-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mEtsGI6djeGJR69SHIsIMYyzO8AMFe2X62plu3g83vqApFKc9qbZObYfUCle/5rL CDVDCE1dFWbLVKjaKASmbA== 0000950148-95-000222.txt : 19950517 0000950148-95-000222.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950148-95-000222 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE GAMING CORP CENTRAL INDEX KEY: 0000002491 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880104066 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04281 FILM NUMBER: 95537470 BUSINESS ADDRESS: STREET 1: 4380 BOULDER HGWY CITY: LAS VEGAS STATE: NV ZIP: 89121 BUSINESS PHONE: 7024354200 FORMER COMPANY: FORMER CONFORMED NAME: UNITED GAMING INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GAMING & TECHNOLOGY INC DATE OF NAME CHANGE: 19890206 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED PATENT TECHNOLOGY INC DATE OF NAME CHANGE: 19830519 10-Q 1 FORM 10-Q 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 0-4281 ALLIANCE GAMING CORPORATION (Exact name of registrant as specified in its charter) NEVADA 88-0104066 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 4380 BOULDER HIGHWAY LAS VEGAS, NEVADA 89121 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER: (702) 435-4200 (Former name, former address and former fiscal year, if changed since last report) _______________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No The number of shares of Common Stock, $0.10 par value, outstanding as of May 9, 1995 according to the records of the registrant's registrar and transfer agent, was 11,654,150. On the same date, the number of shares outstanding of non voting Junior Convertible Special Stock, $0.10 par value, was 1,333,333. ================================================================================ 2 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 I N D E X
PART I. FINANCIAL INFORMATION PAGE Item 1. Unaudited Consolidated Financial Statements Unaudited Condensed Consolidated Balance Sheets as of June 30, 1994 and March 31, 1995 3 Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 1994 and 1995 5 Unaudited Condensed Consolidated Statements of Operations for the nine months ended March 31, 1994 and 1995 6 Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 1994 and 1995 7 Notes to Unaudited Condensed Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K 17 SIGNATURES 19
2 3 PART 1 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS
June 30 Mar 31 1994 1995 --------- --------- (In thousands) Current assets: Cash and cash equivalents $ 37,085 $ 25,952 Securities available for sale 12,489 13,240 Receivables, net 5,924 3,991 Inventories 661 688 Prepaid expenses 4,420 2,902 Refundable income taxes 361 361 Other 30 77 -------- -------- Total current assets 60,970 47,211 -------- -------- Property and equipment: Land and improvements 3,229 15,879 Building and improvements 4,286 7,768 Gaming equipment 30,395 36,413 Furniture, fixtures and equipment 9,632 11,944 Leasehold improvements 5,222 5,424 Construction in progress 212 313 -------- -------- 52,976 77,741 Less accumulated depreciation and amortization 24,293 29,462 -------- -------- Property and equipment, net 28,683 48,279 -------- -------- Other assets: Receivables, net 4,609 5,196 Excess of costs over net assets of an acquired business, net of accumulated amortization of $295 and $498 3,789 6,054 Intangible assets, net of accumulated amortization of $4,145 and $5,174 13,527 12,707 Deferred tax assets 1,081 1,230 Investment in minority owned subsidiary 2,000 1,585 Other 4,757 5,841 -------- -------- Total other assets 29,763 32,613 -------- -------- Total Assets $119,416 $128,103 ======== ========
(continued) 3 4 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
June 30 Mar 31 1994 1995 --------- --------- (In thousands, except share information) Current liabilities: Current maturities of long-term debt, including amounts due to a stockholder of $975 and $1,024 $ 1,504 $ 1,309 Accounts payable 1,572 1,908 Slot contracts payable 89 43 Accrued expenses 6,879 6,202 -------- -------- Total current liabilities 10,044 9,462 Long-term debt less current maturities, including amounts due to a stockholder of $3,415 and $2,535 89,222 101,409 Deferred tax liabilities 1,218 1,230 Other liabilities 3,587 2,806 -------- -------- Total liabilities 104,071 114,907 -------- -------- Commitments and contingencies Minority interest 246 497 Stockholders' equity: Common stock, $0.10 par value; authorized 175,000,000 shares; issued and outstanding 10,505,928 and 11,404,150 1,051 1,141 Special stock, $0.10 par value; authorized 10,000,000 shares; issued and outstanding 1,333,333 and 1,333,333 133 133 Paid-in capital 26,716 30,846 Unrealized loss on securities available for sale (421) (247) Accumulated deficit (12,380) (19,174) -------- -------- Total stockholders' equity 15,099 12,699 -------- -------- Total liabilities and stockholders' equity $119,416 $128,103 ======== ========
See notes to unaudited condensed consolidated financial statements. 4 5 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1994 AND 1995
1994 1995 ---- ---- (In thousands, except per share amounts) Revenues: Gaming Routes $26,902 $26,878 Casinos and taverns 3,840 3,662 Food and beverage sales 1,050 893 Equipment sales 15 6 ------- ------- 31,807 31,439 ------- ------- Costs and expenses: Cost of gaming Routes 19,954 20,197 Casinos and taverns 2,726 2,090 Cost of food and beverage 737 624 Cost of equipment sales 7 2 Selling, general and administrative 6,914 6,888 Depreciation and amortization 2,375 2,322 ------- ------- 32,713 32,123 ------- ------- Operating loss (906) (684) Other income (expense): Interest income 613 731 Interest expense (1,781) (1,928) Minority share of income (409) (83) Equity in income of affiliate --- 20 Other, net 3,359 273 ------- ------- Income (loss) before income taxes 876 (1,671) Income tax expense (29) (104) ------- ------- Net income (loss) $ 847 $(1,775) ======= ======= Income (loss) per share of common stock $ .08 $ (.16) ======= ======= Weighted average common shares outstanding 10,279 11,375 ======= =======
See notes to unaudited condensed consolidated financial statements. 5 6 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS NINE MONTHS ENDED MARCH 31, 1994 AND 1995
1994 1995 ---- ---- (In thousands, except per share amounts) Revenues: Gaming Routes $75,787 $79,389 Casinos and taverns 11,646 11,523 Food and beverage sales 3,315 2,842 Equipment sales 43 22 ------- ------- 90,791 93,776 ------- ------- Costs and expenses: Cost of gaming Routes 56,406 59,411 Casinos and taverns 8,138 6,743 Cost of food and beverage 2,260 2,038 Cost of equipment sales 13 10 Selling, general and administrative 18,097 21,184 Depreciation and amortization 7,044 6,934 ------- ------- 91,958 96,320 ------- ------- Operating loss (1,167) (2,544) Other income (expense): Interest income 1,432 2,235 Interest expense (5,052) (5,844) Minority share of income (409) (252) Equity in net loss of affiliate --- (386) Other, net 3,483 392 ------- ------- Loss before income taxes (1,713) (6,399) Income tax expense (37) (394) ------- ------- Net loss $(1,750) $(6,793) ======= ======= Loss per share of common stock $ (.17) $ (.61) ======= ======= Weighted average common shares outstanding 10,198 11,192 ======= =======
See notes to unaudited condensed consolidated financial statements. 6 7 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED MARCH 31, 1994 AND 1995
1994 1995 ---- ---- (In thousands) Cash flows from operating activities: Net loss (1,750) (6,793) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 7,044 6,934 Loss on sale of property and equipment 714 825 Write off of other assets 1,104 1,620 Provision for losses on receivables 481 380 Amortization of debt discounts 221 237 Equity in losses of affiliate --- 386 Provision for inventory obsolescence 180 --- Net change in operating assets and liabilities: (Increase) decrease in: Inventories (34) (14) Prepaid expenses 160 1,627 Other assets 24 (47) Increase (decrease) in: Accounts and slot contracts payable 1,309 (271) Accrued expenses (17) (4,163) Minority interests 409 251 Other liabilities --- (805) -------- -------- Net cash provided by (used in) operating activities: $ 9,845 $ 167 -------- -------- Cash flows from investing activities: Additions to property and equipment (4,151) (7,816) Proceeds from sale of property and equipment 229 328 Additions to receivables (13,056) (10,251) Cash collections on receivables 12,208 11,063 Net cash provided by acquisition of business --- 2,481 Investment in subsidiary (2,000) (1,585) Acquisition of securities available for sale (12,757) (577) Additions to intangible assets (7,804) (282) Additions to other long-term assets (1,268) (3,152) -------- -------- Net cash used in investing activities (28,599) (9,791) -------- -------- Cash flows from financing activities: Reduction of long-term debt (41,109) (1,975) Proceeds from long-term debt, net 85,384 --- Issuance of common stock warrants 116 --- Issuance of stock 5,129 466 -------- -------- Net cash provided by (used in) financing activities 49,520 (1,509) -------- -------- Cash and cash equivalents: (Decrease) increase for period 30,766 (11,133) Balance, beginning of period 9,580 37,085 -------- -------- Balance, end of period $ 40,346 $ 25,952 ======== ========
See notes to unaudited condensed consolidated financial statements. 7 8 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1994 AND 1995 1. ADJUSTMENTS FOR FAIR PRESENTATION In the opinion of management, all adjustments necessary for a fair presentation of the unaudited results for the three month and nine month periods ended March 31, 1994 and 1995, respectively, have been made. The results of operations for an interim period are not necessarily indicative of the results to be expected for a full year. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes in the Company's annual report on Form 10-K for the fiscal year ended June 30, 1994. 2. RECLASSIFICATIONS Certain reclassifications have been made to prior period financial statements to conform with current period presentations. 3. RECEIVABLES The Company's gaming route operations from time to time involve loans from the Company to location operators in order to enable the Company to enter into arrangements to participate in revenues over extended periods of time. These loans, generally made for buildouts, tenant improvements and initial operating expenses, are generally guaranteed on a full recourse basis by the location owner and secured by all or substantially all of the assets of the location. The majority of the loans are interest bearing and are expected to be repaid over a period of time not to exceed the life of the related revenue sharing agreement. The loans have varying payment terms with weekly payments ranging from approximately $200 to $2,000 and monthly payments ranging from approximately $500 to $9,000. Annual interest rates on the loans range from prime plus 1.5% to stated rates of 12% with various maturity dates ranging from April 1995 to April 2007. The loans are expected to be repaid from the locations' cash flows or proceeds from the sale of the leaseholds. Receivables consist of the following:
