8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (date of earliest event reported): June 30, 2004

ALLIANCE GAMING CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	0-4281	88-0104066
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

6601 South Bermuda Road, Las Vegas, Nevada  89119

(Address of principal executive offices)       (Zip Code)

Registrant’s telephone number, including area code:  (702) 270-7600
Registrant’s internet:  www.alliancegaming.com

ALLIANCE GAMING CORPORATION

FORM 8-K

Item 2.Acquisition or Disposition of Assets.

On June 30, 2004, Alliance Gaming Corporation (“Alliance” or the “Company”) completed the sale of United Coin Machine Co. to Century Gaming, Inc. (“Century”).  Consideration for the transaction consisted of approximately $100 million in cash and the assumption by Century of approximately $5 million in debt.  The Agreement and Plan of Merger is attached as Exhibit 2.1, and a press release announcing the completion of the disposition is attached as Exhibit 99.1.

Item 5.Other Events.

On July 1, 2004, Alliance issued a press release announcing the appointment of Richard Haddrill as President and Chief Executive Officer effective October 1, 2004.  Mr. Haddrill succeeds Robert Miodusnki, who will remain an employee of Alliance until December 31, 2004 and will thereafter assume a role as a consultant to assist the transition of the Company and to consult the newly formed Office of the Chairman.  The Office of the Chairman was formed to oversee a seamless transition and management succession to Mr. Haddrill.  The Office of the Chairman shall consist of Board members David Robbins, Joel Kirschbaum and Mr. Haddrill.  Also on July 1, 2004, Alliance entered into agreements with Mr. Robbins, Mr. Kirschbaum and Kirkland Investments Corporation.  The agreement with Mr. Robbins was made in connection with his service as Chairman of the Board and a member of the Office of the Chairman.  The agreement with Mr. Kirschbaum was made in connection with his service as a member of the Office of the Chairman.  The agreement with Kirkland was made in connection with advisory and related services that Kirkland provides to the Company.

The Employment Agreement entered into with Mr. Haddrill is attached as Exhibit 10.1, the Separation and Consulting Agreement entered into with Mr. Miodunski is attached as Exhibit 10.2, the Agreement entered into with Mr. Robbins is attached as Exhibit 10.3, the Agreement entered into with Mr. Kirschbaum is attached as Exhibit 10.4 and the Advisory Agreement entered into with Kirkland is attached as Exhibit 10.5.  The press release announcing the appointment of Mr. Haddrill, the consulting arrangement with Mr. Miodunski and the formation of the Office of the Chairman is attached as Exhibit 99.2.

Item 7.Financial Statements, Pro Forma Financial Information and Exhibits.

(b) Pro Forma Financial Information

The pro forma financial information required by Article 11 of Regulation S-X in connection with the transaction reported in Item 2 on this Form 8-K is not included herein.  Such pro forma financial information will be filed by amendment.

(c) Exhibits

2.1Agreement and Plan of Merger, dated May 4, 2004, by and among the Company, APT Games, Inc., United Coin Machine Co., United Gaming, Inc. and Century Gaming, Inc.

10.1Employment Agreement between the Company and Richard Haddrill, dated June 30, 2004.

10.2Separation and Consulting Agreement between the Company and Robert L. Miodunski, dated June 30, 2004.

10.3Agreement between the Company and David Robbins, dated July 1, 2004.

10.4Agreement between the Company and Joel Kirschbaum, dated July 1, 2004.

10.5Advisory Services Agreement between the Company and Kirkland Investment Corporation, dated July 1, 2004.

99.1Press release dated July 1, 2004 announcing the completion of the disposition of United Coin Machine Co.

99.2Press release dated July 1, 2004 announcing the appointment of Richard Haddrill as Chief Executive Officer.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALLIANCE GAMING CORPORATION
By:	/s/ Robert L. Miodunski
	President and Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Robert L. Saxton
	Executive Vice President, Chief Financial
	Officer and Treasurer
	(Principal Financial and Accounting Officer)
Dated:  July 6, 2004

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EX-2.1

Exhibit 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ALLIANCE GAMING CORPORATION,

APT GAMES, INC.,

UNITED COIN MACHINE CO.,

UNITED GAMING, INC.

AND

CENTURY GAMING, INC.

