Document:

Exhibit 4.2

 

Statoil ASA

Statoil Petroleum AS

 

Officers’ Certificate

 

Pursuant to Sections 102 and 301 of the Indenture

 

Each
of the undersigned officers of Statoil ASA, a public limited company
incorporated under the laws of the Kingdom of Norway (the “Company”) and of
Statoil Petroleum AS, a limited company incorporated under the laws of the
Kingdom of Norway (“Statoil Petroleum”), hereby certifies:

 

1.             The terms of the series of
securities established under the Indenture, dated as of April 15, 2009, as
supplemented by the Supplemental Indenture No. 1, dated as of May 26,
2010 (the “Indenture”), among the Company, Statoil Petroleum and Deutsche Bank
Trust Company Americas, as Trustee, in the aggregate principal amount of
US$1,250,000,000, to be entitled the 3.125% Notes due 2017, and in the
aggregate principal amount of US$750,000,000, to be entitled the 5.100% Notes
due 2040 (together, the “Notes”), are set forth in Annex A.

 

2.             That the following
statements are made pursuant to the provisions of Section 102 of the
Indenture:

 

(1)           Each of the undersigned has
read the provisions of the Indenture setting forth conditions precedent to the
authentication of the Notes, and the definitions in the Indenture relating
thereto;

 

(2)           Each of the undersigned has
examined resolutions of the Board of Directors of the Company and resolutions
of the Board of Directors of Statoil Petroleum together with the terms set
forth in Annex A;

 

(3)           In the opinion of each of
the undersigned such examination is sufficient to enable us to express an
informed opinion as to whether or not the conditions precedent referred to
above have been complied with; and

 

(4)           Each of the undersigned is
of the opinion that the conditions precedent referred to above have been
complied with.

 

 

IN
WITNESS WHEREOF, each of the undersigned has signed his name.

 

 

	
  Dated:
  August 17, 2010

  	
  Statoil
  ASA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Svein Skeie

  
	
   

  	
   

  	
  Name:
  Svein Skeie

  
	
   

  	
   

  	
  Title:
  Senior Vice President CFO Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Statoil
  Petroleum AS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Svein Skeie

  
	
   

  	
   

  	
  Name:
  Svein Skeie

  
	
   

  	
   

  	
  Title:
  Senior Vice President CFO Finance

  

 

Signature Page to
102/301 Officers’ Certificate

 

 

Annex A

 

	
  U.S.$1,250,000,000 3.125% Notes
  due 2017:

  
	
   

  
	
  Issuer:

  	
   

  	
  Statoil
  ASA (“Statoil”).

  
	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  Statoil
  Petroleum AS (“Statoil Petroleum”).

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  3.125%
  Notes due 2017 (the “2017 Notes”).

  
	
   

  	
   

  	
   

  
	
  Total
  initial principal amount being issued:

  	
   

  	
  $1,250,000,000

  
	
   

  	
   

  	
   

  
	
  Issuance Date:

  	
   

  	
  August 17,
  2010

  
	
   

  	
   

  	
   

  
	
  Guarantee

  	
   

  	
  Payment
  of the principal of and interest on the Notes is fully guaranteed by Statoil
  Petroleum pursuant to Section 1401 of the Indenture.

  
	
   

  	
   

  	
   

  
	
  Maturity Date:

  	
   

  	
  August 17,
  2017

  
	
   

  	
   

  	
   

  
	
  Day Count:

  	
   

  	
  30/360

  
	
   

  	
   

  	
   

  
	
  Day Count Convention:

  	
   

  	
  Following
  unadjusted.

  
	
   

  	
   

  	
   

  
	
  Interest Rate:

  	
   

  	
  3.125%
  per annum.

  
	
   

  	
   

  	
   

  
	
  Date interest starts accruing:

  	
   

  	
  August 17,
  2010

  
	
   

  	
   

  	
   

  
	
  Interest Payment Dates:

  	
   

  	
  February 17
  and August 17 of each year, subject to the Day Count Convention,
  commencing February 17, 2011.

  
	
   

  	
   

  	
   

  
	
  Make-Whole Spread:

  	
   

  	
  15
  basis points.

  
	
   

  	
   

  	
   

  
	
  Further issuances:

  	
   

  	
  Statoil
  may, at its sole option, at any time and without the consent of the then
  existing noteholders, “reopen” the 2017 Notes and issue an unlimited
  principal amount of additional 2017 Notes in one or more transactions
  subsequent to the date of the related prospectus supplement dated
  August 10, 2010, with terms (other than the issuance date, issue price
  and, possibly, the first interest payment date and the date interest starts
  accruing) identical to the 2017 Notes, as described beginning on
  page S-3 of the prospectus supplement. Statoil may reopen the 2017 Notes
  only if the additional 2017 Notes issued will be fungible with the original
  2017 Notes of the series for United States federal income tax purposes.

