Document:

Exhibit
10.17

 

SECOND
AMENDMENT TO TRADEMARK LICENSE AGREEMENT

AND
SETTLEMENT AGREEMENT

 

This Agreement
is made the 31st day of March 1995, by and between Bally Entertainment Corporation
(“Bally”), and Bally Gaming International, Inc. and Bally Gaming, Inc.
(collectively, “BGI”).

 

W I T N E S
S E T H

 

WHEREAS, Bally has instituted an action
against BGI in the United States District Court, District of New Jersey, for: (1) violation
of the Federal Trademark and Unfair Competition Laws of the United States, 15 U.S.C.
$ 1051 et  seg., and (2) violation of state unfair
competition laws; and

 

WHEREAS, the United States District Court,
District of New Jersey, by Order dated March 29, 1995, has enjoined BGI,
and their officers, agents, servants, employees, attorneys, and those persons
in active concert or participation with them who receive actual notice, and
those persons acting on their behalf, form (1) selling and distributing
machines, parts and any other items it manufactures, distributes or sells
bearing the “Bally” tradename and/or “BALLY”
trademarks; and (2) distributing any promotional, printed or documentary
materials of any nature containing the “Bally” tradename and/or “BALLY” trademarks; and

 

WHEREAS, the parties have agreed to resolve
and settle Bally’s claims against BGI on certain terms and conditions as set
forth below;

 

 

NOW, THEREFORE, in consideration of the mutual
covenants set forth herein, and for other good and valuable consideration, the
parties agree as follows:

 

1.             The
Amended and Restated Trademark License Agreement dated July 5, 1992 shall
continue in full force and effect, subject to the addition of the following
provisions, which are hereby deemed to be made a part of the Amended and
Restated Trademark License Agreement as if set forth in full therein and said
Amended and Restated Trademark License Agreement is annexed hereto and made a
part hereof.

 

2.             BGI
shall rebate to Bally $250.00 for each slot machine Bally or any of its
subsidiaries or affiliates purchases or commits to purchase from BGI for use in
any one of the following Bally casinos: 
Bally’s Park Place, The Grand, Balle of Orleans, Bally’s Las Vegas, and
the dockside casino in Mississippi, for a period of two (2) years from the
date of this Agreement, including the 464 slot machines currently on order for use
by Balle of Orleans, the 36 slot machines currently on order for use by Bally’s
Las Vegas, the 29 slot machines currently on order for use by The Grand, and
the 16 slot machines currently on order for use by Bally’s Park Place.

 

3.             BGI
shall also rebate to Bally $250.00 for each slot machine Bally or any of its
subsidiaries or affiliates purchases or commits to purchase from BGI for use in
the next three casinos to be opened by Bally, for a period ending with respect
to each such casino two (2) years after the date each such casino opens
for business.

 

 

4.             The
purchase price for each slot machine Bally, or its subsidiaries or affiliates, purchase
or commit to purchase pursuant to this Agreement, shall be the regular price at
which the alot machines they purchase or commit to purchase have been sold or
offered for sale by BGI to similarly situated customers within the 12-month
period prior to Bally’s or its subsidiaries’ or affiliates’ purchases or
commitments to purchase, without reference to the $250.00 rebate provided for
herein.

 

5.             Simultaneously
with the execution and delivery of this Agreement, BGI shall execute and
deliver to Bally a Release identical in form and content to the Release
attached hereto as Exhibit C.

 

6.             Simultaneously
with the execution and delivery of this Agreement, Bally shall execute and
deliver to BGI a Release identical in form and content to the Release attached
hereto as Exhibit D.

 

7.             This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New Jersey, without regard to the conflicts of law principles
thereof.

 

8.             Any
legal proceedings initiated in connection with this Agreement shall be brought
solely before the state or federal courts, or administrative tribunals, within
the State of New Jersey.

 

9.             This
Agreement may be executed in counterparts, each of which will be deemed to be
an original and all of which together constitute the same agreement.

 

 

10.           This
Agreement and the exhibits hereto are binding upon and enforceable against BGI,
Bally, and their respective shareholders, directors, officers, subsidiaries,
affiliates, successors, assigns, agents, representatives, and employees.