DATED

MAY 4, 2004

TABLE OF CONTENTS

ARTICLE I CERTAIN DEFINITIONS
ARTICLE II THE MERGER
Section 2.1	Purchase Agreement Superseded
Section 2.2	The Merger
Section 2.3	Assumption of Lease Agreement
Section 2.4	Merger Consideration
Section 2.5	Payment of Merger Consideration
Section 2.6	Acknowledgment of Prior Deliveries
Section 2.7	Signing Deliveries
Section 2.8	Closing
Section 2.9	Closing Deliveries and Other Actions
Section 2.10	Excluded Assets
Section 2.11	Merger Consideration Adjustment; Multi-Play Lawsuit
ARTICLE III REPRESENTATIONS AND WARRANTIES OF APT AND ALLIANCE
Section 3.1	Corporate Existence
Section 3.2	Authority of APT; No Breach
Section 3.3	Capitalization; Ownership of the Shares
Section 3.5	Licenses and Permits
Section 3.6	Real Property
Section 3.7	Tangible Personal Property
Section 3.8	Intellectual Property Rights
Section 3.9	Labor and Employment Agreements
Section 3.10	Employee Benefit Plans and Arrangements; ERISA
Section 3.11	Material Contracts and Relationships
Section 3.12	Transactions with Affiliates
Section 3.13	Compliance with Laws
Section 3.14	Litigation
Section 3.15	Taxes
Section 3.16	Insurance
Section 3.17	Environmental Matters
Section 3.18	Brokerage Fees
Section 3.19	Consents and Approvals
Section 3.20	No Conflicts
Section 3.21	Bank Accounts
Section 3.22	Securities Act Representations
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF UG AND CENTURY
Section 4.1	Corporate Existence
Section 4.2	Authority of UG and Century; No Breach
Section 4.3	[INTENTIONALLY LEFT BLANK]
Section 4.4	Capitalization

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Section 4.5	Licenses and Permits
Section 4.6	No Conflicts
Section 4.7	Litigation
Section 4.8	Consents and Approvals
Section 4.9	Securities Act Representations
Section 4.10	Financing
Section 4.11	Century’s Financial Statements
ARTICLE V COVENANTS OF APT, ALLIANCE AND THE COMPANY
Section 5.1	Regulatory and Other Approvals
Section 5.2	HSR Filings
Section 5.3	Conduct of Business
Section 5.4	Financial Statements and Reports
Section 5.5	Fulfillment of Conditions
Section 5.6	Cash on Hand
Section 5.7	Control of the Company’s Operations
Section 5.8	APT’s Bank Accounts
Section 5.9	Insurance and Insurance Benefits
Section 5.10	Restrictions
Section 5.11	Non-competition
Section 5.12	Non-solicitation.
Section 5.13	Notification
ARTICLE VI COVENANTS OF UG, CENTURY AND SURVIVING CORPORATION
Section 6.1	Regulatory and Other Approvals
Section 6.2	HSR Filings
Section 6.3	Fulfillment of Conditions
Section 6.4	Notification
Section 6.5	Guarantees
Section 6.6	Brokerage Fees
Section 6.7	Century’s Financial Statements.
ARTICLE VII CLOSING CONDITIONS
Section 7.1	Conditions to Obligations of UG and Century
Section 7.2	Conditions to Obligations of APT, the Company and Alliance
ARTICLE VIII EMPLOYEES AND EMPLOYEE BENEFITS MATTERS
Section 8.1	Continuation of Benefits
Section 8.2	Severance Policy and Other Agreements
Section 8.3	Bonus
Section 8.4	Waiver of Preexisting Conditions; Credit for Deductibles; Service Credit

