Exhibit 10.7


 


STOCK OPTION AGREEMENT


 


	
  Optionee:

  	
   Richard Haddrill

  	
   

  	
  Grant
  Date: 

  	
  October
  27, 2004

  
	
  Per
  Share Exercise Price:

  	
  $17.16

  	
   

  	
  Number
  of Shares: 

  	
  95,000

  
	
  Plan:

  	
   2001 Long-Term Incentive Plan 

  	
   

  	
  Option
  Type: 

  	
  Nonqualified
  Stock Options

  
									



 


STOCK OPTION AGREEMENT (this “Agreement”)
dated as of the Grant Date specified above between Alliance Gaming Corporation,
a Nevada corporation (the “Company”), and the Optionee specified above,
pursuant to the Plan specified above as in effect and as amended from time to
time.


 


1.   Incorporation By Reference    This
Agreement is subject in all respects to the terms and provisions of the Plan,
all of which are by this reference made a part of and incorporated in this
Agreement. Any capitalized term not defined in this Agreement shall have the
meaning ascribed to it in the Plan. If and to the extent this Agreement and the
Plan conflict, the Plan shall control.


 


2.   Grant of Option.   The Company grants
to the Optionee, as of the Grant Date specified above, an option (the “Option”)
to acquire the Number of Shares of the Company’s common stock specified above
(the “Option Shares”) from the Company at the Per Share Exercise Price
specified above. The Option is not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Intemal Revenue Code.


 


3.   Exercise of the Option.   Subject to
the relevant provisions of the Plan and the Agreement dated June 30, 2004,
between the Company and the Optionee, as amended or extended from time to time,
the Option shall become exercisable on October 1, 2012, if the Optionee is an
employee of the Company on October 1, 2012, and shall remain exercisable until
October 1, 2014, at which time any unexercised Options shall expire. Options
shall become exercisable earlier than October 1, 2012, as follows:


 


(a)   One twelfth of such
Options shall become exercisable on the later of (i) the first date on which
the Fair Market Value (as defined below) of the Company’s common stock is at
least $30 and (ii) October 1, 2005; but only if the Fair Market Value of the
Company’s common stock is at least $30 on or before October 1, 2007.


 


(b)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $35 and (ii) October 1,
2005; but only if the Fair Market Value of the Company’s common stock is at
least $35 on or before October
1, 2007.


 


(c)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s stock is at least
$40 and (ii) October 1, 2005; but only if the Fair Market value of
the Company’s common stock is at least $40 on or before October 1, 2008.


 


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(d)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $45 and (ii) October 1, 2005; but only if (x) the Fair Market Value of the Company’s
common stock is at least $45 on or before
October 1, 2008, or (y) the Fair Market Value of the Company’s stock is at
least $40 on or before October 1, 2008, and at least $45 on or before October 1, 2009.


 


(e)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $30 and (ii) October 1, 2006; but only if the Fair Market Value of the
Company’s common stock is at least $30 on or before October 1, 2007.


 


(f)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $35 and (ii) October 1, 2006; but only if the Fair Market Value of the
Company’s stock is at least $35 on or before October 1, 2007.


 


(g)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s stock is at least
$40 and (ii) October 1, 2006; but only if the Fair Market Value of the Company’s
common stock is at least $40 on or before October 1, 2008.


 


(h)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $45 and (ii) October 1, 2006; but only if (x) the Fair Market Value of
the Company’s common stock is at least $45 on or before October 1, 2008, or (y)
the Fair Market Value of the Company’s common stock is at least $40 on or
before October 1, 2008, and at least $45 on or before October 1, 2009.


 


(i)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $30 and (ii) October 1, 2007; but only if the Fair Market Value of the
Company’s common stock is at least $30 on or before October 1, 2007.


 


(j)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $35 and (ii) October 1, 2007; but only if the Fair Market Value of the
Company’s common stock is at least $35 on or before October 1, 2007.