 

11.           BGI
shall pay additional royalties to Bally as follows:

 

(a)           With
respect to BGI’s sale of gaming machines, commencing on the date hereof, BGI
shall pay Bally gaming $25.00 per machine for the first 20,000 gaming machines
(as such machines are defined and described in paragraph 1 Grant of License
in the Amended and Restated Trademark License Agreement) sold or leased by BGI
for each 12-month period from the date hereof. 
For all gaming machines sold or all gaming machines sold or leased
during, said 12-month period in excess of 20,000, $30.00 per machine shall be
paid by BGI to Bally.

 

(b)           The
royalty payments shall be paid on the fifteenth day following each quarter of
each year of the term of this Agreement for the gaming machines sold or leased
in that quarter.  Thirty days after the
end of each year, an accounting shall be provided by BGI to Bally, signed by
the Chief Financial Officer of BGI, certifying the total number of machines
sold or leased in that year so that the parties can determine if the aforesaid
royalties have been fully, properly and promptly paid.

 

(c)           The
minimum royalties for each 12-month period during the term of this Agreement or
any extension thereof shall be $500,000.

 

 

12.           This
Agreement shall continue in full force and effect for at least five years from
the date hereof, at which time it may be terminated by BGI upon six months
prior written notice to Bally, by sending such notice to Bally’s Chief
Financial Officer, via certified mail, return receipt requested, to Bally’s
Chief Financial officer, 8700 West Bryn Mawr, Chicago, Illinois 60631.  If BGI fails to timely serve such notice as
aforesaid upon Bally, then the Amended and Restated Trademark License Agreement
dated July 8, 1992, and this amendment thereto, shall continue in full
force and effect for an additional period of 12 months, and thereafter continue
for successive 12-month periods unless written notice as aforesaid is timely
received six months prior to the end of said 12 month period

 

13.           Payments
overdue more than 15 days shall be subject to a late payment charge calculated
at an annual rate of three percent (3%) over the prime rate (as posted by
Chemical Bank) during delinquency.

 

14.           As
used herein and in Paragraph 9 of the amended and Restated Trademark License
Agreement, “subsidiaries or affiliates” of BGI shall include only wholly-owned
subsidiaries or affiliates of BGI.

 

15.           BGI
shall not use the Mark or any part or variation thereof as part of any name or
mark likely to be similar or confusingly similar to the Mark, without the prior
written consent of Bally.

 

 

16.           BGI
agrees that any and all rights that may be acquired by the use of the Mark by
BGI shall inure to the sole benefit of Bally.

 

17.           The
“Mark” for purposes of this Agreement shall mean the “Bally” name and the “BALLY”
trademarks, and service marks and registrations thereof listed on Schedule A.

 

18.           BGI
agrees that the nature and quality of all services rendered by BGI in
connection with the Mark; all goods sold by BGI under the Mark; and all related
advertising, promotional and other related uses of the Mark by BGI shall
conform to standards set by and be under the control of Bally.

 

19.           BGI
agrees to cooperate with Bally in facilitating Bally’s control of such nature
and quality, to permit reasonable inspection of BGI’s operation, and to supply
Bally with specimens of all uses of the Mark upon request.

 

20.           BGI
agrees to use the Mark only in the form and with appropriate legends as
prescribed from time to time by Bally.

 

21.           BGI
shall pay Bally its legal fees in the amount of not more than $150,000, by
check payable to the law firm Sills Cummis Zuckerman Radin Tischman Epstein &
Gross, P.A., within five (5) days of the date hereof.

 

 

	
  ATTEST

  	
   

  	
  BALLY GAMING INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Neil E.
  Jenkins

  	
   

  
	
   

  	
   

  	
   

  	
  Neil E. Jenkins

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST

  	
   

  	
  BALLY GAMING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Neil E.
  Jenkins

  	
   

  
	
   

  	
   

  	
   

  	
  Neil E. Jenkins

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST

  	
   

  	
  BALLY ENTERTAINMENT CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Carol S. DePaul

  	
   

  
	
   

  	
   

  	
   

  	
  Carol S. DePaul

  

 

Dated: March 31, 1995

 

 

Exhibit A

 

 

EXHIBIT A

SCHEDULE OF
TRADEMARKS

 

	
  A.