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Section 8.5	Welfare Plans
Section 8.6	COBRA
Section 8.7	401(k) Plan Assets
ARTICLE IX INDEMNIFICATION
Section 9.1	Indemnification by APT and Alliance
Section 9.2	Indemnification by Surviving Corporation and Century
Section 9.3	Claims for Indemnification
Section 9.4	Defense of Third Party Claims
Section 9.5	Limitation on Century’s and Surviving Corporation’s Indemnity Claims
Section 9.6	Limitation on APT’s and Alliance’s Indemnity Claims and Rights to Contribution
ARTICLE X TERMINATION
Section 10.1	Termination
Section 10.2	Written Notice of Offer
ARTICLE XI TAX MATTERS
Section 11.1	Section 338(h)(10) Election
ARTICLE XII SURVIVAL; NO OTHER REPRESENTATIONS
Section 12.1	Post Closing Survival of Representations and Warranties
Section 12.2	No Other Representation
ARTICLE XIII MISCELLANEOUS
Section 13.1	Fees and Expenses
Section 13.2	Notices
Section 13.3	Attorneys’ Fees and Costs
Section 13.4	Assignability and Parties in Interest
Section 13.5	Governing Law
Section 13.6	Counterparts
Section 13.7	Complete Agreement
Section 13.8	Modifications, Amendments and Waivers
Section 13.9	Limit on Interest
Section 13.10	Further Assurances
Section 13.11	Contract Interpretation; Construction of Agreement
Section 13.12	Jurisdiction and Venue
Section 13.13	Specific Performance
Section 13.14	Dispute Resolution
Section 13.15	Waiver of Jury Trial

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EXHIBITS

EXHIBIT A	Articles of Merger
EXHIBIT B	Amended and Restated Articles of Incorporation of Surviving Corporation
EXHIBIT C	Amended and Restated Bylaws of Surviving Corporation
EXHIBIT D	Assignment and Assumption Agreement
EXHIBIT E	Form of Escrow Agreement
EXHIBIT F	Form of Letter of Credit
EXHIBIT G	Form of Guaranty
EXHIBIT H	Form of Supply Agreement
EXHIBIT I	Form of Intellectual Property Licensing Agreement
EXHIBIT J	Form of Officer’s Certificate of APT and Alliance
EXHIBIT K	Form of Officer’s Certificate of UG and Century
EXHIBIT L	Bully’s Contracts

SCHEDULES

SCHEDULE 2.4	SCHEDULE 3.13
SCHEDULE 2.9(b)(i)	SCHEDULE 3.14
SCHEDULE 2.10	SCHEDULE 3.15
SCHEDULE 3.2	SCHEDULE 3.16
SCHEDULE 3.3	SCHEDULE 3.18
SCHEDULE 3.4(a)	SCHEDULE 3.19
SCHEDULE 3.4(b)	SCHEDULE 3.20
SCHEDULE 3.5	SCHEDULE 3.21
SCHEDULE 3.6(a)	SCHEDULE 4.4
SCHEDULE 3.6(b)	SCHEDULE 4.5
SCHEDULE 3.6(c)	SCHEDULE 4.8
SCHEDULE 3.7	SCHEDULE 4.11(a)
SCHEDULE 3.8	SCHEDULE 4.11(b)
SCHEDULE 3.9	SCHEDULE 5.6
SCHEDULE 3.10	SCHEDULE 5.10
SCHEDULE 3.11(a)	SCHEDULE 6.5
SCHEDULE 3.12	SCHEDULE 7.1(f)
	SCHEDULE 7.2(f)

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AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “Agreement”) is made and entered into as of May 4 , 2004 (the “Signing Date”), by and among Alliance Gaming Corporation, a Nevada corporation (“Alliance”); APT Games, Inc., a Nevada corporation and a wholly-owned subsidiary of Alliance (“APT”); United Coin Machine Co., a Nevada corporation (the “Company”); United Gaming, Inc., a Nevada corporation (“UG”); and Century Gaming, Inc., a Montana corporation (“Century”).

RECITALS

WHEREAS, the Company is a wholly-owned subsidiary of APT;

WHEREAS, immediately prior to consummation of the merger provided for herein, UG will be a wholly-owned subsidiary of Century;

WHEREAS, Alliance, APT, UG and Century entered into a Stock Purchase Agreement, dated June 30, 2003 and amended by an Amendment to Stock Purchase Agreement dated August 29, 2003 (as so amended, the “Purchase Agreement”), that provided for, among other things, (i) the sale by APT and the purchase by UG of all of the issued and outstanding Capital Stock (as defined herein) of the Company and (ii) the transfer of the Capital Stock of Century such that it would become a wholly-owned subsidiary of UG; and

WHEREAS, after the Purchase Agreement was executed, certain regulatory and business considerations resulted in the parties’ agreement to (i) restructure the transactions contemplated by the Purchase Agreement as a merger of UG with and into the Company with the Company being the surviving entity (the “Surviving Corporation”) and Century becoming the parent of the Surviving Corporation (the “Merger”), (ii) amend certain business terms of the transactions, all of the foregoing on the terms and conditions set forth herein and (iii) have this Agreement supersede and replace the Purchase Agreement in its entirety.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the provisions set forth below, and subject to the terms and conditions set forth herein, the parties agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

As used in this Agreement, the following terms shall have the meanings indicated below:

“Adjusted EBITDA” has the meaning set forth in Section 2.4.