  
	
   

  	
   

  	
   

  
	
  CUSIP Number:

  	
   

  	
  85771P
  AB8

  
	
   

  	
   

  	
   

  
	
  ISIN:

  	
   

  	
  US85771PAB85

  
	
   

  	
   

  	
   

  
	
  U.S.$750,000,000 5.100% Notes
  due 2040:

  
	
   

  
	
  Issuer:

  	
   

  	
  Statoil
  ASA (“Statoil”).

  
	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  Statoil
  Petroleum AS (“Statoil Petroleum”).

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  5.100%
  Notes due 2040 (the “2040 Notes”).

  

 

A-1

 

	
  Total
  initial principal amount being issued:

  	
   

  	
  $750,000,000

  
	
   

  	
   

  	
   

  
	
  Issuance Date:

  	
   

  	
  August 17,
  2010

  
	
   

  	
   

  	
   

  
	
  Guarantee

  	
   

  	
  Payment
  of the principal of and interest on the Notes is fully guaranteed by Statoil
  Petroleum pursuant to Section 1401 of the Indenture.

  
	
   

  	
   

  	
   

  
	
  Maturity Date:

  	
   

  	
  August 17,
  2040

  
	
   

  	
   

  	
   

  
	
  Day Count:

  	
   

  	
  30/360

  
	
   

  	
   

  	
   

  
	
  Day Count Convention:

  	
   

  	
  Following
  unadjusted.

  
	
   

  	
   

  	
   

  
	
  Interest Rate:

  	
   

  	
  5.100%
  per annum.

  
	
   

  	
   

  	
   

  
	
  Date interest starts accruing:

  	
   

  	
  August 17,
  2010

  
	
   

  	
   

  	
   

  
	
  Interest Payment Dates:

  	
   

  	
  February 17
  and August 17 of each year, subject to the Day Count Convention,
  commencing February 17, 2011.

  
	
   

  	
   

  	
   

  
	
  Make-Whole Spread:

  	
   

  	
  20
  basis points.

  
	
   

  	
   

  	
   

  
	
  Further issuances:

  	
   

  	
  Statoil
  may, at its sole option, at any time and without the consent of the then
  existing noteholders, “reopen” the 2040 Notes and issue an unlimited principal
  amount of additional 2040 Notes in one or more transactions subsequent to the
  date of the related prospectus supplement dated August 10, 2010, with
  terms (other than the issuance date, issue price and, possibly, the first
  interest payment date and the date interest starts accruing) identical to the
  2040 Notes, as described beginning on page S-3 of the prospectus
  supplement. Statoil may reopen the 2040 Notes only if the additional 2040
  Notes issued will be fungible with the original 2040 Notes of the series for
  United States federal income tax purposes.

  
	
   

  	
   

  	
   

  
	
  CUSIP Number:

  	
   

  	
  85771P
  AC6

  
	
   

  	
   

  	
   

  
	
  ISIN:

  	
   

  	
  US85771PAC68

  
	
   

  	
   

  	
   

  
	
  The following terms apply to
  the 2017 Notes and the 2040 Notes:

  
	
   

  
	
  Denomination:

  	
   

  	
  Each
  of the 2017 Notes and the 2040 Notes (together the “Notes”) will be issued in
  denominations of $1,000 and integral multiples of $1,000.

  
	
   

  	
   

  	
   

  
	
  Business Day:

  	
   

  	
  Any
  weekday on which banking or trust institutions in neither New York nor Oslo
  are authorized generally or obligated by law, regulation or executive order
  to close.

  
	
   

  	
   

  	
   

  
	
  Regular record dates for
  interest:

  	
   

  	
  The
  15th calendar day preceding each Interest Payment Date, whether or not such
  day is a Business Day.

  
	
   

  	
   

  	
   

  
	
  Sinking fund:

  	
   

  	
  There
  is no sinking fund.

  
	
   

  	
   

  	
   

  
	
  Optional tax redemption:

  	
   

  	
  Statoil
  and Statoil Petroleum have the option to redeem the Notes of either series,
  in whole, in the two situations described below at a redemption price equal
  to the principal amount of the applicable series 

  

 

A-2

 

	
   

  	
   