June 30 Mar 31 1994 1995 ------- ------- (In thousands) Notes receivable-location operators $ 8,319 $ 8,051 Other receivables 2,214 1,136 ------- ------- 10,533 9,187 Less current amounts (5,924) (3,991) ------ ------ Long-term receivables, excluding current amounts $ 4,609 $ 5,196 ======= =======
Receivables are presented net of an allowance for doubtful accounts of approximately $1,389,000 and $1,635,000 as of June 30, 1994 and March 31, 1995, respectively. The allowance is allocated between current and long-term receivables on a pro rata basis related to notes receivable from location operators. During the fiscal year ended June 30, 1994 ("fiscal 1994"), the Company cancelled certain sublease agreements as a result of defaults by payors in making payments and acquired title to the assets and operating rights to the tavern locations in exchange for releases of the customers' debt owed to the Company. Also during fiscal 1994, interest income of approximately $48,000 was recognized on these receivables. Total interest income of $130,000 would have been recognized if the receivables had been current in accordance with their original terms. The total initial investment in these tavern locations of approximately $2,011,000 includes the net receivables of approximately $1,362,000 and other assets of $649,000. Management of the Company has 8 9 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1994 AND 1995 3. RECEIVABLES (CONTINUED) determined the fair value of the locations' assets from knowledge of sales of comparable establishments and expertise acquired from operating its gaming devices at similar locations. Due to the Company's decision to dispose of the currently operated small independent tavern operations, certain reserves and write downs were charged against operations in the fourth quarter of fiscal 1994. The Company has reached an agreement to sell all such locations currently owned by the Company. The sale is contingent upon, among other conditions, the buyer obtaining all required gaming licenses, of which there can be no assurance. Management cannot estimate when or how many of these locations will be obtained and subsequently sold in the future. No taverns were acquired in the nine months ended March 31, 1995. 4. DEBT Long-term debt at June 30, 1994 and March 31, 1995 consists of the following:
June 30 Mar 31 1994 1995 ------- ------- (In thousands) 7.5% Convertible Subordinated Debentures due 2003 85,000 85,000 Due to stockholder, net of discount of $984,000 and $807,000 4,390 3,559 Hospitality Franchise Systems Note Payable --- 9,256 Other debt 1,336 4,903 ------- -------- 90,726 102,718 Less current maturities 1,504 1,309 ------- -------- Long-term debt, less current maturities $89,222 $101,409 ======= ========
Accrued interest of approximately $1,893,000 (June 30) and $306,000 (March 31) is included in accrued expenses in the Company's unaudited condensed consolidated balance sheets. Included in these amounts are $30,000 (June 30) and $31,000 (March 31) due to affiliates of Alfred H. Wilms, the Company's largest stockholder and a member of the Board of Directors of the Company, relating to funding of the Louisiana gaming device route operations of the Company's majority-controlled subsidiary, Video Services, Inc. ("VSI"). 5. INCOME TAXES The Company generally accounts for income taxes and files its income tax returns on a consolidated basis. However, VSI, in which the Company holds 100% of the voting interests, has previously filed its tax returns on a separate basis and was not consolidated for tax purposes. During the quarter ended December 31, 1994, the Company determined that VSI can be consolidated for tax purposes. As a result, the Company filed for a refund of estimated federal income taxes paid for the fiscal year ended June 30, 1994. Effective July 1, 1993, the Company adopted Financial Accounting Standard No. 109 Accounting for Income Taxes. Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of 9 10 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1994 AND 1995 5. INCOME TAXES (CONTINUED) a change in tax rates is recognized in income in the period that includes the enactment date. Due to losses and the lack of available carrybacks, the Company recognized no federal income tax expense or benefit for the for the three or nine month periods ended March 31, 1994 and 1995. The federal and state income tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at March 31, 1995 are presented below.
(in thousands) Deferred tax assets: Net operating loss carryforwards $ 10,005 Inventory obsolescence reserve 542 Receivables, bad debt allowance 577 VSI organization and start-up costs 172 Reserves for discontinued operations 1,376 Unrealized loss on securities available for sale 162 Other 292 -------- Total gross deferred tax assets 13,126 Less: Valuation allowance (11,896) -------- Net deferred tax assets $ 1,230 Deferred tax liabilities: Property and equipment principally due to depreciation differences 1,230 -------- Total gross deferred tax liabilities 1,230 -------- Net deferred tax assets (liabilities) $ --- ========
The valuation allowance for deferred tax assets as of June 30, 1994 was $10,615,000. The net change in the total valuation allowance for the consolidated group for the nine months ended March 31, 1995 was an increase of $1,281,000. At March 31, 1995, the Company had estimated net operating loss carryforwards for federal income tax purposes of approximately $29,425,000 which are available to offset future federal taxable income, if any, expiring 2007 through 2009. 6. INTANGIBLE ASSETS Intangible Assets includes $5,503,000, net of $819,000 of accumulated amortization, for commissions, discounts and other issuance costs related to the Company's 1993 private placement of $85,000,000 aggregate principal amount of 7.5% Convertible Subordinated Debentures due 2003. Such costs are being amortized on a straight line basis over the term of the debentures. 7. INVESTMENT IN MINORITY OWNED SUBSIDIARY Investment in minority owned subsidiary consists of $1,585,000 related to the Company's investment in Kansas Financial Partners, LLC. 8. ACQUISITION OF ADDITIONAL INTEREST IN RAINBOW CASINO On March 29, 1995, the Company consummated certain transactions whereby a subsidiary of the Company acquired from The Rainbow Casino Corporation, a Mississippi corporation ("RCC"), the general partnership 10 11 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1994 AND 1995 8. ACQUISITION OF ADDITIONAL INTEREST IN RAINBOW CASINO (CONTINUED) interest in the Rainbow Casino-Vicksburg Partnership, L.P. ("RCVP"), and increased its partnership interest. In exchange for the assumption of approximately $1,140,000 of liabilities (plus a financing premium) related to the completion of the project which remained after the opening of the casino (for which RCC was to have been responsible but had not paid) by National Gaming Mississippi, Inc. ("NGM"), a subsidiary of Hospitality Franchise Systems, Inc., a related cash payment of $652,000 by the Company to NGM and commitments from the Company and NGM to fund additional financing required to complete the project (i) the Company became the general partner and RCC became the limited partner and (ii) the respective partnership interests were adjusted. As adjusted, RCC is entitled to receive 10% of the net cash flow (as defined), which amount shall increase to 20% if net cash flow exceeds $35,000,000 for a period of fifteen years, such period being subject to one year extensions for each year in which a minimum payment of $50,000 is not made. As a result of these transactions, the assets and liabilities of RCVP have been included in the accompanying consolidated balance sheet as of March 31, 1995. Prior to this acquisition, the Company accounted for its investment under the equity method. The Company has accounted for the acquisition of a controlling interest in the partnership using the purchase method of accounting, and accordingly allocated the purchase price to the assets acquired based on their estimated fair value. Such estimates may be revised at a later date. The excess of the cost over the estimated fair value of the assets acquired of approximately $2,125,000 will be amortized on a straight line basis over 15 years. Beginning March 29, 1995, the results of operations of RCVP have been reflected in the Company's consolidated statements of income and cash flows. 