“Affiliate”means, in respect of any specified Person, any other Person, whether or not a separate legal entity, that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person (the terms “controls,” “controlled” or “control” meaning the possession, directly or indirectly, of the power to direct or cause the direction of management

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policies of a Person, whether through the ownership of securities, by contract or credit arrangement, as trustee or executor, or otherwise).

“Agreement” has the meaning set forth in the Preamble.

“Alliance” has the meaning set forth in the Preamble.

“Alliance 401(k) Plan” has the meaning set forth in Section 8.7.

“Allocation” has the meaning set forth in Section 11.1(b).

“APT” has the meaning set forth in the Preamble.

“Articles of Merger” has the meaning set forth in Section 2.2(b)(iii).

“Assignment and Assumption Agreement” has the meaning set forth in Section 2.3.

“Bally” means Bally Gaming, Inc.

“Bully’s Contracts” means collectively the Participation Agreements Renewal Agreement, dated March 22, 2004, entered into by the Company and Paul Sonner and Bully’s Sports Bar & Grill, Inc.; a Loan and Security Agreement and Promissory Note, both dated March 22, 2004, entered into by the Company and Paul D. Sonner and Bully’s Sports Bar & Grill, Inc.; an Assignment and Substitution Agreement, dated May 4, 2004, among Alliance, the Company and Bally; and an Intercreditor Agreement, dated May 4, 2004, between Alliance and the Company, all as set forth in Exhibit L hereto.

“Business” means the business of selecting, owning, installing, operating and maintaining video poker devices, reel-type slot machines and other electronic gaming machines in local establishments owned by third parties in Nevada.

“Capital Stock” means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership, partnership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash on Hand” has the meaning set forth in Section 5.6(a).

“Cash Payment” has the meaning set forth in Section 2.5(a).

“Century” has the meaning set forth in Preamble.

“Century’s Financial Statements” means all financial statements of Century delivered or which are required to be delivered as set forth in Section 4.11 and Section 6.7.

“Change of Control” shall be deemed to have occurred upon (a) the consummation of a tender for or purchase of more than 50% of a company’s Capital Stock by a third party,

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excluding the initial public offering by Surviving Corporation of any class of its Capital Stock, (b) a merger, consolidation or recapitalization of a company such that the stockholders of the company immediately prior to the consummation of such transaction possess less than 50% of the voting securities of the surviving entity immediately after the transaction (determined on a fully-diluted basis assuming the conversion of all convertible securities of such Person), or (c) the sale, lease or other disposition of all or substantially all of the assets of a company.

“Closing” has the meaning set forth in Section 2.8.

“Closing Date” has the meaning set forth in Section 2.8.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the Preamble.

“Competing Change of Control” has the meaning set forth in Section 5.11(c)(i).

“Contract” means each of the contracts, purchase orders and agreements (whether written or oral) to which the Company is a party or is legally bound.

“Deposit” has the meaning set forth in Section 2.6(a).

“EBITDA” means the Company’s earnings before interest, taxes, depreciation and amortization as determined under GAAP.

“EBITDA Ending Date” has the meaning set forth in Section 2.4(a)(i).

“Effective Date” means the date on which the Effective Time occurs, as provided for in Section 2.2(c)(i).

“Effective Time” has the meaning set forth in Section 2.2(c)(i).

“Employee Benefit Plan” means any (a) nonqualified deferred compensation or retirement plan or arrangement, (b) Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any multi-employer plan), (d) Employee Welfare Benefit Plan or (e) Other Employee Benefit Obligation.

“Employee Pension Benefit Plan” has the meaning set forth in Section 3(2) of ERISA.