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY  
  Stylized Letters

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  505,218

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  December 28, 1948

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  28 (Toys & Sporting Goods)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  BALL ROLLING GAMES HAVING A BOARD AND BALLS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY  
  Stylized Letters

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,012,119

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  June 3, 1975

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific
  Apparatus)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  RELAYS, STEPPING MECHANISMS, STEEPING
  SWITCHES, AND ELECTRICAL CONTROL UNITS EMPLOYING ELECTROMAGNETS AND SOLENOIDS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY SYSTEM 5000 and Design

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,547,119

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  July 11, 1989

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific
  Apparatus)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  AUTOMATIC
  SLOT MACHINES

  

 

 

	
  D.

  	
   

  	
  TRADEMARK/SERVICEMARK:

  	
   

  	
  BALLY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,552,562

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  August 22, 1989

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific
  Apparatus)

  28(Toys & Sporting Goods)

  41 (Education & Entertainment Services)

  42 (Miscellaneous Service Marks)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  (INT. CL. 9) ELECTRICAL APPARATUS FOR
  TESTING VIDEO GAMES AND FOR ALTERING OR CONVERTING VIDEO GAMES; GAMING
  EQUIPMENT, NAMELY SLOT MACHINES, VIDEO POKER MACHINES AND VIDEO SLOT
  MACHINES; LOTTERY TERMINALS AND LOTTERY TICKET DISPENSING APPARATUS (INT. CL.
  28) VIDEO GAMES AND VIDEO GAME SYSTEMS. NAMELY, EQUIPMENT FOR PLAYING A VIDEO
  GAME AND MATING CARTRIDGES/PROVIDING COMPUTERIZED GAME DATA TO THE EQUIPMENT;
  EXERCISE EQUIPMENT, NAMELY, EXERCISE CYCLES, ROWING MACHINES AND WEIGHT
  MACHINES (INT. CL. 41) HEALTH CLUB AND FITNESS CLUB SERVICES (INT. CL. 42)
  HOTEL SERVICES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY   Stylized letters

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,646,697

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  June 4, 1991

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific
  Apparatus)

  28 (Toys & Sporting Goods)

  

 

 

	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  (INT. CL. 9) ELECTRICAL APPARATUS FOR
  TESTING VIDEO GAMES AND FOR ALTERING OR CONVERTING VIDEO GAMES; GAMING
  EQUIPMENT, NAMELY SLOT MACHINES, VIDEO POKER MACHINES AND VIDEO SLOT
  MACHINES; COMPUTER PROGRAMS AND INSTRUCTIONAL MANUALS SOLD AS A UNIT FOR
  GAMING EQUIPMENT, GAMING INFORMATION SYSTEMS AND ELECTRONIC EXERCISE
  EQUIPMENT; ELECTRONIC GAMING INFORMATION SYSTEMS COMPRISING COMPUTERS AND
  INTERFACES CONNECTED TO GAMING MACHINES; LOTTERY TERMINALS AND LOTTERY TICKET
  DISPENSING APPARATUS (INT. CL. 28) VIDEO GAMES AND VIDEO GAME; SYSTEMS,
  NAMELY. EQUIPMENT FOR PLAYING A VIDEO GAME AND MATING CARTRIDGES PROVIDING
  COMPUTERIZED GAME DATA TO THE EQUIPMENT; EXERCISE EQUIPMENT, NAMELY, EXERCISE
  CYCLES, ROWING MACHINES, STAIR CLIMBING MACHINES AND WEIGHT MACHINES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY CAJUN

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,792,139

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  September 7, 1993

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific
  Apparatus)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  ELECTRONIC VIDEO LOTTERY TERMINALS

  

 

 

	
  G.

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY  
  MARDI GRAS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,806,687

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  November 23, 1993

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific Apparatus)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  ELECTRONIC
  VIDEO LOTTERY TERMINALS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY  
  MAVERICK

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,816,368

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  January 11, 1994

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific Apparatus)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  ELECTRONIC
  VIDEO LOTTERY TERMINALS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L.