  	
  of
  the Notes plus accrued interest and any additional amounts due on the date
  fixed for redemption upon providing between 30 and 60 days’ notice.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  first situation is where, as a result of changes in or amendment to, or
  changes in the official application or interpretation of, any laws or
  regulations or rulings, or changes in the official application or
  interpretation of, or any execution of or amendment to, any treaties on or
  after August 10, 2010 in the jurisdiction where Statoil or Statoil
  Petroleum are incorporated or, if different tax resident, Statoil or Statoil
  Petroleum, as applicable, would be required to pay additional amounts as
  described below under “Additional amounts”. If Statoil or Statoil Petroleum
  is succeeded by another entity, the applicable jurisdiction will be the
  jurisdiction in which such successor entity is organized or incorporated or,
  if different, tax resident, and the applicable date will be the date the
  entity became a successor. Statoil or Statoil Petroleum do not have the
  option to redeem in this case if either Statoil or Statoil Petroleum, as
  applicable, could have avoided the payment of additional amounts or the
  deduction or withholding by using reasonable measures available to Statoil or
  Statoil Petroleum, as applicable.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  second situation is where, following a merger, consolidation, sale or lease
  of Statoil’s or Statoil Petroleum’s assets to a person that assumes Statoil’s
  or Statoil Petroleum’s obligations under the applicable series of the Notes,
  that person is required to pay additional amounts as described below under
  “Additional amounts”. Statoil, Statoil Petroleum or the other person would
  have the option to redeem the applicable series of the Notes in this
  situation even if the additional amounts became payable immediately after
  such assumption. Neither Statoil, Statoil Petroleum nor that person has any
  obligation under the indenture to seek to avoid the obligation to pay
  additional amounts in this situation. Statoil, Statoil Petroleum or the other
  person, as applicable, shall deliver to the trustee an officer’s certificate
  to the effect that the circumstances required for redemption exist. However,
  Statoil, Statoil Petroleum or the other person, as applicable, would have the
  option to redeem the applicable series of the Notes in the circumstances
  described in this paragraph only if a change in, execution of or amendment to
  any laws or treaties or official application of any law or treaty occurs
  after the date of such assumption.

  
	
   

  	
   

  	
   

  
	
  Optional make-whole redemption:

  	
   

  	
  Statoil
  has the right to redeem the Notes of either series, in whole or in part, at
  any time and from time to time at a redemption price equal to the greater of
  (i) 100% of the principal amount of the applicable series of the Notes
  to be redeemed and (ii) the sum of the present values of the remaining
  scheduled payments of principal and interest on the applicable series of the
  Notes to be redeemed (not including any portion of payments of interest
  accrued to the redemption date) discounted to the redemption date on a
  semi-annual basis (assuming a 360-day year 

  

 

A-3

 

	
   

  	
   

  	
  consisting
  of twelve 30-day months) at the treasury rate plus, for each series of Notes,
  its Make-Whole spread, plus accrued and unpaid interest to the date of
  redemption. For purposes of determining the optional make-whole redemption
  price, the following definitions are applicable. “Treasury rate” means, with
  respect to any redemption date, the rate per year equal to the semi-annual
  equivalent yield to maturity or interpolated (on a day count basis) of the
  comparable treasury issue, assuming a price for the comparable treasury issue
  (expressed as a percentage of its principal amount) equal to the comparable
  treasury price for such redemption date. “Comparable treasury issue” means
  the U.S. Treasury security or securities selected by the quotation agent as
  having an actual or interpolated maturity comparable to the remaining term of
  the applicable series of the Notes to be redeemed that would be utilized, at
  the time of selection and in accordance with customary financial practice, in
  pricing new issues of corporate debt securities of comparable maturity to the
  remaining term of such notes. “Comparable treasury price” means, with respect
  to any redemption date, the average of the reference treasury dealer
  quotations for such redemption date. “Quotation agent” means one of the
  reference treasury dealers appointed by Statoil. “Reference treasury dealer”
  means Barclays Capital Inc., Deutsche Bank Securities Inc. or J.P. Morgan
  Securities Inc., or their respective affiliates which are primary U.S.
  government securities dealers, and their respective successors, and two other
  primary U.S. government securities dealers selected by Statoil, provided,
  however, that if any of the foregoing shall cease to be a primary U.S.
  government securities dealer in the United States (a “primary treasury
  dealer”), Statoil shall substitute therefor another primary treasury dealer.
  “Reference treasury dealer quotations” means with respect to each reference
  treasury dealer and any redemption date, the average, as determined by the
  quotation agent, of the bid and asked prices for the comparable treasury
  issue (expressed in each case as a percentage of its principal amount) quoted
  in writing to the quotation agent by such reference treasury dealer at
  3:30 p.m. New York time on the third business day preceding such
  redemption date.

  
	
   

  	
   

  	
   

  
	
  Additional amounts:

  	
   

  	
  None
  payable under current law.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  government or any political subdivision or taxing authority of such
  government of any jurisdiction where Statoil or Statoil Petroleum are
  incorporated (currently the Kingdom of Norway) or, if different, tax resident
  may require Statoil or Statoil Petroleum to withhold amounts from payments on
  the principal or interest on the Notes of either series or payment under the
  guarantees for taxes, assessments or any other governmental charges. If any
  such jurisdiction requires a withholding of this type, Statoil or Statoil
  Petroleum may be required to pay the noteholder additional amounts so that
  the net amount the noteholder receives will be the amount specified in the
  applicable series of the Notes. However, in order for the noteholder to be
  entitled to receive the 

  

 

A-4

 

	
   

  	
   

  	
  additional
  amounts, the noteholder must not be resident in the jurisdiction that
  requires the withholding. Statoil and Statoil Petroleum will not have to pay
  additional amounts under any or any combination of the following circumstances:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1) The
  tax, assessment or governmental charge is imposed only because the
  noteholder, or a fiduciary, settlor, beneficiary or member or shareholder of,
  or possessor of a power over, the noteholder, if the noteholder is an estate,
  trust, partnership or corporation, was or is connected to the taxing
  jurisdiction, other than by merely holding the Notes or receiving principal
  or interest in respect thereof. These connections include where the
  noteholder or related party:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a) is
  or has been a citizen or resident of the jurisdiction;