“Employee Welfare Benefit Plan” has the meaning set forth in Section 3(1) of ERISA.

“Environmental Law” means any Law relating to the regulation or protection of the environment or natural resources or the emission release, treatment, storage, disposal, transport or handling of Hazardous Material.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

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“ERISA Affiliate” means any Person who is in the same controlled group of corporations or who is under common control with APT or, before the Closing, the Company (within the meaning of Section 414(b) or 414(c) of the Code).

“Escrow Account” has the meaning set forth in Section 2.5(b).

“Escrow Agreement” has the meaning set forth in Section 2.5(b).

“Escrow Funds” has the meaning set forth in Section 2.5(b).

“Exchange Act” has the meaning set forth in Section 3.19.

“Final Cash Count” has the meaning set forth in Section 5.6(b).

“Financial Statements” has the meaning set forth in Section 3.4.

“Food 4 Less” has the meaning set forth in Section 2.4(a)(i).

“GAAP”means United States generally accepted accounting principles as in effect at the time in question.

“Governmental Entity” has the meaning set forth in Section 3.5.

“Guaranty” has the meaning set forth in Section 2.7(b).

“Hazardous Material” means (a) any petroleum or petroleum fraction, explosives, radioactive materials, friable asbestos, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid containing regulated levels of polychlorinated biphenyls (PCBs); and (b) any chemicals or substances which are defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “extremely hazardous wastes,” or “toxic substances,” under any Environmental Law.

“HSR Act” has the meaning set forth in Section 3.19.

“Indebtedness” of any Person means all obligations of such Person (a) for borrowed money, (b) evidenced by notes, bonds, debentures or similar instruments, (c) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), (d) under capital leases and (e) in the nature of guarantees of the obligations described in clauses (a) through (d) above of any other Person.

“indemnified party” has the meaning set forth in Section 9.3.

“indemnifying party” has the meaning set forth in Section 9.3.

“Independent Accountant” has the meaning set forth in Section 13.14(b).

“Intellectual Property” means all patents and patent rights, trademarks and trademark rights, service marks and service marks rights, trade names and trade name rights, copyrights and all pending applications for and registrations of patents, trademarks, and copyrights.

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“Interim Balance Sheet” has the meaning set forth in Section 3.4.

“Investment Assets” means all debentures, notes and other evidences of Indebtedness, stocks, securities (including rights to purchase and securities convertible into or exchangeable for other securities), interests in joint ventures and general and limited partnerships, mortgage loans and other investment or portfolio assets owned of record or beneficially by the Company and issued by any Person other than the Company (other than trade receivables generated in the ordinary course of business of the Company).

“knowledge of APT”means that any one or more of Robert Miodunski, Robert Saxton, Dave Sloan, Mark Lerner, Robert “Bill” Nader, Craig Soper and Rob Woodson has actual knowledge of such fact.

“Landlord” means William T. Papagna, a natural person, Betty Jo Papagna, a natural person, and William T. Papagna, as trustee, collectively, as lessor.

“Laws” means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States or any state, county, city or other political subdivision or of any Governmental Entity.

“Lease Agreement” means that certain Lease, dated as of February 25, 1983, between Landlord and Interstate Check Cashing Co., a Nevada corporation, predecessor-in-interest to Alliance Gaming, Inc., a Nevada corporation, as lessee, as amended by that certain Amendment to Lease, dated as of October 18, 1987, and as further amended, supplemented or modified from time to time.

“Letter of Credit” has the meaning set forth in Section 2.6(a).

“License Agreement” has the meaning set forth in Section 2.9(a)(viii).

“Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or other security agreement of any kind or nature whatsoever.

“Longs” has the meaning set forth in Section 2.4(a)(i).

“Losses” has the meaning set forth in Section 9.1.

“M&A qualified beneficiaries” has the meaning set forth in Section 8.6.

“Material Adverse Effect” means any material change in or effect on the business of the Company that is materially adverse to the business, results of operations, or condition (financial or otherwise) of the Company, taken as a whole.

“Material Contracts” has the meaning set forth in Section 3.11(a).

“Merger” has the meaning set forth in the Recitals.

“Merger Consideration” has the meaning set forth in Section 2.4.

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“Merger Consideration Adjustment” has the meaning set forth in Section 2.11(a).