  	
   

  	
  TRADEMARK:

  	
   

  	
  BALLY  
  GAMING   Stylized Letters

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION NUMBER:

  	
   

  	
  1,820,490

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  REGISTRATION DATE:

  	
   

  	
  February 8, 1994

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTL CLASS:

  	
   

  	
  9 (Electrical & Scientific Apparatus)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOODS/SERVICES:

  	
   

  	
  GAMING EQUIPMENT; NAMELY, SLOT MACHINES,
  VIDEO POKER MACHINES AND VIDEO SLOT MACHINES AND VIDEO LOTTERY TERMINALS

  

 

 

Exhibit BExhibit 10.21

 

PREPAYMENT
AGREEMENT

 

THIS PREPAYMENT AGREEMENT is dated as of June 28, 2005, and is
being entered into by and among Alliance Gaming Corporation, a Nevada
corporation (“Alliance”), Robert Luciano, Jr. (“Luciano”), and Luciano, as
trustee of the Robert Luciano Family Trust dated February 27, 1995, as
amended (“Holder”).

 

RECITALS

 

WHEREAS, Alliance issued an Unsecured Subordinated Promissory Note
dated December 30, 2004 in the principal sum of $28,000,000 (the “Promissory
Note”) to Luciano, as trustee of the Holder, for the benefit of the Seller
Group.

 

WHEREAS, pursuant to the terms of the Promissory Note, Alliance may
prepay the amounts due under the Promissory Note at any time in cash or by the
delivery of shares of Alliance’s common stock, par value $0.10 per share (the “Alliance
Shares”) and Alliance desires to prepay a portion of the Promissory Note by
payment of Alliance Shares on June [28], 2005 (the “Prepayment Date”).

 

WHEREAS, Luciano, as trustee of the Holder, has instructed and directed
Alliance that the Alliance Shares constituting the prepayment should be paid
directly to the members of the Seller Group in the manner set forth herein.

 

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

 

1.             Definitions. Capitalized terms not otherwise defined herein shall have the meanings
set forth in that certain Amended and Restated Stock Purchase 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 Alliance, Sierra Design Group,
a Nevada corporation, Luciano and the Holder, as sole stockholder of Sierra
Design Group.

 

2.             Instruction by Luciano. Luciano, as trustee of the Holder, hereby
instructs and directs Alliance that the Alliance Shares constituting the
prepayment should be paid directly to the members of the Seller Group as
follows:

 

(a)           Each individual listed on Schedule 1 that has executed and delivered to
Alliance by 5:00 p.m. PDT on the day immediately prior to the Prepayment
Date, an Investor Representation Letter and Acknowledgement Agreement in the
form attached as Exhibit A hereto (the “Acknowledgement”), shall receive
his share of the prepayment in a number of unregistered Alliance Shares equal
to one-half of the individual’s pro  rata percentage (set forth on Schedule 1
hereto) of the Outstanding Balance plus accrued and unpaid interest thereon, divided by the average per share closing
price of the Alliance Shares on the New York Stock Exchange for the 20 business
days immediately prior to the Prepayment Date.

 

 

(b)           Luciano shall receive payment in Alliance Shares in an amount equal to
$14 million minus the aggregate amount in principal paid under Section 2(a), plus
accrued and unpaid interest thereon, divided by the average per share closing
price of the Alliance Shares on the New York Stock Exchange for the 20 business
days immediately prior to the Prepayment Date (such amount, the “Luciano
Prepayment”).

 

3.             Prepayment Procedures. Upon the Prepayment Date, Luciano shall
cancel and deliver the Promissory Note to Alliance. Alliance will issue to
Luciano, as trustee of the Holder and for the benefit of such individuals,
within two business days thereof, a new promissory note identical in form to
the Promissory Note in the principal sum of $14 million. Any fractional Alliance
Shares that result from the calculation of the prepayment amount in Section 2
shall be rounded up to the nearest whole Alliance Share.

 

4.             Representation and Warranties of Luciano. Luciano represents and warrants to Alliance
that he:

 

(a)           is an “Accredited Investor”, as such term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended;

 

(b)           has such knowledge and experience in financial business matters that he
is capable of evaluating the merits and risks of the prospective investment in
the Alliance Shares; and

 

(c)           (i) is receiving Alliance Shares under this Agreement and is
acquiring the Alliance Shares for investment for his own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the Securities Act, (ii) has no present intention
of selling, granting any participation in, or otherwise distributing any of the
shares of Alliance Shares issued hereunder otherwise than pursuant to an
effective registration statement under the Securities Act or in a transaction
exempt from the registration requirements under the Securities Act and
applicable state securities laws and (iii) has no contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of
the Alliance Shares issued hereunder.