  
	
   

  	
   

  	
  (b) is
  or has been present or engaged in trade or business in the jurisdiction; or

  
	
   

  	
   

  	
  (c) has
  or had a permanent establishment in the jurisdiction.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2) The
  tax, assessment or governmental charge is imposed due to the presentation of
  the Notes of either series (where presentation is required) for payment on a
  date more than 30 days after the applicable series of the Notes became due or
  after the payment was provided for, whichever occurs later.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3) The
  tax, assessment or governmental charge is on account of an estate,
  inheritance, gift, sale, transfer, personal property or similar tax,
  assessment or other governmental charge.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4) The
  tax, assessment or governmental charge is for a tax or governmental charge
  that is payable in a manner that does not involve withholding.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (5) The
  tax, assessment or governmental charge is imposed or withheld because the
  noteholder or beneficial owner failed to comply with any of Statoil’s
  following requests:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a) to
  provide information about the nationality, residence or identity of the
  noteholder or beneficial owner, or

  
	
   

  	
   

  	
  (b) to
  make a declaration or other similar claim or satisfy any information or
  reporting requirements

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  in
  each case that the statutes, treaties, regulations or administrative
  practices of the taxing jurisdiction require as a precondition to exemption
  from all or part of such tax, assessment or governmental charge.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (6) The
  tax, assessment or governmental charge is imposed pursuant to European Union
  Directive 2003/48/EC or any other Directive implementing the conclusions of
  the ECOFIN Council meeting of November 26 and 27, 2000 on the taxation
  of savings or any law or agreement implementing or complying with, or introduced
  to conform 

  

 

A-5

 

	
   

  	
   

  	
  to,
  such directive.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (7) The
  tax, assessment or governmental charge is imposed on a noteholder or
  beneficial owner who could have avoided such withholding or deduction by
  presenting its Notes to another paying agent.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (8) The
  noteholder is a fiduciary, partnership or other entity that is not the sole
  beneficial owner of the payment of the principal of, or any interest on, the
  Notes, and the laws of the jurisdiction (or any political subdivision or
  taxing authority thereof or therein) require the payment to be included in
  the income of a beneficiary or settlor for tax purposes with respect to such
  fiduciary, a member of such partnership or a beneficial owner who would not
  have been entitled to such additional amounts had such beneficiary, settlor,
  member or beneficial owner been the noteholder of the Notes.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  foregoing provisions will also apply to any present or future taxes,
  assessments or governmental charges imposed by any jurisdiction in which
  Statoil’s or Statoil Petroleum’s successor is organized or incorporated or,
  if different, tax resident.

  

 

A-6Exhibit 10.1

 

August 12,
2010

 

Mr. Neil
Davidson

 

RE:                              Employment Offer

 

Dear
Mr. Davidson:

 

Bally Technologies, Inc. (the “Company”)
is pleased to offer you continued employment with the Company under the
following terms and conditions.  The
effective date of this offer letter will be August 12, 2010 (the “Effective
Date”).  Notwithstanding anything herein
to the contrary, either you or the Company may terminate your employment at any
time with or without cause, with the rights and obligations of the parties upon
termination of your employment limited strictly to the terms of this letter
agreement.

 

Further, the terms and conditions of this
letter agreement shall be conditional upon the continuous review and approval
of Bally Technologies’ Compliance Committee.

 

1.                                      Definitions.

 

“Cause” means the following events
leading to termination of employment as determined by the Company, upon
reasonable investigation, in its judgment and discretion, as the case may be
after: (1) a substantial act or omission which is dishonest or fraudulent
against the Company, (2) a conviction of a felony or conviction of a gross
misdemeanor involving moral turpitude or criminal conduct against any person or
property, including without limitation, the Company, (3) a substantial act
or omission that constitutes willful misconduct in the performance of your job
responsibilities or material failure to adhere to legal Company policies,
(4) any improper or illegal act, omission or pattern of conduct in the
performance of your job responsibilities, which is not remedied by you within
thirty (30) days of your receipt of written notice from the Company, (5) a
breach of the Company’s then-current corporation policies, procedures and
rules, (6) any material breach of this letter agreement by you, or
(7) failure to comply with any provision of the gaming laws of the State
of Nevada or the rules and regulations of the Nevada Gaming Control Board
or the Nevada Gaming Commission or any gaming law, ordinance, rule or
regulation of any city or county having jurisdiction, or the gaming laws,
regulations and rules of any other nation, state, county or other
jurisdiction in which the Company may be doing business at any time which will
materially and negatively affect the registration and licensing of the Company.