11 12 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES: At March 31, 1995, the Company had working capital of approximately $37,913,000, a decrease of approximately $13,013,000 from June 30, 1994. The decrease in working capital is primarily in cash and cash equivalents which were used for investing activities and to fund development activities in connection with the Company's growth strategy. As of March 31, 1995, the Company had $39,192,000 in cash, cash equivalents and securities available for sale, of which approximately $7,000,000 is necessary to fund ongoing gaming operations in the ordinary course of business. During the nine months ended March 31, 1995, the Company incurred approximately $5,647,000 in costs associated with pursuit of the Company's growth strategy. The Company's strategy is to use its strengthened management team, diversified gaming expertise and business and investment community relationships to develop new opportunities in the operation of land-based (including Native American), dockside and riverboat casinos, gaming systems and technology, and the supply and management of gaming devices. On July 16, 1994, the Rainbow Casino located in Vicksburg, Mississippi permanently opened for business. Through a subsidiary, the Company originally purchased a 45% limited partnership interest in the Rainbow Casino-Vicksburg Partnership, L.P., a Mississippi limited partnership ("RCVP"), which owns the casino, all assets (including the gaming equipment) associated with the casino and certain adjacent parcels of land. The 55% general partnership interest in RCVP was held by The Rainbow Casino Corporation, an unaffiliated Mississippi corporation ("RCC"). As previously reported, in connection with the completion of construction of the casino and the acquisition of its original 45% limited partnership interest, the Company funded a $3,250,000 advance to RCC on the same terms as RCC's financing from Hospitality Franchise Systems, Inc. ("HFS") (other than the fact that such advance is subordinate to payments due to HFS). The Company received a royalty of 5.2% of annual gross revenues. The entire $3,250,000 advance to RCC was funded in fiscal 1995. On March 29, 1995, the Company consummated certain transactions whereby the Company acquired from RCC the general partnership interest in RCVP and increased its partnership interest. In exchange for the assumption of approximately $1,140,000 of liabilities (plus a financing premium) related to the completion of the project which survived the opening of the casino (for which RCC was to have been responsible but failed to satisfy) by National Gaming Mississippi, Inc. ("NGM"), a subsidiary of HFS, a related cash payment of $652,000 by the Company to NGM and commitments by the Company and NGM to fund additional financing required to complete the project (i) a subsidiary of the Company became the general partner and RCC became the limited partner and (ii) the respective partnership interests were adjusted. As adjusted, RCC is entitled to receive 10% of the net cash flow (as defined), which amount shall increase to 20% if net cash flow exceeds $35,000,000 for a period of fifteen years, such period being subject to one year extensions for each year in which a minimum payment of $50,000 is not made. The Company and Casino Magic Corporation, through wholly owned subsidiaries, are members in Kansas Gaming Partners, LLC ("KGP") and Kansas Financial Partners, LLC ("KFP"), both Kansas limited liability companies. Under an option agreement granted to KGP by Camptown Greyhound Racing, Inc. ("Camptown"), KGP has been granted the exclusive right to operate casino-type gaming at Camptown's facility if and when such gaming is permitted in Kansas. In the event that casino gaming is enacted in Kansas, it is contemplated that KGP would build a casino, hotel, RV Park, theme park and restaurants at the 320 acre site in Frontenac, Kansas. In September 1994, the Kansas Racing Commission approved a revised financing proposal submitted by Camptown that would facilitate completion of construction of a greyhound racing facility on the Frontenac site. Camptown has received a $3,205,000 loan commitment which has been guaranteed by KFP. In December 1994, the Company invested $1,580,000 in KFP for its portion of the loan guarantee which was made in the form of a certificate of deposit. Construction of Camptown's racing facility is expected to be completed in May 1995 and operations are expected 12 13 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 to commence later that same month. Camptown's obligation to begin to repay the loan gauranteed by KFP will commence with interest only payments in June 1995. Principal repayment is scheduled to commence in June 1996. As previously reported, the Company has been engaged in discussions with Lone Star Casino Corporation ("Lone Star") and other parties relating to a possible joint venture in Bay St. Louis, Mississippi ("Pine Hills"). In April 1995, however, the Mississippi Supreme Court overturned prior decisions and found that the proposed site plan for Pine Hills did not comply with applicable law. As a result of this decision, the Company has ended discussions with Lone Star. The Company will not incur any additional charges to earnings by terminating these discussions. In March 1995, the Company delivered the remaining 112,222 shares of its Common Stock issuable in connection with its March 1994 acquisition of 90% of the common stock of Native American Investments, Inc. ("NAI"). In the same transaction, the Company also acquired the remaining 10% of the NAI stock which it did not already own and entered into certain mutual releases with the former owners thereof. The Company's lease to operate the casino at the Quality Inn in Las Vegas, Nevada expires on approximately June 30, 1995. The Company has chosen not to exercise its renewal rights under this lease. The exact date on or after June 30 on which the Company will vacate the casino is still under discussion. For the nine months ended March 31, 1995, the Quality Inn Casino has contributed approximately $1,800,000 of revenues and $199,000 of operating income to the Company. Cash provided by operations for the nine months ended March 31, 1995 decreased approximately $9,678,000 (98.3%) from amounts reported for the prior year period. This decline was due primarily to an increase in development costs of approximately $3,605,000 and a decrease in accrued expenses of $4,146,000 caused primarily by payment of the semi-annual interest due on the Company's 7.5% Convertible Subordinated Debentures due 2003 (the "Debentures"). Additionally, accounts payable activity showed a decline of $1,580,000 compared to the prior year and other long-term liabilities decreased by $805,000 as the Company paid rent and other expenses accrued in fiscal 1994 associated with its decision to exit the downtown Las Vegas gaming market and dispose of its tavern locations. These uses of cash were partially offset by an increase in cash from operations of approximately $3,691,000 from the Company's core Nevada and Louisiana business operations as compared to the same period last year. Also, included in the prior year's results of operations was a non-recurring gain of $3,600,000 associated with the termination of the Company's letter agreement with Capital Gaming International, Inc. Cash flows used for investing activities decreased by $18,808,000 from the same period in the prior year. In the prior year, the Company completed the private placement of the Debentures. Upon closing of this private placement, the Company purchased approximately $12,757,000 of securities available for sale and capitalized approximately $5,358,000 in costs related to the issuance of the Debentures. Additionally, the Company reported increased cash of $2,481,000 as a result of acquiring its additional interest in RCVP. These improvements were somewhat offset by an increase to additions to other long-term assets of $1,884,000 due largely to purchases of gaming equipment parts, primarily bill acceptors. Cash flows from financing activities declined $51,029,000 from the same period last year. As noted above, in September 1993, the Company completed the private placement of $85,000,000 aggregate principal amount of its Debentures. Concurrent with the closing of the issuance of the Debentures, Kirkland-Ft. Worth Investment Partners, L.P. invested $5,000,000 in the Company in exchange for 1,333,333 shares of the Company's Non-Voting Junior Convertible Special Stock and warrants to purchase up to 2,750,000 shares of Common Stock, subject to certain conditions. A portion of the net proceeds from these transactions was used to repay previously existing debt and accrued interest of approximately $38,245,000. Management believes the Company's present working capital and funds generated from operations are sufficient to meet its existing commitments, debt payments and other obligations as they become due. As discussed in previous reports, however, it remains a part of the Company's business strategy to seek additional gaming opportunities, including opportunities in which its route and casino experience may be applicable. As part of its business activities, 13 14 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 the Company is regularly involved in the identification, investigation and development of such opportunities. Accordingly, in order to support such activities, the Company may in the future elect to issue additional debt or equity securities if and when appropriate opportunities become available on terms satisfactory to it. RESULTS OF OPERATIONS. Three Months Ended March 31, 1994 and 1995 Revenues: Total revenues for the three months ended March 31, 1995 were $31,439,000, a decrease of $368,000 (1.2%) from the same period in the prior year. Revenues from all gaming route operations decreased $24,000 (0.1%) to approximately $26,878,000 in the third quarter of fiscal 1995. Revenues from Louisiana route operations declined $668,000 (a decrease of 13.6%) primarily as a result of increased competition from riverboat operations. This competition will likely increase with the April opening of a land-based casino in New Orleans. Revenue from Nevada route operations increased approximately $644,000 (2.9%) over those for the same period last year. The increase in the Nevada gaming route revenues was attributable to a $0.40 decrease in the average net win per gaming device per day for the three months ended March 31, 1995 compared to the same period in the prior year (accounting for a decrease of approximately $183,000) and an increase in the weighted average number of gaming devices on location for the current quarter as compared to the same period in the prior year (accounting for an increase of approximately $827,000). Revenues from casino and tavern operations, including food and beverage sales, decreased approximately $335,000 (6.9%) during the current year quarter as compared to those for the prior year. These revenues include royalty income from RCVP which commenced with the opening of the Rainbow Casino in July 1994 and continued until the Company's acquisition of its general partnership interest in RCVP on March 29, 1995. However, these royalty fees were offset by the termination of the Company's lease at the Royal Casino on November 30, 1994. Additionally, casino and tavern revenues for the quarter ended March 31, 1995 do not include revenues earned by the Trolley Stop Casino ("Trolley Stop") or Miss Lucy's Gambling Hall and Saloon ("Miss Lucy's") where operations were substantially reduced in September 1994 to the minimum levels required to preserve the related gaming licenses. Costs and Expenses: Costs of Revenues Cost of gaming route revenues for the quarter ended March 31, 1995 increased $243,000 (1.2%) over the same quarter in the prior year. Costs of revenues from route operations in Louisiana decreased $440,000 (a decrease of 14.1% from last year) as revenues