 

5.             Restrictive Legend. Each certificate representing (a) the
Alliance Shares, and (b) any other securities issued in respect of the
Alliance Shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall be stamped or otherwise imprinted with
legends in the following form (in addition to any legend required under applicable
state securities and gaming laws):

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO IT
STATING THAT

 

2

 

SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.”

 

6.             Registration of the Alliance Shares. Except as restricted by applicable law, as soon
as practicable after Alliance files its Form 10-K for the fiscal year
ending June 30, 2005 with the Commission, Alliance shall prepare and file
with the Commission a registration statement (“Shelf Registration Statement”)
on an appropriate form as provided in the applicable rules and regulations
of the Commission to register under the Securities Act of 1933, as amended (the
“Securities Act”) the offer and sale of the Alliance Shares prepaid pursuant to
this Agreement to Luciano and the individuals listed in Schedule 1 that
have timely executed and delivered the Acknowledgement, from time to time in
accordance with the methods of distribution set forth in the Shelf Registration
Statement and Rule 415 under the Securities Act.

 

7.             Registration Procedures. Alliance shall use its best efforts to keep
the Shelf Registration Statement continuously effective, supplemented and
amended as required by the Securities Act, in order to permit the Shelf
Registration Statement to be usable by Luciano and the individuals listed in Schedule 1
that have timely executed and delivered the Acknowledgement for a period from
the date the Shelf Registration Statement is declared effective by the
Commission until the earlier of (i) the second anniversary thereof or (ii) the
date upon which all the Alliance Shares covered by the Shelf Registration
Statement have been sold pursuant thereto. Alliance shall cause the Shelf
Registration Statement and any amendment or supplement thereto, (A) to
comply in all material respects with the applicable requirements of the Securities
Act; and (B) not to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The parties hereby
acknowledge that Alliance shall have no obligation to distribute the Alliance
Shares covered by the Shelf Registration Statement through an underwritten offering.

 

8.             Expenses of Registration. Alliance shall bear all fees associated
with the filing of the Shelf Registration Statement including: (i) all
registration and filing fees, (ii) all fees and expenses of compliance
with federal securities laws and state “blue sky” or securities laws, (iii) all
expenses of printing, (iv) all fees and disbursements of legal counsel to
Alliance, (v) all application fees in connection with the listing of the
Alliance Shares on a national securities exchange, (vi) all fees and
disbursements of independent public accountants for Alliance and (vii) the
reasonable fees and disbursements of not more than one law firm or counsel to
act as counsel for the members of the Seller Group. Notwithstanding the
foregoing, Alliance shall not be responsible for any selling commissions or
stock transfer taxes associated with the distribution of the Alliance Shares.

 

9.             Miscellaneous.

 

(a)           Complete Agreement. This Agreement, the Schedules and the
documents delivered or to be delivered pursuant to this Agreement contain or
will contain the entire agreement among the parties with respect to the
transactions contemplated hereby and shall supersede all prior or
contemporaneous oral or written negotiations, commitments, agreements and
understandings with respect to such subject matter.

 

3

 

(b)           Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission (with subsequent letter
confirmation by mail) or three days after being mailed by certified or registered
mail, postage prepaid, return receipt requested, to the parties, their
successors in interest or their assignees at the following addresses, or at
such other addresses as the parties may designate by written notice in the
manner aforesaid:

 

	
  If
  to Alliance;

  	
  Alliance
  Gaming Corporation

  
	
   

  	
  6601
  South Bermuda Road

  
	
   

  	
  Las
  Vegas, Nevada 89119

  
	
   

  	
  Facsimile:

  	
  (702)
  896-7990

  
	
   

  	
  Attention:

  	
  Legal
  Department

  
	
   

  	
   

  	
   

  
	
  With
  a copy (which does

  	
   

  	
   

  
	
  not
  constitute notice) to:

  	
  Gibson,
  Dunn & Crutcher LLP

  
	
   

  	
  333
  South Grand Avenue

  
	
   

  	
  Los
  Angeles, California 90071-3197

  
	
   

  	
  Facsimile:

  	
  (213)
  229-7520

  
	
   

  	
  Attention:

  	
  Peter
  F. Ziegler, Esq.