 

“Change of Control” means such circumstances
which shall have been deemed to occur upon (1) the consummation of a
tender for or purchase of more than fifty percent (50%) of the Company’s
capital stock (as “Company” is defined below) by a third party, excluding the
initial public offering by the Company of any class of its capital stock,
(2) a merger, consolidation or 

 

 

recapitalization
of the Company such that the stockholders of the Company immediately prior to
the consummation of such transaction possess less than fifty percent (50%) of
the voting securities of the surviving entity immediately after the transaction
or (3) the sale, lease or other disposition of all or substantially all of
the assets of the Company.

 

“Diminution of Duties” means any change in your
title, job duties and responsibilities that materially alters or modifies your
employment duties and responsibilities with the Company in any manner that
results in a material diminution or reduction of your work duties and
responsibilities that occurs following a Change of Control of the Company.

 

“Salary Continuation” means the Company’s
continued payment of your then-current base salary on normal paydays following
termination of your employment with the Company, paid under such circumstances
described in further detail in this letter agreement, less standard withholding
and offset by all income earned from other employment during any period of time
that you receive any Salary Continuation.

 

2.                                      Compensation.

 

A.                                    Position and Title.  You
are hereby offered the position of Senior Vice President and Chief Financial
Officer.  You will report to the Chief
Executive Officer of Bally Technologies, Inc.  Your duties will generally include all
management and supervision of all of the Company’s finance and accounting
functions and staffing, along with any other related duties that the Chief
Executive Officer may assign to you.  In
addition, your duties will include the position of Corporate Treasurer for the Company
and its subsidiaries and affiliates and fulfilling any other work duties and
requirements for the Company that are related thereto.

 

B.                                    Salary.  Your base
salary will be $300,000 a year beginning on the Effective Date.  Your base salary will be reviewed annually
and adjustments may be made at the Company’s option, and based on merit, and
all at the Company’s sole discretion. 
The Company makes no express representations as to the certainty of any
salary increases.

 

C.                                    Management Incentive Program. Notwithstanding the
Effective Date of this letter agreement, and provided that you are then
employed by the Company, you will be entitled to participate in the Company’s
Senior Management Incentive Program or any successor plan (the “MIP”),
effective as of July 1, 2010.  This
incentive plan currently entitles you to receive a target performance bonus in
the amount of 60% of your base salary, subject to the terms and conditions of
the plan. If your employment terminates for any reason other than as a result
of a termination without Cause by the Company (or any successor) or Diminution
of Duties, in either case within one year following a Change of Control of the
Company, you shall not be entitled to any portion of the MIP; provided,
however, that if your employment terminates without Cause by the Company (or
any successor) or as a result of a Diminution of Duties, in either case within
one year following a Change of Control, you will be entitled to receive a pro
rata portion of such bonus, based on the number of days that you have actually
worked in the fiscal year coinciding with your termination.  Such bonus shall be determined and paid at
the end of the fiscal year coinciding with your termination, all in the manner
that such bonuses are customarily paid to plan participants and subject to the
terms and conditions of the plan.  Any
such bonus shall be paid pursuant to the terms and conditions of the plan, with
any personal objective component of 

 

2

 

the
plan deemed as achieved on a pro rata basis, based on the number of days that
you have actually worked in the fiscal year coinciding with your termination
and at a personal achievement set at 50% of the personal objective target.  For clarity, and as an example only, if,
under the conditions specified, your employment terminates 3 months after the
Company’s then-current fiscal year begins, and your personal objective portion
of the plan is targeted at 30% of the total bonus, then your personal objective
component of the plan for that fiscal year shall be considered 3.75% achieved
(30% target multiplied by 3/12 multiplied by 50%), provided that you have met
all other terms and conditions of the plan. 
Payment of any such bonus on termination of employment shall be subject
to the satisfaction of your obligations under Section 2G of this letter
agreement.

 

D.                                    Transition
Bonus.  Provided that you are then
employed by the Company, and in addition to any other incentive compensation
you may become entitled to, you will be eligible to earn a one-time additional
cash bonus in the amount of up to $100,000 gross, payable within 75 days
following the end of the Company’s 2011 fiscal year, if, in the discretion of
Chief Executive Officer and the Board of Directors of Bally Technologies, Inc.
(the “Board”), you have achieved by then a successful transition into the role
of Chief Financial Officer which shall, in part, be based upon: (i) their
subjective determination  that
substantially all of your personal objectives under the MIP have been
satisfied; and (ii) your regular communication with the Audit Committee to
the Board regarding the status of your transition, along with any other
information that the Board may require from time to time; provided however
that, if your employment terminates prior to the end of the Company’s 2011
fiscal year for any reason, you shall not be entitled to any portion of this
transition bonus.

 

E.                                      Equity Awards.  Subject to
the approval of the Board, you will be granted an option on the Effective Date
to acquire 30,000 shares of Bally Technologies, Inc. common stock (the “Common
Stock”) at the per-share exercise price which will be equal to the market price
of a share of Common Stock as of the close of business on the Effective Date,
referred to as the “Option.”  In
addition, subject to Board approval, on the Effective Date, you will be awarded
14,000 shares of restricted Common Stock, referred to as the “Restricted Stock.”  Subject to the express provisions of this
letter agreement, the Option and the Restricted Stock will be issued pursuant
to the Bally Technologies, Inc. 2010 Long Term Incentive Plan (the “LTIP”)
and the forms of award agreement currently used thereunder, and in accordance
with the Company’s then current policies and procedures for equity-based
compensation awards.