declined primarily as a result of the increased competition in that market. Costs of gaming revenues for Nevada gaming route revenues increased $683,000 (4.1%) as compared to the prior year and increased slightly as a percent of Nevada gaming route revenues due primarily to additional and renewed space lease contracts. Cost of route revenues includes rents under both space lease and revenue sharing arrangements, gaming taxes and direct labor, including related taxes and benefits. The cost of casino and tavern revenues decreased $749,000 (21.6%) compared to the prior year results primarily due to the reduction of operations of the Trolley Stop and Miss Lucy's and the termination of the Company's lease at the Royal Casino. Cost of casino and tavern revenues includes cost of goods sold, gaming taxes, rent and direct labor, including related taxes and benefits. Expenses Included in selling, general and administrative expenses for the quarter ended March 31, 1995 are developmental costs associated with the pursuit of the Company's growth strategy of approximately $2,140,000, an increase of $643,000 (43.0%) over last year. Prior year development costs include certain significant expenses associated with 14 15 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 the Company's purchase of NAI. These developmental costs include salaries and wages, related taxes and benefits, professional fees, travel expense and other expenses associated with supporting the Company's growth strategy. Exclusive of the development expenses noted above, selling, general and administrative expenses for the quarter ended March 31, 1995 decreased approximately $669,000 (12.4%) from the prior year. Such expenses related to gaming route operations decreased $663,000 (25.3%) from the prior year primarily reflecting steps taken to control costs, including reduced staffing levels, for both Louisiana and Nevada gaming route operations. Selling, general and administrative costs also decreased for casino and tavern operations by $304,000 (26.8%) from the prior year period due to the reduction of operations at the Trolley Stop and Miss Lucy's and the termination of the Company's lease at the Royal Casino. These decreases in selling, general and administrative costs were partially offset by an increase in corporate general and administrative expenses of $298,000 (18.0%). This increase was caused primarily by costs associated with additions to the corporate staff and increased legal fees. The Company expects that there may be further increases in selling, general and administrative expenses related to unforeseen additions of new management and development personnel and other costs associated with supporting the Company's growth strategy. Included in other income and expense of the current quarter is income of $20,000 representing the Company's share of the results of operations for the Rainbow Casino and related facilities during the period prior to the Company's acquisition of the general partnership interest in RCVP on March 29, 1995. Nine Months Ended March 31, 1994 and 1995 Revenues: Total revenues for the nine months ended March 31, 1995 were $93,776,000, an increase of $2,985,000 (3.3%) over those for the same period in the prior year. Revenues from all gaming route operations increased $3,602,000 (4.8%) to approximately $79,389,000 in the first nine months of fiscal 1995. Revenues from Louisiana route operations declined $861,000 (a decrease of 6.7%) primarily as a result of increased competition from riverboats. This competition will likely increase with the April 1995 opening of a land-based casino in New Orleans. Revenue from Nevada route operations increased approximately $4,463,000 (7.1%) over those for the same period last year. The increase in the Nevada gaming route revenues was attributable to a $2.83 increase in the average net win per gaming device per day for the nine months ended March 31, 1995 compared to the same period in the prior year (accounting for an increase of approximately $3,990,000) and an increase in the weighted average number of gaming devices on location for the current period as compared to the same period in the prior year (accounting for an increase of approximately $473,000). Revenues from casino and tavern operations, including food and beverage sales, decreased approximately $596,000 (4.0%) during the current year period as compared to those for the prior year. These revenues include royalty income from RCVP which commenced upon opening of the Rainbow Casino in July 1994 and continued until the Company's acquisition of its general partnership interest on March 29, 1995. However, these royalty fees were offset by the termination of the Company's lease at the Royal Casino on November 30, 1994. Additionally, casino and tavern revenues for the nine month period ended March 31, 1995 do not include revenues earned by the Trolley Stop or Miss Lucy's where operations were substantially reduced in September 1994 to the minimum levels required to preserve the related gaming licenses. Costs and Expenses: Costs of Revenues Cost of gaming route revenues for the nine months ended March 31, 1995 increased $3,005,000 (5.3%) over the same period in the prior year. Costs of revenues from Louisiana route operations decreased $554,000 (a decrease of 6.7% from last year) as revenues declined in the face of increased competition. Costs of gaming revenues for Nevada gaming route revenues increased $3,559,000 (7.4%) as compared to the prior year and remained relatively constant as a percent of Nevada gaming route revenues. Cost of route revenues includes rents under both space 15 16 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 lease and revenue sharing arrangements, gaming taxes and direct labor, including related taxes and benefits. The cost of casino and tavern revenues decreased $1,617,000 (15.6%) compared to the prior year results primarily due to the reduction of operations of the Trolley Stop and Miss Lucy's and the termination of the Company's lease at the Royal Casino. Cost of casino and tavern revenues includes cost of goods sold, gaming taxes, rent and direct labor, including related taxes and benefits. Expenses Included in selling, general and administrative expenses for the nine months ended March 31, 1995 are developmental costs associated with the pursuit of the Company's growth strategy of approximately $5,647,000. This represents an increase of $3,588,000 (174.2%) over the same period last year. In general, developmental costs include salaries and wages, related taxes and benefits, professional fees, travel expense and other expenses associated with supporting the Company's growth strategy. Exclusive of the development expenses noted above, selling, general and administrative expenses for the period decreased approximately $501,000 (3.1%) from the prior year. Such expenses related to gaming route operations decreased $830,000 (11.1%) from the prior year primarily reflecting steps taken to control costs, including reduced staffing levels, for Louisiana gaming route operations. Selling, general and administrative costs also decreased for casino and tavern operations by $738,000 (21.7%) from the prior year period due to the reduction of operations at the Trolley Stop and Miss Lucy's and the termination of the Company's lease at the Royal Casino. These decreases were offset by an increase in corporate general and administrative expenses of $1,066,000 (20.5%). This increase was caused primarily by costs associated with additions to the corporate staff and increased legal fees. The Company expects that there may be further increases in selling, general and administrative expenses related to unforeseen additions of new management and development personnel and other costs associated with supporting the Company's growth strategy. Included in other income and expenses is a charge of $386,000 representing the Company's share of the results of operations for the Rainbow Casino and related facilities during the period prior to the Company's acquisition of the general partnership interest in RCVP. The plan for RCVP includes an initial period in which the casino is operating while construction of a hotel and family entertainment park by unaffiliated companies takes place on the site. The initial period will be complete when all facilities are completed and operating. The losses incurred by the Casino to date include pre-opening costs, as well as operating losses incurred during the initial period. It is currently anticipated that construction of the hotel and family entertainment park will be completed in May 1995 and the construction of the related restaurant will be completed by June 30, 1995. 16 17 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.58 Consolidation Agreement, dated as of March 29, 1995, among the Company, United Gaming Rainbow, Inc. ("UGR"), Rainbow Casino Corporation ("RCC"), Rainbow Casino-Vicksburg Partnership, L.P. ("RCVP"), National Gaming Mississippi, Inc.("NGM"), HFS Gaming Corporation ("HFS"), National Gaming Corporation ("NGC"), Rainbow Development Corporation ("RDC"), John A. Barrett, Jr. and Leigh Seippel (filed as Exhibit 2.2 to Form 8-K dated March 29, 1995). 10.59 Second Amended and Restated Agreement of Limited Partnership, dated as of March 29, 1995, between UGR, as general partner, and RCC, as limited partner (filed as Exhibit 2.3 to Form 8-K dated March 29, 1995). 10.60 Class A Note dated March 29, 1995 issued by RCVP to UGR (filed as Exhibit 2.4 to Form 8-K dated March 29, 1995). 10.61 Class B Note dated March 29, 1995 issued by RCVP to NGM (filed as Exhibit 2.5 to Form 8-K dated March 29, 1995). 10.62 Class B Note dated March 29, 1995 issued by RCVP to UGR (filed as Exhibit 2.6 to Form 8-K dated March 29, 1995). 10.63 Letter Agreement, dated as of March 29, 1995, among UGR, RCC, John A. Barrett, Jr., Leigh Seippel and Butler, Snow, O'Mara, Stevens & Cannada (filed as Exhibit 2.7 to Form 8-K dated March 29, 1995). 10.64 Release, dated as of March 29, 1995, by UGR and the Company and their affiliates of RCC, RDC, John A. Barrett, Jr. and Leigh Seippel and their affiliates (other than RCVP) (filed as Exhibit 2.8 to Form 8-K dated March 29, 1995). 10.65 Release, dated as of March 29, 1995, by RCC, RDC, John A. Barrett, Jr. and Leigh Seippel and their affiliates of UGR and the Company and their affiliates (other than RCVP) (filed as Exhibit 2.9 to Form 8-K dated March 29, 1995). 10.66 Employment Agreement, dated as of August 15, 1994, between the Company and Steven Greathouse.