  
	
   

  	
   

  	
   

  
	
  If
  to Luciano or Holder:

  	
  Mr. Robert
  Luciano

  
	
   

  	
  c/o
  Sierra Design Group

  
	
   

  	
  300
  Sierra Manor Dr.

  
	
   

  	
  Reno,
  Nevada 89511

  
	
   

  	
  Telecopy:

  	
  (775)
  850-1501

  
	
   

  	
  Attention:

  	
  Robert
  Luciano

  
	
   

  	
   

  	
   

  
	
  With
  a copy (which does

  	
   

  	
   

  
	
  not
  constitute notice) to:

  	
  Lionel,
  Sawyer & Collins

  
	
   

  	
  1100
  Bank of America Plaza

  
	
   

  	
  50
  West Liberty Street

  
	
   

  	
  Reno,
  Nevada 89501

  
	
   

  	
  Facsimile:

  	
  (775)
  788-8682

  
	
   

  	
  Attention:

  	
  Dan
  Reaser

  

 

(c)           Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal law, and not the law
pertaining to conflicts or choice of law, of the State of Nevada.

 

(d)           Fees and Expenses. Except as provided for in Section 7, the
parties shall bear their own attorneys’, accountants’ and other fees, costs and
expenses incurred in connection with the negotiation and the consummation of
the transactions contemplated hereby.

 

4

 

(e)           Attorneys’ Fees and Costs. Should any party institute any action or
proceeding in any court to enforce any provision of this Agreement, the
prevailing party shall be entitled to receive from the losing party reasonable
attorneys’ fees and costs incurred in such action or proceeding, whether or not
such action or proceeding is prosecuted to judgment.

 

(f)            Counterparts. This Agreement may be executed by facsimile
copy and in multiple counterparts, each of which shall be deemed an original,
but all of which when taken together shall constitute one and the same
instrument.

 

[Signature Page follows]

 

5

 

IN WITNESS WHEREOF, each
of the parties has executed this Prepayment Agreement as of the date first
written above.

 

 

	
  LUCIANO

  	
  /s/ Robert Luciano

  	
   

  
	
   

  	
  Robert
  Luciano

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HOLDER

  	
  Robert Luciano Family
  Trust dated

  
	
   

  	
  February 27, 1995, as
  amended

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Robert Luciano

  	
   

  
	
   

  	
  Name: Robert Luciano

  	
   

  
	
   

  	
  Title: Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ALLIANCE

  	
  ALLIANCE
  GAMING CORPORATION,

  a Nevada Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Steven DesChamps

  	
   

  
	
   

  	
  Name:     Steven
  DesChamps

  	
   

  
	
   

  	
  Title:       CFO

  	
   

  
				

 

[signature page to Prepayment Agreement]

 

6

 

Schedule 1

 

	
  Name

  	
   

  	
  Pro Rata Percentage

  	
   

  
	
  1.

  	
  Robert Crowder (A)

  	
   

  	
  2.6288

  	
  %

  
	
  2.

  	
  Loren Nelson (A)

  	
   

  	
  2.1288

  	
  %

  
	
  3.

  	
  Craig Bullis

  	
   

  	
  2.4428

  	
  %

  
	
  4.

  	
  Warren White

  	
   

  	
  2.2148

  	
  %

  
	
  5.

  	
  Lars Perry

  	
   

  	
  1.8064

  	
  %

  
	
  6.

  	
  Thomas Taxon

  	
   

  	
  1.7910

  	
  %

  
	
  7.

  	
  Walter Eisele

  	
   

  	
  0.4540

  	
  %

  
	
  8.

  	
  Michael Delaney

  	
   

  	
  0.4540

  	
  %

  

 

7

 

EXHIBIT A

 

INVESTOR REPRESENTATION LETTER

AND ACKNOWLEDGEMENT AGREEMENT

 

THIS INVESTOR REPRESENTATION LETTER AND ACKNOWLEDGMENT AGREEMENT (this “Acknowledgment”)
is dated as of June [   ], 2005, and is being entered into by
and between                                       ,
an individual and a member of the Seller Group (the “Seller Group Member”), and
Alliance Gaming Corporation, a Nevada corporation (“Alliance”).