 

The
Option and the Restricted Stock shall become vested and, to the extent
applicable, exercisable in three installments, with one-third of the shares
subject to each award vesting on the second, third and fourth anniversaries of
the Effective Date, subject to your continued employment with the Company
through each vesting date.  The Company
intends to implement an employee stock ownership program for senior level
executives.  Due to your title,
responsibilities, and the size of your equity grants, you will be subject to
these guidelines as they are approved by the Company’s Board of Directors.

 

Subject
to Section 2G of this letter agreement, and in the event your employment
with the Company terminates: (i) because of a termination of employment by
the Company (or any successor) without Cause; or (ii) by you, as a result
of a Diminution of Duties, in each case, within one year following a Change of
Control of the Company, then: (1) if such termination of 

 

3

 

employment
occurs within one year following the Effective Date, those installments of
Options and the Restricted Stock scheduled to vest within two years of the date
of  the Effective Date  shall immediately become vested and for those
options granted on or after the Effective Date you shall have one  year from the date of your termination of
employment (or, if sooner, until the end of the existing contractual term of
your Options) to exercise your vested Options (options granted before the
Effective Date will remain exercisable and terminate in accordance with their
terms and conditions and the LTIP); and (2) if such termination of
employment occurs at any time after the first anniversary of the Effective
Date, those installments of Options and the Restricted Stock scheduled to vest
within one year of the date of such termination of employment shall immediately
become vested and for those options granted on or after the Effective Date you
shall have one year from the date of your termination of employment (or, if sooner,
until the end of the existing contractual term of your Options) to exercise
your vested Options (options granted before the Effective Date will remain
exercisable and terminate in accordance with their terms and conditions and the
LTIP).

 

F.                                      Salary Continuation.  If
the Company terminates your employment without Cause after the Effective Date,
the Company will pay you Salary Continuation for a period of one year
immediately following such termination of your employment, subject to:
(1) the release agreement described in paragraph G below becoming
effective and irrevocable in accordance with its terms; and (2) your
continued compliance with the covenants described in Section 3 below.  You will not receive Salary Continuation for
any period of time following your termination if the Company terminates your
employment for Cause or if you terminate your employment for any reason at any
time, unless you terminate your employment as a result of a Diminution of
Duties occurring within one year following a Change of Control of the
Company.  If you terminate your
employment as a result of a Diminution of Duties occurring within one year
following a Change of Control of the Company, the Company will pay you Salary
Continuation for a period of one year immediately following such termination of
employment, subject to (i) the release agreement described in paragraph G
below becoming effective and irrevocable in accordance with its terms and
(ii) your continued compliance with the covenants described in Section 3
below.

 

G.                                    Termination Release.  The payment to
you of any amounts of cash and equity compensation following termination of
your employment with the Company in accordance with Section 2 of this
letter agreement shall be conditioned upon the execution by you within 21 days
following your termination of employment of a release agreement providing for
the release of all claims against the Company or any successor, and the
irrevocability of the same.

 

3.                                      Employment Covenants.

 

A.                                    Covenant not to compete. You agree not to compete
with the Company for as long as you are employed by the Company. You agree not
to compete with the Company for one year after your employment with the Company
terminates if the Company terminates you for Cause, or if you quit for any
reason (the “Non-Compete Period”), on the terms and conditions set forth in Section 2
above.

 

4

 

If
you are terminated without Cause, or if you quit as a result of Diminution of
Duties, in either case within one year following a Change of Control, you agree
not to compete with the Company during any period that you receive Salary
Continuation, as set forth above.

 

To
“compete” means to establish, engage, or be connected with, directly or
indirectly, any person or entity engaged in a business in competition with the
business of the Company (which, as defined above, includes any of the Company’s
subsidiaries or affiliates) in any area where the Company does business,
whether as an employee, owner, partner, agent, employee, officer, consultant,
advisor, stockholder (except as the beneficial owner of not more than 5 percent
of the outstanding shares of a corporation, any of the capital stock of which
is listed on any national or regional securities exchange or quoted in the
daily listing of over-the-counter market securities and, in each case, in which
you do not undertake any management or operational or advisory role) or in any
other capacity, for your own account or for the benefit of any person or
entity.

 

You
acknowledge and agree that the scope and duration of this covenant not to
compete are reasonable and fair. However, if a court of competent jurisdiction
determines that this covenant is overly broad or unenforceable in any respect,
you and the Company agree that the covenant shall be enforced to the greatest
extent the court deems appropriate and that the court may modify this covenant
to that extent.