17 18 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued) b. Reports on Form 8-K: 1) The registrant submitted Form 8-K dated March 29, 1995 and amended April 17, 1995 which included the following item: Item 2. Acquisition of the general partnership interest and an increased partnership interest in Rainbow Casino- Vicksburg Partnership, L.P. 18 19 ALLIANCE GAMING CORPORATION FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALLIANCE GAMING CORPORATION DATE: May 10, 1995 (Registrant) By /s/ Steve Greathouse --------------------------------- President/Chief Executive Officer By /s/ John W. Alderfer --------------------------------- Sr. Vice President/Treasurer/Secretary 19 EX-10.66 2 EXHIBIT 10.66 1 EXHIBIT 10.66 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT dated as of August 15, 1994 by and between Alliance Gaming Corporation, a Nevada corporation (the "Company"), and Steven Greathouse, an individual (the "Executive"). R E C I T A L S ; A. The Company considers it important and in its best interest and the best interest of its stockholders to foster the employment of key management personnel, and desires to retain the services of the Executive, on the terms and subject to the conditions provided in this Agreement. B. The Executive desires to accept employment by the Company and to render services to the Company, on the terms and subject to the conditions provided in this Agreement. A G R E E M E N T : The parties hereto agree as follows: 1. Employment. The Company hereby agrees to employ and retain the Executive, and the Executive agrees to be employed and retained by the Company, to render services to the Company for the period, at the rate of compensation and upon the other terms and conditions set forth in this Agreement. 2. Term. The term of the Executive's employment under this Agreement (the "Term") shall commence on the date hereof and shall contnue through and including August 14, 1997, unless earlier terminated as provided in this Agreement (the date of any termination of this Agreement or the expiration of the Term, as provided herein, the "Termination Date"). 3. Position and Duties. (a) Position. The Executive shall serve as President and Chief Executive Officer of the Company. During his employment hereunder, the Executive shall report directly to the board of directors of the Company (the "Board"). The Executive shall, if so elected by the stockholders of the Company, also serve on the Board from time to time, for successive periods of such election(s) and for such period as shall be agreed to by the Executive, subject, in each case, to the continued election thereto by the Company's stockholders. In the event that the Executive's employment by the Company shall be terminated, for any reason, the Executive shall be deemed to have immediately resigned from the Board, such resignation being effective on the Termination Date. (b) Duties. In accordance with the by-laws of the Company, during the Term, the Executive shall have and exercise the full power and authority of President and 1 2 Chief Executive officer, including without limitation, that of hiring, retaining and discharging personnel, subject to the full and customary approval, oversight and supervision of the Board. During the Term, the Executive shall perform the duties contemplated by such title and such other duties, consistent with his experience and abilities, as may be assigned to the Executive by the Board. The Executive shall devote his full time and efforts to the business and affairs of the Company, use his best efforts to further the interests of the Company and at all times conduct himself in a manner which reflects credit upon the Company. It is contemplated that the Executive shall render services to the Company from the Company's principal place of business; however, the parties acknowledge and agree that the executive may be required to travel extensively during the Term in fulfilling his duties hereunder. 4. Compensation and Reimbursement of Expenses. ------------------------------------------ (a) Salary. For purposes of this Agreement, each consecutive 12-month period during the Term ending on each August 14th during the Term shall be referred to as an "Employment Year." For services rendered by the Executive under this Agreement, the Company shall pay to the Executive as compensation during each Employment year during the Term, a base salary (the "Base Salary") at an annual rate of $400,000 per year (prorated for any partial Employment Years). Increases in the Base Salary shall be considered by the Board no less frequently than annually, commencing at the end of the first Employment Year hereunder and will be based upon criteria applicable to other senior executives of the Company; it being understood, however, that the award of any such increase shall be in the sole discretion of the Board (with the Executive not voting on such determination). The Base Salary shall be payable in equal bi-weekly installments, commencing with the end of the pay period which next follows the commencement of the Term, and shall be subject to customary payroll deductions (i.e., for social security, federal, state and local taxes and other amounts customarily withheld from the salaries of employees of the Company). (b) Bonus. The Executive shall be eligible to receive from the Company, within 120 days of the end of each Employment Year, a cash bonus in respect of such Employment year (the "Annual Bonus"), which shall be based upon all relevant criteria, including without limitation, (i) the performance of the Company during such Employment Year based upon customary financial and other criteria, such as but not limited to, return on the Company's consolidated stockholders' equity and total capital (i.e., stockholders' equity and total debt), performance of the Company's Common Stock, par value $.10 per share (the "Common Stock"), and the Company's absolute and relative amounts of consolidated cash flow, operating income and net income, and the comparison of such results with the Company's budgets and projections therefor, and (ii) the performance of the Executive in rendering services to the Company. It is contemplated but not certain that the Annual Bonus shall be between 50% and 100% of the Base Salary for each applicable Employment Year; it being understood, however, that the Company shall not be obligated to pay to the Executive any Annual Bonus and the payment, if any, and amount thereof shall be solely within the discretion of the Board (with the Executive not voting on such determination). It is also contemplated that the Compensation Committee of the Board shall formulate specific criteria and performance targets for the determination of the Annual Bonus, if any. The Annual Bonus shall be subject to customary payroll deductions (i.e., for social seucirty, federal, state 2 3 and local taxes and other amounts customarily withheld from the salaries of employees of the Company). (c) Stock, Warrants and Options. (1) Effective as of commencement of the Executive's employment with the Company, which the parties acknowledge is August 15, 1994 (the "Initial Employment Date"), in order to induce the Executive to accept employment with the Company, the Company shall issue to the Executive, in certificate form, 250,000 shares of restricted Common Stock (the "Employment Stock"). The Executive shall not sell, transfer, hypothecate, assign or otherwise transfer the Employment Stock (except by operation of law in the event of the Executive's death) prior to January 1, 1995. The Employee acknowledges that such Employment Stock has not been registered for sale under the Securities Act of 1933 (the "Securities Act") or applicable state "blue sky" laws and that such Employment Stock may be sold only pursuant to such registration or applicable exemptions therefrom. The Executive confirms that he is an accredited investor (as defined under the Securities Act) and has been afforded the opportunity to ask questions of and receive information from management and other representatives of the Company in connection with the receipt of the Employment Stock and the Incentive Warrants (as defined below). The Executive agrees that in connection with his receipt and ownership of the Employment Stock and, as applicable, any other securities of the Company issued or delivered to the Executive in connection with his employment by the Company, he shall file in a timely manner any and all applicable forms or filings required under the Securities Act or the Securities Exchange Act of 1934, including without limitation, Forms 3, 4 and/or 5. The Company shall cause to be registered under the Securities Act the Employment Stock on such form of registration statement for a shelf registration that the Company may designate as soon as practicable after March 1, 1995, so long as the Executive shall have furnished such affidavits and instruments in connection therewith relating to the Executive and his ownership of the Employment Stock and other relevant matters that shall be customary and reasonably requested by the Company. Other than as set forth above in this clause (1), the Executive shall be free to transfer or dispose of the Employment Stock. (2) Effective as of the Initial Employment Date, in order to induce the Executive to accept employment with the Company, the Company shall issue to the Executive warrants to acquire 250,000 shares of common stock of the Company (the "Incentive Warrants") pursuant to a warrant agreement and warrant in the form attached hereto as Exhibit A. The Executive acknowledges that neither such Incentive Warrants nor the Common Stock underlying them have been registered for sale under the Securities Act or applicable state "blue sky" laws and that such Incentive Warrants may be sold only pursuant to such registration or applicable exemptions therefrom. (3) Effective as of the Initial Employment Date, in order to induce the Executive to accept employment with the Company, the Company shall issue to the Executive options (pursuant to the Company's 1991 Incentive Stock Option Plan (the "Plan")) to acquire 250,000 shares of Common Stock of the Company (the "Employment Options"). The Employment Options shall (A) have an exercise price of $5-3/4 per share, (B) expire on August 14, 1999 and (C) vest and become exercisable at the end of each Employment Year as follows: 3 4 August 14, 1995 - 84,000 shares August 14, 1996 - 83,000 shares August 14, 1997 - 83,000 shares Prior to each such applicable date, such Employment Options shall not be vested or exercisable. (d) Reimbursement of Expenses. Consistent with established policies of the Company as in effect from time to time, the Company shall pay to or reimburse the Executive for all reasonable and actual out-of-pocket expenses, including without limitation, travel, hotel and similar expenses, incurred by the Executive from time to time in performing his obligations under this Agreement. 