:

 

1.                                       Each of therepresentations and warranties of Seller contained in Section 3.23 of theAgreement were true and correct at and as of the date of the Amendment and aretrue and correct as of the date hereof.

 

2.                                       Seller’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.

 

IN WITNESS WHEREOF, this certificate has beenexecuted by the undersigned as of December 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 CERTIFICATEOFALLIANCE GAMING CORPORATION,a Nevada corporation

 

Reference is made to that certain Amendment No. 1dated as of December 30, 2004 (the “Amendment”) to Amended andRestated Stock Purchase Agreement (the “Agreement”), dated as of March 2,2004, by and among Alliance Gaming Corporation, a Nevada corporation (“Buyer”),Sierra Design Group, a Nevada corporation (the “Company”), RobertLuciano (“Luciano”) and Robert Luciano, as trustee of the Robert LucianoFamily Trust dated February 27, 1995, as amended, as sole stockholder ofthe 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 withoutdefinition shall have the meaning specified in the Agreement.

 

The undersigned, Richard Haddrill, doeshereby certify that he is the duly elected, qualified and acting President andChief Executive Officer of Buyer.  Assuch, he has access to Buyer’s corporate records and is familiar with thematters therein contained and herein certified. He further certifies:

 

Buyer’s covenants and obligations required tobe complied with under the Agreement prior to the Additional Payment ClosingDate have been so complied with in all material respects.

 

IN WITNESS WHEREOF, this certificate has beenexecuted by the undersigned as of December 30, 2004.

 

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

 

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