 

B.                                    Covenant not to solicit customers, employees, or consultants. You agree
that during your employment with the Company and for one year after your
employment ends for any reason, you shall not, directly or indirectly, (i) aid
or endeavor to solicit or induce any other employee or consultant of the
Company to leave the Company to accept employment of any kind with any other
person or entity, or (ii) solicit the trade or patronage of any of the
Company’s customers (which includes customers of any of the Company’s
subsidiaries or affiliates) or of anyone who has traded or dealt with the
Company with respect to any technologies, services, products, trade secrets, or
other matters in which the Company is active.

 

C.                                    Confidential information. You agree that your work
for the Company will give you access to confidential matters of the Company not
publicly known such as proprietary matters of a technical nature (including but
not limited to know-how, technical data, gaming processes, gaming equipment,
techniques, developments) and proprietary matters of a business nature
(including but not limited to information about costs, profits, markets, sales,
lists of customers, and matters received by the Company in confidence from
other parties), collectively referred to as “Confidential Matters.” Some
Confidential Matters may be entitled to protection as “Trade Secrets,” as that
term is defined in N.R.S. 600A.030(5), the Restatement of Torts, and case law
interpreting the same.

 

You
agree to keep secret all such Confidential Matters and agree not to directly or
indirectly, other than is necessary in the business of the Company and the scope
of your employment, disclose or use any such Confidential Matters at any time
except (i) with prior written consent of the Company, (ii) as
necessary in any judicial or arbitration action to enforce the provisions of
this letter agreement, (iii) in connection with any judicial or
administrative proceeding to the extent required by law, and (iv) as
otherwise required by law. You agree that all written materials (including
correspondence, memoranda, manuals, notes, and notebooks) and all models,
mechanisms, devices, drawings, and plans in your possession from time to time
(whether or not 

 

5

 

written
or prepared by you) embodying Confidential Matters shall be and remain the sole
property of the Company, and you will use all reasonable precautions to assure
that all such written materials and models, mechanisms, devices, drawings, and
plans are properly protected and kept from unauthorized persons. You further
agree to deliver all Confidential Matters, including copies, immediately to the
Company on termination of your employment for any reason, or at any time the
Company may request.

 

After
termination of your employment with the Company for any reason, you shall not
reveal directly or indirectly to any person or entity or use for your personal
benefit (including without limitation, for the purpose of soliciting business,
whether or not competitive with any business of the Company) any Confidential
Matters. To the extent that any Confidential Matters are considered by the
Company as Trade Secrets, you agree that all limitations on use of these Trade
Secrets shall last forever. You further agree that immediately upon or after
termination, you will deliver to the Company all memoranda, notes, reports,
lists, models, mechanisms, devices, drawings or plans and other documents (and
all copies thereof) in your possession relating to the business of the Company
or its subsidiaries and affiliates.

 

D.                                    Intellectual Property. You shall promptly disclose in writing to the Company
all inventions, discoveries, concepts, ideas, developments, improvements, and
innovations, whether or not patentable, and the expressions of all inventions,
discoveries, concepts, ideas, developments, improvements, and innovations,
whether or not copyrightable (collectively “Inventions”), conceived, developed,
or first actually reduced to practice by you, either alone or with others,
during your employment with the Company or during the first six months after
your employment with the Company ends for any reason, that (i) relate in
any manner to the existing or contemplated business or research activities of
the Company, (ii) are suggested by or result from your work for the
Company; or (iii) result from the use of time, materials, or facilities of
the Company. All Inventions you conceive, develop, or first actually reduce to
practice, either alone or with others, while employed by the Company that
relate in any manner to the existing or contemplated business or research
activities of the Company shall be the exclusive property of the Company. You
assign to the Company your entire right, title, and interest in and to all such
Inventions and to all unpatented Inventions that you now own, except those
specifically described in a statement that has been separately executed by you
and an officer of the Company and attached hereto, provided, however, that if
no such list is attached, you represent and warrant that there are no such
Inventions. You will, at the request and expense of the Company, execute specific
assignments to any such Inventions and execute, acknowledge, and deliver patent
applications and such other documents (including but not limited to all
provisionals, continuations, continuations-in-part, continued prosecution
applications, extensions, re-issues, re-examinations, divisionals and foreign
counterparts) and take such further action as may be considered necessary by
the Company at any time, whether during your employment with the Company or
after it terminates for any reason, to obtain and define letters patent in any
and all countries and to vest title to such Inventions and related patents or
patent applications in the Company or its assignees. Any Invention that you
disclose to a third person or describe in a patent application filed by you or
in your behalf during your employment with the Company or within six months
after your employment with the Company terminates for any reason shall be
presumed to have been conceived or made by you during your employment with the
Company unless proved to have been conceived and made by you after the
expiration or termination of this letter agreement.

 

6

 

You acknowledge that the remuneration you
receive in connection with your employment with the Company includes reasonable
compensation for the fact that the Intellectual Property rights will vest in
the Company and/or its affiliated companies (if so designated by the Company)
by operation of law or for the assignment and transfer to the Company of such
rights pursuant to this Section 3.