5. Benefits. (a) Benefit Plans. The payments provided in Section 4 above are in addition to any benefits to which the Executive may be, or may become, entitled under any of the Company's employee benefit plans or programs for which key executives are or shall become eligible, including without limitation, retirement, life, health and disability benefits. In addition, the Executive shall be eligible to receive during the Term benefits and emoluments which are consistent with the benefits and emoluments provided to all senior officers or executives of the Company. (b) Vacation. The Executive shall be entitled to three weeks annual paid vacation time. The Executive's entitlement to such vacation time for each Employment Year shall vest and accrue on the first day of each such Employment Year. In the event any of such vacation days are not used by the Executive in any Employment Year, the Executive shall have the right to accumulate and carry forward such number of days from year to year as shall be consistent with the Company's policy therefor for senior executives, as in effect from time to time. The Executive shall also be entitled to reasonable periods of sick leave with compensation and all paid holidays given by the Company to its senior executive officers. (c) Club Membership. During the Employment Term, the Company shall pay the cost of membership for the Executive and his family in the Las Vegas Country Club. (d) No Reduction. There shall be no material reduction or diminution of the benefits provided in this Section 5 during the Term unless (i) the Executive shall have provided his consent to such reduction or diminution, (ii) an equitable arrangement (embodied in an ongoing substitute or alternative benefit or plan) has been made with respect to such benefit or plan or (iii) such reduction is part of a program of across-the-board benefit reductions similarly affecting the senior executive officers of the Company. 6. Benefits Payable Upon Disability. (a) Disability Benefits. During any period of Disability (as defined below) occurring during the Term, the Company shall continue to pay to the Executive the Base 4 5 Salary as provided herein and continue to extend to him the benefits described in Sections 4 and 5 hereof; it being understood that if disability benefits are provided under any disability insurance or similar policy maintained by the Company (or maintained by the Executive, the cost of which is reimbursed or paid by the Company), payments under such policy shall be considered as payments by the Company and shall offset any Base Salary payable to the Executive under this Agreement. As used in this Agreement, "Disability" shall mean the inability (as determined by a majority of the remaining members of the Board (other than the Executive) voting for such determination) of the Executive to render services to the Company, as provided herein, as a result of physical or mental infirmity or disability. (b) Services During Disability. During the Term, notwithstanding any Disability, the Executive shall, to the extent that he is physically and mentally able to do so, furnish information, assistance and services to the Company, and upon the the reasonable request in writing on behalf of the Board (as determined by a majority of the remaining members of the Board (other than the Executive) voting for such determination), from time to time, he shall make himself available to the Company to undertake reasonable assignments and fulfill his duties hereunder, consistent with his current position with the Company and his physical and mental health. 7. Termination. This Agreement shall be terminated in accordance with the provisions of this Section 7, in which case the provision of Section 8 below shall be applicable. (a) Upon Expiration of the Term. This Agreement shall terminate in accordance with Section 2 above. (b) By The Company. In addition to the provisions of Section 7(a) above, this Agreement is subject to earlier termination by the Company as follows: (i) Death of Executive. If the Executive dies, this Agreement shall terminate, the Termination Date being the date of the Executive's death. (ii) Disability. If the Executive has been absent from service to the Company, as required in this Agreement, for a period of 90 days or more as a result of Disability during any consecutive 180-day period during the Term, the Company shall terminate this Agreement (such Disability being determined by a majority of the remaining members of the Board (other than the Executive) voting for such determination), the Termination Date being 15 days after notice thereof is provided to the Executive. (iii) Termination by Company for Cause. The Company shall have the right to terminate the Executive's employment under this Agreement for Cause (as defined below), such termination to be effective immediately upon notice thereof from the Company to the Executive. For purposes of this Agreement, "Cause" shall mean the Executive's (A) conviction of any misdemeanor involving moral turpitude, or any felony, (B) misappropriation or embezzlement from the Company, (C) denial or rejection of any gaming license or permit or commission of any act which could 5 6 reasonably be expected to result in such denial or rejection, (D) any breach during the Term of Sections 10 to 11 below or (e) the persistent failure or refusal after notice to comply with the Executive's duties or obligations hereunder. (iv) Termination by the Company Without Cause. The Company shall have the right to terminate the Executive's employment hereunder for any other reason not set forth in clauses (i), (ii) or (iii) of this Section 7(b), the Termination Date being 15 days after notice from the Company to the Executive. (c) By The Executive. In addition to the provisions of Section 7(a) above, this Agreement is subject to earlier termination by the Executive, as follows: (i) Termination by the Executive for Just Cause. The Executive shall have the right to terminate his employment under this Agreement upon the occurrence of a material breach of this Agreement by the Company, which the parties agree shall be limited to (A) a reduction by the Company in the Base Salary below the minimum Base Salary specified in Section 4(a) above or the failure of the Company to pay to the Executive any portion of the Base Salary within 30 days of the time that any such amount is due and payable hereunder or (B) the assignment to the Executive of duties and responsibilities that are materially inconsistent with those of a president and chief executive officer of the Company, in each case, in the cases of clauses (A) and (B), which has not been cured by the Company after 30 days' written notice from the Executive to the Company; provided, that in the case of three such material breaches (and notice thereof), the Executive shall thereafter have the right to terminate this Agreement immediately upon notice to the Company in the case of a subsequent material breach. In the event that the Executive elects to terminate this Agreement as a result of the events described in clauses (A) or (B) above, the Executive shall exercise such right within 10 days after the lapsing of the 30-day period referred to above in this clause (i) (assuming that the Company shall have failed to cure such material breach within such period), or, as applicable, within 10 days of any additional material breach giving rise to an immediate right of termination; thereafter, such right to terminate shall no longer be exercisable. The Termination Date shall be a date specified by the Executive, which shall be between 30 and 45 days after the date of such default notice by the Executive. (ii) Termination by Executive upon Change in Key Participant. The Executive shall have the right to terminate his employment under this Agreement: (A) if any Key Participant (as defined below) sells in whole (but not in part) to any unaffiliated third party (an affiliated third party being any family member or trust for the benefit of such family member) or otherwise liquidates his investment in the Company (in whole but not in part) and the Executive reasonably and in good faith determines that such sale or liquidation materially impairs the ability of the Company successfully to achieve its growth strategy as stated in the Company's Prospectus dated March 21, 1994, of (B) if there shall have occurred a material breach or default of Section 3.4 of the Stockholders Agreement among the Company and certain other parties dated September 21, 1993 by any of the Key Participants. For purposes of this clause (ii), "Key Participants" means the stockholders of Kirkland Investment 6 7 Corporation, a Delaware corporation, the limited partners in Kirkland-Ft. Worth Investment Partners, L.P., a Delaware limited partnership, such limited partners' general partners, and any person controlling such persons, each as of September 14, 1993. In the event that the Executive elects to terminate this Agreement as a result of the events described in clauses (A) or (B) above, the Executive shall provide 30 days' notice thereof to the Company, during which time the event or circumstance giving rise to such right of termination may be cured. In the event that the Executive elects to terminate this Agreement as a result of the events described in clauses (A) or (B) above, the Executive shall exercise such right within 10 days after the lapsing of the 30-day period referred to above in this clause (ii) (assuming that such event or circumstance shall not have been cured) upon written notice to the Company (the date of such notice, the "Section 7(c)(ii) Notice Date"); thereafter, such right to terminate shall no longer be exercisable. The Termination Date shall be a date specified by the Executive, which shall be between 30 and 45 days after the Section 7(c)(ii) Notice Date; thereafter, such right to terminate shall no longer be exercisable. (iii) Termination by the Executive Without Just Cause. The Executive shall have the right to terminate the Executive's employment under this Agreement for any other reason not set forth in clause (i) or (ii) of this Section 7(c), the Termination Date being 15 days after notice thereof from the Executive to the Company. 