 

RECITALS

 

WHEREAS, Alliance issued an Unsecured Subordinated Promissory Note
dated December 30, 2004 in the principal sum of $28,000,000 (the “Promissory
Note”) to Luciano, as trustee of the Robert Luciano Family Trust dated February 27,
1995, as amended (“Trust”), for the benefit of the Seller Group.

 

WHEREAS, pursuant to the terms of the Promissory Note, Alliance may
prepay the amounts due under the Promissory Note at any time in cash or by the
delivery of such number of shares of Alliance’s common stock, par value $0.10
per share (the “Alliance Shares”).

 

WHEREAS, Luciano, as trustee of the Trust, has instructed and directed
Alliance that the Alliance Shares constituting the prepayment should be paid
directly to certain members of the Seller Group in the manner set forth in the
Prepayment Agreement by and among Alliance, Luciano and the Trust (the “Prepayment
Agreement”).

 

WHEREAS, pursuant to the Prepayment Agreement, the Seller Group Member
is receiving Alliance Shares in respect of one-half of his interest in the
Promissory Note.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follow:

 

1.             Definitions. Capitalized terms not otherwise defined herein shall have the meanings
set forth in that certain Amended and Restated Stock Purchase 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 Alliance, Sierra Design Group,
a Nevada corporation, Luciano and the Trust, as sole stockholder of Sierra
Design Group.

 

2.             Representation and Warranty of each Seller
Group Member. The Seller
Group Member represents and warrants that he:

 

[FOR THE ACCREDITED INVESTORS]

 

(a)           is an “Accredited Investor”, as such term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended;

 

8

 

(b)           has such knowledge and experience in financial business matters that he
is capable of evaluating the merits and risks of the prospective investment in
the Alliance Shares; and

 

(c)           (i) is receiving Alliance Shares under this Agreement and is
acquiring the Alliance Shares for investment for his own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the Securities Act, (ii) has no present intention
of selling, granting any participation in, or otherwise distributing any of the
shares of Alliance Shares otherwise than pursuant to an effective registration
statement under the Securities Act or in a transaction exempt from the registration
requirements under the Securities Act and applicable state securities laws and (iii) has
no contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Alliance Shares.

 

[FOR THE NON-ACCREDITED INVESTORS]

 

(a)           has such knowledge and experience in financial business matters that he
is capable of evaluating the merits and risks of the prospective investment in
the Alliance Shares;

 

(b)           has received (i) the Annual Report on form 10-K, as amended, of
Alliance for its fiscal year ended June 30, 2004, (ii) the Quarterly
Reports on Form 10-Q of Alliance for the quarters ended September 30,
2004, December 31, 2004 and March 31, 2005, (iii) the Proxy Statement
for the Annual Meeting of Alliance held on December 8, 2004 and (iv) any
current reports on Form 8-K of Alliance filed with the Securities and
Exchange Commission since March 31, 2005; and

 

(c)           (i) is receiving Alliance Shares under this Agreement and is
acquiring the Alliance Shares for investment for his own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the Securities Act, (ii) has no present intention
of selling, granting any participation in, or otherwise distributing any of the
shares of Alliance Shares otherwise than pursuant to an effective registration
statement under the Securities Act or in a transaction exempt from the
registration requirements under the Securities Act and applicable state
securities laws and (iii) has no contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Alliance Shares.

 

3.             Acknowledgment and Consent. The Seller Group Member hereby acknowledges
and agrees that the delivery and payment of Alliance Shares pursuant to the
Prepayment Agreement dated June [   ], 2005, constitutes
the prepayment in full of one-half of the amount of the Outstanding Balance
plus the accrued and unpaid interest thereon owed to him under the Promissory
Note.

 

[Signature Page follows]

 

9

 

IN WITNESS WHEREOF, each of the parties has executed this Investor Representation Letter
and Acknowledgement Agreement as of the date first written above.

 

 

	
  ALLIANCE

  	
  ALLIANCE
  GAMING CORPORATION,

  
	
   

  	
  a
  Nevada Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  SELLER GROUP MEMBER

  	
   

  	
   

  
	
   

  	
  Name:

  
					

 

[signature page to Investor
Representation Letter and Acknowledgment Agreement]

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00095-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00095-of-00352.parquet"}]]