 


(k)   An additional
one-twelfth of such Options shall become exercisable on the later of (i) the
first date on which the Fair Market Value of the Company’s common stock is at
least $40 and (ii) October 1, 2007; but only if the Fair Market Value of the
Company’s common stock is at least $40 on or before October 1, 2008.


 


(1)   An additional
one-twelfth of such Options shall become exercisable on the


 


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later of (i) the first date
on which the Fair Market Value of the Company’s common stock is at least $45 and (ii) October 1, 2007; but only if (x)
the Fair Market Value of the Company’s common stock is at least $45 on or before October 1, 2008, or (y) the Fair
Market Value of the Company’s common stock is at least $40 on or before October 1,
2008, and at least $45 on or before
October 1, 2009.


 


The term “Fair Market Value”
with respect to the Company’s common stock as of a particular date shall mean
the average per share closing price of the Company’s common stock on the stock
exchange on which the stock is principally traded for the 20 business days
immediately prior to such date.


 


4.   Method
of Exercise and Payment.   To exercise the Option, the Optionee
must deliver a written notice, in such manner and form as the Company may
require, to the Company’s corporate secretary or the secretary’s designee on
any business day. The notice must specify the number of the Option Shares the
Optionee wants to acquire, the date of grant of the Option, the aggregate
purchase price for the shares with respect to which the Option is exercised,
and the effective date of exercise (no earlier than the date of receipt of such
notice by the Company). The notice must be accompanied by payment, made in the
manner set forth in the Plan, of (i) the aggregate purchase price for the
Option Shares to be acquired, and (ii) unless the Committee administering the
Plan determines otherwise, the amount of any taxes (including, but not limited
to, any FICA, FUTA, and similar taxes) required to be withheld and paid by the
Company or its subsidiary in connection with the exercise of the Option, as
determined by the Committee.


 


5.   Dividends.   The
Option shall not entitle the Optionee to receive any dividend declared on the
Company’s common stock.


 


6.   Non-transferability.   Neither
the Optionee nor the Optionee’s beneficiaries shall sell, exchange, transfer,
assign, or otherwise dispose of the Option or any rights or interests therein,
other than by testamentary disposition by the Optionee or the laws of descent
and distribution. Neither the Optionee nor the Optionee’s beneficiaries shall
pledge, encumber, or otherwise hypothecate the Option or any rights or
interests therein in any way at any time. The Option shall not be subject to
execution, attachment, or similar legal process. Any attempted sale, pledge, or
other disposition of the Option in violation of this paragraph shall be void
and of no force or effect.


 


7.   Entire
Agreement; Amendment.   Except as otherwise provided herein,
this Agreement contains the entire agreement between the parties and supersedes
other oral and written agreements previously entered into by the parties
concerning the same subject matter. This Agreement may be modified or rescinded
only with the written consent of both parties. The Options are granted pursuant
to the June 30, 2004, Employment Agreement between the Company and the
Optionee, the terms of which shall prevail in the event of a conflict with this
Stock Option Agreement.


 


8.   Governing
Law.   Nevada law shall govern this Agreement and its interpretation.
The issuance of the Option (and the Option Shares upon exercise of this Option)
pursuant to this Agreement shall be subject to, and shall comply with, any
applicable requirements of any federal and state securities laws, rules, and
regulations (including but not limited to the Securities Act, the


 


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Exchange Act, and the
respective rules and regulations promulgated thereunder) and any other
applicable law or regulation.


 


9.   Binding
Effect.   This Agreement shall bind and inure to the benefit of the
Company and its successors and assigns.


 


10.   Counterparts.   This
Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which, taken together, shall constitute one and the same
instrument.


 


 


	
  ALLIANCE
  GAMING CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
                       /s/ Mark Lerner

  	
   

  	
  /s/ Richard Haddrill

  
	
  Mark Lerner, Secretary

  	
   

  	
  Richard Haddrill

  
				



 


 


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