8. Effect of Termination. The following provisions shall be applicable in the event of termination of this Agreement as provided in Section 7 above. (a) Expiration of Term. Upon termination of this Agreement as provided in Section 7(a) above, this Agreement shall terminate and be of no further force and effect, except as provided in Sections 11, 12 and 13(b) below, which shall survive such termination, and no additional payments, liabilities or obligations shall be due and owing from either party to the other. (b) Death. Upon the termination of this Agreement as provided in Section 7(b)(i) above, the Company shall pay to the Executive's estate (i) an amount equal to the sum of (A) $1,850,000, payable within 180 days after the Termination Date (but not earlier than any recovery of insurance proceeds in respect thereof, as provided below), and (B) any Annual Bonus for the Employment Year in which the Termination Date occurs that the Board determines would otherise have been payable had the Executive not died, which Annual Bonus shall be reduced by prorating it through the Termination Date, payable, in the case of this clause (B), at the time such payment would otherwise be due and payable hereunder, and (ii) expense reimbursement amounts accrued through the Termination Date, at the time such payment would otherwise be due and payable thereunder, and neither party shall have any further liability or obligation to the other, except as provided in Section 12 below, which shall survive the Termination Date. Notwithstanding the provisions of clause (i) above, the Company shall have the right to provide for either or both of the payments described therein by purchasing life insurance on the Executive's life itself or reimbursing to the Executive the cost of the premiums in respect of such life insurance which shall be purchased directly by the Executive; in the event that either 7 8 or both of such insurance coverages is obtained, such payments shall be made solely from such insurance coverages and not from the Company and shall constitute the Executive's estate's or heirs' sole remedy in respect of such payments. An amount equal to 50% of any unvested Employment Options as of the Termination Date shall vest and become exercisable by virtue of any termination under Section 7(b)(i) and, notwithstanding the provisions of the Company's Stock Option Plan pursuant to which the Employment Options may have been granted, the Executive's estate shall have a period of two years from the Termination Date to exercise the Employment Options. (c) Disability. Upon the termination of this Agreement as provided in Section 7(b)(ii) above, the Company shall pay to the Executive (i) an amount equal to 60% of the Executive's Base Salary in effect in the year in which the Termination Date occurs, but not in excess of the rate of $180,000 per year, from the Termination Date until such time as the Executive shall attain the age of 65, and (ii) any Annual Bonus for the Employment Year in which the Termination Date occurs that the Board determines would otherwise have been payable had the Executive not become Disabled, which Annual Bonus shall be reduced by prorating it through the Termination Date, in each case, payable at the times such payments would otherwise be due and payable hereunder; provided, in the case of clauses (i) and (ii) above, that the Executive continues to comply with his covenants in Sections 10 (during the Term had such termination under Section 7(b)(ii) above not occurred) and 11 below, as provided therein, and (iii) expense reimbursement amounts accrued through the Termination Date, at the time such payment would otherwise be due and payable thereunder, and neither party shall have any further liability or obligation to the other, except that the provisions of Sections 10, 11, 12 and 13(b) below shall survive the Termination Date, to the extent provided therein. Notwithstanding the provisions of clauses (i) and (ii) above, the Company shall have the right to provide for either or both of such payments by either purchasing disability insurance itself in respect of the Executive or reimbursing to the Executive the cost of the premiums in respect of such disability insurance which shall be purchased directly by the Executive; in the event that either or both of such insurance coverages is obtained, such payments shall be made solely from such insurance coverages and not from the Company and shall constitute the Executive's sole remedy in respect of such payments. An amount equal to 50% of any unvested Employment Options as of the Termination Date shall vest and become exercisable by virtue of any termination under Section 7(b)(ii) and, notwithstanding the provisions of the Company's Stock Option Plan pursuant to which the Employment Options may have been granted, the Executive shall have a period of two years from the Termination Date to exercise such options. (d) Termination by the Company for Cause. Upon the termination of this Agreement as provided in Section 7(b)(iii) above, the Company shall pay to the Executive (i) the accrued and unpaid Base Salary, if any, through the Termination Date and (ii) expense reimbursement amounts accrued through the Termination Date, at the time such payments are otherwise due and payable thereunder, and neither 8 9 party shall have any further liability or obligation to the other, except that the provisions of Sections 10, 11, 12 and 13(b) below shall survive the Termination Date, to the extent provided therein, with the provisions of such Section 10 surviving for the shorter of (A) 12 months from the Termination Date and (B) the remainder of the Term had such termination not occurred. No unvested Employment Options shall vest or become exercisable by virtue of any termination under Section 7(b)(iii) and any and all rights thereto then possessed by the Executive shall be terminated and of no further force and effect. (e) Termination by the Company Without Cause. Upon termination of this Agreement as provided in Section 7(b)(iv) above, the Company shall pay to the Executive (i) the Base Salary which would otherwise be payable hereunder in respect of the remainder of the Term; provided, that the Executive continues to comply with the covenants in Section 11 below, as provided therein, and (ii) expense reimbursement amounts accrued through the Termination Date, in each case, in the case of clauses (i) and (ii) above, at the time such payments are otherwise due and payable thereunder, and neither party shall have any further liability or obligation to the other, except that the provisions of Sections 11, 12 and 13(b) below shall survive the Termination Date, to the extent provided therein; it being understood that the covenants in Section 10 below shall be of no further force and effect following the Termination Date. All unvested Employment Options, if any, shall vest and become exercisable (in accordance with the Plan) by virtue of any termination under Section 7(b)(iv). (f) Termination by the Executive for Just Cause. Upon termination of this Agreement as provided in Section 7(c)(i) above, the Company shall pay to the Executive (i) the Base Salary which would otherwise be payable hereunder in respect of the remainder of the Term; provided, that the Executive continues to comply with the covenants in Section 11 below, as provided therein, and (ii) expense reimbursement amounts accrued through the Termination Date, in each case, in the case of clause (i) and (ii) above, at the time such payments are otherwise due and payable thereunder, and neither party shall have any further liability or obligation to the other, except that the provisions of Sections 11, 12 and 13(b) below shall survive the Termination Date, to the extent provided therein; it being understood that the covenants in Section 10 below shall be of no further force and effect following the Termination Date. All unvested Employment Options, if any, shall vest and become exercisable (in accordance with the Plan) by virtue of any termination under Section 7(c)(i). (g) Termination by the Executive upon Change in Key Participant. Upon termination of this Agreement as provided in Section 7(c)(ii) above, the Executive shall (x) not be bound by the provisions of Section 10 below, which shall be of no further force and effect, and (y) immediately have the one-time right (exercisable for a period of 10 days following the Termination Date, upon written notice to the Company) to convert or cause to be exchanged, without restriction, any outstanding and unexercised Incentive Warrants (whether or not vested) to vested Employment Options; and the Company shall pay to the Executive (i) an amount equal to the sum 9 10 of (A) 100% of the Base Salary which would otherwise be payable hereunder in respect of the shorter of (I) the six-month period following the Section 7(c)(ii) Notice Date and (II) the remainder of the Term has such termination not occured and (B) any Annual Bonus for the Employment Year in which the Termination Date occurs that the Board determines would otherwise have been payable had such termination not occurred, which Annual Bonus shall be reduced by prorating it through the Termination Date, in each case, in the case of clauses (A) and (B) above, payable at the times such payments are otherwise due and payable hereunder; provided, in each case, that the Exeuctive continues to comply with the covenants in Section 11 below, as provided therein, and (ii) expense reimbursement amounts accrued through the Termination Date, at the time such payment is otherwise due and payable thereunder, and neither party shall have any obligation or liability to the other, except that the provisions of Sections 11, 12 and 13(b) below shall survive the Termination Date, to the extent provided therein, and the covenants in Section 10 below shall be of no further force and effect following the Termination Date. All unvested Employee Options, if any, shall vest and become exercisable (in accordance with the Plan and as set forth above) by virtue of any termination under Section 7(c)(ii). (h) Termination by the Executive Without Just Cause. Upon the termination of this Agreement as provided in Section 7(c)(iii) above, the Company shall pay to the Executive (i) the accrued and unpaid Base Salary, if any, through the Termination Date, (ii) expense reimbursement amounts accrued through the Termination Date and (iii) Base Salary at a rate of $201,000 per calendar year during the period that the provisions of Section 10 shall be in effect, as provided below, at the time such payments are otherwise due and payable thereunder, and neither party shall have any further liability or obligation to the other, except that the provisions of Sections 10, 11, 12 and 13(b) below shall survive the Termination Date, to the extent provided therein, with the provisions of such Section 10 surviving for the shorter of (A) 12 months from the Termination Date and (B) the remainder of the Term had such termination not occurred. During such period that the provisions of Section 10 are in effect, the Executive shall continue to be eligible to receive the benefits provided in Section 5 above. No unvested Employment Options shall vest or become exercisable by virtue of any termination under Section 7(c)(iii) and any and all rights thereto then possessed by the Executive shall be terminated and of no further force and effect. 