 

E.                                      Non-disparagement. You and the Company each agree that, during
your employment with the Company and after your employment with the Company
terminates for any reason, neither shall, publicly or privately, disparage or
make any statements (written or oral) that could impugn the integrity, acumen
(business or otherwise), ethics, or business practices of the other (including,
in the case of the Company, its affiliates and subsidiaries), except, in each
case, to the extent (but solely to the extent) necessary (i) in any
judicial or arbitration action to enforce the provisions of this letter
agreement, or (ii) in connection with any judicial or administrative
proceeding to the extent required by applicable law, or (iii) as otherwise
required by law.

 

F.                                      Injunctive relief; jurisdiction. You acknowledge that the
Company will suffer irreparable injury, not readily susceptible of valuation in
monetary damages, if you breach any of your obligations under this letter
agreement. Accordingly, you agree that the Company will be entitled, at its
option, to injunctive relief against any breach or prospective breach by you of
your obligations under this section in any federal or state court of competent
jurisdiction sitting in Nevada, in addition to monetary damages and any other
remedies available at law or in equity. You hereby submit to the jurisdiction
of such courts for the purposes of any actions or proceedings instituted by the
Company to obtain such injunctive relief, and agree that process may be served
on you by registered mail, addressed to your last address known to the Company,
or in any other manner authorized by law. 
The Company may also suspend any salary continuation payments during any
period that you are in breach of this letter agreement and the applicable
restricted period shall be extended by any period that you are in breach.

 

G.                                    Material inducements. The restrictive covenants
and other provisions in this letter agreement are material inducements to the
Company entering into and performing its obligations under this letter
agreement. Accordingly, in the event of any breach of the provisions of this
section by you, in addition to all other remedies at law or in equity possessed
by the Company, including but not limited to the right to enforce the covenants
you have agreed to in this letter agreement, the Company shall have the right
to terminate this letter agreement and your employment with the Company and not
pay any amounts payable to you under this letter agreement.  In the event any of the provisions of this
letter agreement are individually deemed unlawful, any remaining provisions of
this letter shall remain in full force and effect.

 

4.                                      Miscellaneous.

 

The
intent of the parties is that payments and benefits under this letter agreement
comply with Section 409A of the Internal Revenue Code of 1986, as amended,
and the regulations and guidance promulgated thereunder (collectively “Section 409A”)
and, accordingly, to the maximum extent permitted, this letter agreement shall
be interpreted to be in compliance therewith. 
For purposes of this letter agreement, a termination of employment shall
not be deemed to have occurred for purposes of any provision of this letter
agreement providing for the payment of any amounts or benefits that are
considered to be deferred compensation under 

 

7

 

Section 409A
upon or following a termination of employment unless such termination is also a
“separation from service” within the meaning of Section 409A.  In addition, if you are deemed on the date of
your termination of employment to be a “specified employee” within the meaning
of that term under Section 409A(a)(2)(B) of the Internal Revenue Code
of 1986, as amended, then with regard to any payment or the provision of any
benefit that is considered deferred compensation under Section 409A
payable on account of a “separation from service,” and that is not exempt from Section 409A
as involuntary separation pay or a short-term deferral (or otherwise), such
payment or benefit shall be made or provided at the date which is the earlier
of (i) the expiration of the six-month period measured from the date of
such “separation from service,” and (ii) the date of your death (the “Delay
Period”).  Upon the expiration of the
Delay Period, all payments and benefits delayed pursuant to this paragraph
(whether they would have otherwise been payable in a single sum or in
installments in the absence of such delay) shall be paid or reimbursed to you
in a lump sum without interest, and any remaining payments and benefits due
under this letter agreement will be paid or provided in accordance with the
normal payment dates specified for them herein. 
Each payment hereunder shall be deemed a separate payment for purposes
of Section 409A.

 

Except
as modified by this letter, the terms and conditions of your employment with
the Company shall continue to be subject to the Company’s regular employment
policies and practices and benefits as may be in effect from time to time.  This letter comprises the entire agreement
between you and the Company and supersedes all other oral and written
agreements previously entered into by you and the Company concerning the same
subject matter.  If accepted, this offer
will not create an agreement of employment for any specific term or otherwise
alter the at-will nature of your employment relationship with the Company.  If you accept this offer, either you or the
Company may terminate your employment at any time with or without cause.

 

If
you accept this offer of employment, please sign below and return this letter
to me. Once signed and returned, this letter will comprise a binding agreement
between you and the Company.  If you have
any questions about its meaning, you are urged to consult with your attorney.

 

	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BALLY
  TECHNOLOGIES, INC.

  	
   

  
	
   

  	
   

  
	
  /s/
  Mark Lerner

  	
   

  
	
  By:
  Mark Lerner

  	
   

  
	
  Secretary

  	
   

  

 

8

 

ACCEPTANCE

 

I
have read the foregoing letter, and I have reviewed it with counsel or have had
the opportunity to do so. I understand and accept its terms.

 

	
  /s/
  Neil Davidson

  	
   

  
	
  Neil
  Davidson

  	
   

  

 

9

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