9. Federal Income Tax and Other Withholdings. The company shall withhold from any benefits payble pursuant to this Agreement such Federal, State, City or other taxes and other amounts as may be required to be withheld pursuant to any applicable law or governmental regulations or ruling and shall timely pay over to the appropriate governmental or other authorities the amount withheld, together with any additional amounts required to be paid by the Company in respect thereof. 10. Non-Competition. The Executive covenants and agrees that he will not at any time during his employment with the Company and, to the extent set forth in the applicable subsections of Section 8 above, for a period of up to 12 months after the Termination Date, directly or indirectly, whether as employee, owner, partner, agent, director, officer, consultant, advisor, stockholder (except as the beneficial owner of not more than 10 11 5% 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 the Executive does not undertake any management or operational or advisory role) or in any other capacity, for his own account or for the benefit of any person or entity, establish, engage or be connected with or in any manner any person or entity which is at the time engaged in a business which is then in competition with the business of the Company (or any of its subsidiaries or affiliates); it being understood that for purposes of this Section 10, participation in the business of owning, managing, operating or financing casino or similar gaming in the United States shall be deemed to be business in which the Company is engaged. 11. Confidential Information and Non-Disparagement. (a) In accordance with NRS 600A.010 et seq. (the so-called Uniform Trade Secrets Act), the Executive shall hold in a fiduciary capacity for the benefit of the Company and its stockholders all secret, confidential or proprietary information, knowledge or data relating to the Company (and any of its subsidiaries or affiliates), which shall have been obtained by the Executive during or by reason of his employment by the Company. During and after the end of the Term, the Executive shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to any person or entity other than the Company (or such applicable subsidiaries or affiliates) and those designated by them which would result in any misappropriation under and as defined in such Act, except that, while employed by the Company,in furtherance of the business and for the benefit of the Company, the Executive may provide confidential information as appropriate to attorneys, accountants, financial institutions or other persons or entities engaged in business with the Company from time to time. (b) Each of the parties agrees that from and after any termination or expiration of the Term, 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, except, in each case, to the extent (but solely to the extent) necessary (i) in any judicial or arbitral action to enforce the provisions of this Agreement or (ii) in connnectin with any judicial or administrative proceeding to the extent required by applicable law. 12. Indemnification and Liability Insurance. (a) Indemnification. The Company shall indemnify and hold the Executive harmless, to the fullest extent legally permitted by Section 78.751 of the Nevada Corporation Code (as amended and in effect from time to time) against any and all expenses, liabilities and losses (including without limitation, reasonable attorneys' fees and disbursements of counsel reasonably satisfactory to the Company), incurred or suffered by him in connection with his service as a director or officer of the Company during the Term, in each case, except to the extent of the Executive's negligence or willful misconduct. (b) Insurance. The Company shall maintain, for the benefit of the Executive, a directors' and officers' liability insurance policy insuring the Executive's service as a director and/or officer of the Company (or any subsidiary of the Company) during the Term 11 12 in accordance with its customary practices as in effect from time to time during the Term. The parties acknowledge and agree that such policy may cover other officers and directors of the Company in addition to the Executive. 13. General Provisions. (a) Assignment. Neither this Agreement nor any right or interest hereunder shall be assignable by the Executive of the Company without the prior written consent of the other; provided, that (i) in the evennt of the Executive's Death during the Term, the Executive's estate and his heirs, executors, administrators, legatees and distributees shall have the rights and obligations set forth herein, as provided herein, and (ii) nothing contained in this Agreement shall limit or restrict the Company's ability to merge or consolidate or effect any similar transaction with any other entity, irrespective of whether the Company is the surviving entity (including a split up, spin off or similar type transaction); provided, that one or more of such surviving entities shall continue to be bound by the provisions hereof binding upon the Company. (b) Material Inducements. The provisions of Section 10 and 11 above are material inducements to the Company entering into and performing this Agreement; accordingly, in the event of any breach of the provisions of Sections 10 or 11(a) by the Executive, in addition to all other remedies at law or in equity possessed by the Company, (i) the Company shall have the right to terminate and not pay any amounts payable to the Executive hereunder, (ii) all Incentive Warrants and Employment Options that are unexercised shall be immediately forfeited and returned to the Company and (iii) the Executive shall immediately account to the Company and return to the Company an amount in cash equal to all profits or benefits obtained or realized by the Executive by virtue of the ownership or disposition of the Incentive Warrants and Employment Options. (c) Binding Agreement. This Agreement shall be binding upon, and inure to the benefit of, the Executive and the Company and their respective heirs, executors, administrators, legatees and distributees, successors and permitted assigns. (d) Amendment of Agreement. This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (e) Severability. If, for any reason, any provision of this Agreement is determined to be invalid or unenforceable, such invalidity or lack of enforceability shall not affect any other provision of this Agreement not so determined to be invalid or unenforceable, and each such other provision shall, to the full extent consistent with applicable law, continue in full force and effect, irrespective of such invalid or unenforceable provision. (f) Effective of Prior Agreements. This Agreement contains the entire understanding between the parties hereto respecting the Executive's employment by the Company, and supersedes any prior employment agreement between the Company and the Executive. 12 13 (g) Notices. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered, if sent by telecopy or by hand, (ii) one business day after sending, if sent by reputable overnight courier service, such as Federal Express, or (iii) three business days after being mailed, if sent by United States certified or registered mail, return receipt requested, postage prepaid. Notices shall be sent by one of the methods described above; provided, that any notice sent by telecopy shall also be sent by any other method permitted above. Notices shall be sent, if to the Executive, to 7140 Darby Avenue, Las Vegas, Nevada 89117, with a copy to Morris Brignone & Pickering, 300 S. Fourth Street, Las Vegas, Nevada 90101; attention; Andrew S. Brignone, Esq.; and if to the Company, to Alliance Gaming Corporation, 4380 Boulder Highway, Las Vegas, Nevada 89121, directed to the attention of the Board with copies to the Chairman and the Assistant Secretary of the Company; or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. (h) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. (i) Arbitration. In the event of a dispute or controversy arising under or in connection with this Agreement (except, at the option of the Company, Sections 10 and 11 above, which may be adjudicated in a federal or state court sitting in Las Vegas, Nevada), the Executive shall give the Company or the Company shall give the Executive, as applicable, a written demand for relief. If the dispute or controversy is not resolved, it shall be settled exclusively by arbitration, conducted in Las Vegas, Nevada, in accordance with the rules of the American Arbitration Association (or if the such association does not then conduct business in such city, another arbitral panel reasonably satisfactory to each party) then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction over the parties hereto. (j) Indulgences, Etc. Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. (k) Headings. The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. (l) Governing Law. This Agreement has been executed and delivered in the State of Nevada, and its validity, interpretation, performance, and enforcement shall be governed by the laws of such State, without regard to principles of conflicts of laws. 13 14 (m) Board Approval. This Agreement is subject to the approval of the Board and shall be and become effective only upon the approval thereof by the Board; prior to such time it shall not have any force and effect. [The remainder of this page is left blank.] 14 15 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has signed this Agreement, all as of the date first set forth above. Alliance Gaming Corporation By: JOEL KIRSCHBAUM ----------------------- Name: Joel Kirschbaum Title: Chairman STEVEN GREATHOUSE ----------------------- Steven Greathouse 15 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENTS OF EARNINGS AND CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-30-1995 MAR-31-1995 25,952 13,240 3,991 1,696 688 47,211 48,279 29,462 128,103 9,462 101,409 1,141 0 0 11,558 128,103 899 31,349 626 22,913 9,210 119 1,928 (1,671) 104 (1,775) 0 0 0 (1,775) (0.16) 0
-----END PRIVACY-ENHANCED MESSAGE-----