“Minimum Cash on Hand” has the meaning set forth in Section 5.6(a).

“Mountain View” has the meaning set forth in Section 2.4(a)(i).

“Mountain View Proceeds” has the meaning set forth in Section 2.10(b).

“multi-employer plan” has the meaning set forth in Section 3.10(c).

“Multi-Hand Patents” means those two particular Multi-Hand patents (U.S. Patent Numbers 5,823,873 and 6,007066) owned by Action Gaming, Inc. and at issue in the Multi-Play Lawsuit.

“Multi-Play Lawsuit” means that particular lawsuit brought in the United States District Court, District of Nevada, by Action Gaming, Inc. and IGT against Alliance, Bally and the Company (Case No.: CV-S-01-1109-JCM(PAL)).

“Nevada Secretary” means the Secretary of State of the State of Nevada.

“New Common Stock” has the meaning set forth in Section 2.2(c)(vi).

“NRS” means the Nevada Revised Statutes.

“Old Escrow Agreement” has the meaning set forth in Section 2.5(b).

“Old Guaranty” has the meaning set forth in Section 2.6(c).

“Order” means any writ, judgment, decree, injunction or similar order of any Governmental Entity (in each such case whether preliminary or final).

“Other Employee Benefit Obligation” means all obligations, arrangements, or customary practices, whether or not legally enforceable, to provide benefits, other than salary, as compensation for services rendered, to present or former directors, officers, employees, or agents, including, without limitation, bonus, incentive compensation, stock option and severance plans, agreements and arrangements.

“Other Operating Income” means the category of “Other Operating Income” of the Company, as reported pursuant to the terms of this Agreement on the Company’s financial statements.

“Participation Agreement” means any Contract relating to the Company’s placing slot and video gaming machines at any property or facility where the Company shares some portion of the revenue from slot and video gaming machines.

“Permitted Lien” means (a) any Lien for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (b) any statutory Lien arising in the ordinary course of business by operation of Law with respect to any liability of the Company that is not yet due or

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delinquent and (c) any minor imperfection of title or similar Lien which individually or in the aggregate with other such Liens could not reasonably be expected to have a Material Adverse Effect.

“Person”means any entity or natural person or any corporation, partnership, joint venture or other entity, whether or not a legal entity.

“Plan” has the meaning set forth in Section 3(3) of ERISA.

“Post Closing Adjustment” has the meaning set forth in Section 5.6(c).

“Pre-Merger Shares” means all of the shares of Capital Stock of the Company that were issued and outstanding as of immediately prior to the Effective Time.

“Principals” means J. Grant Lincoln, D. Ladd Lincoln and Steven W. Arntzen.

“Prospective Transaction” has the meaning set forth in Section 5.12.

“Purchase Agreement” has the meaning set forth in the Recitals.

“Qualified Plan” means each Employee Benefit Plan which is intended to qualify under Section 401 of the Code.

“Raley’s Lawsuit” means that particular arbitration brought by the Company and all proceedings related thereto, including the lawsuit titled Raleys v. United Coin Machine Co., CV-S-03-1376 JCM (RJJ), U.S. District Court for the District of Nevada, and any appeal therefrom.

“Raley’s Proceeds” means any and all monetary proceeds received by the Company prior to the Closing Date from the Raley’s Lawsuit or any settlement thereof.

“Randy Miller Games” means 4x4 Poker, Count ‘em Down Keno and Count ‘em Blackjack.

“Royalty Games” means rights to gaming machine game concepts acquired by the Company through (1) an agreement dated January 9, 2003, and all amendments thereto, entered into between the Company and ColePat, LLC in regard to Lucky Reels Draw Poker and (2) through an agreement dated November 1, 2003, and all amendments thereto, entered into between the Company and RM Innovations LLC in regard to Randy Miller Games.

“Section 338(h)(10) Election” has the meaning set forth in Section 11.1(a).

“Securities Act” has the meaning set forth in Section 3.22.

“Signing Date” has the meaning set forth in the Preamble.

“Smiths” has the meaning set forth in Section 2.4(a)(i).

“Space Lease Agreement” means any Contract relating to the Company’s fixed price space lease of any property or facility for its slot and video gaming machines.

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“Sparky’s” has the meaning set forth in Section 2.4(a)(i).

“Sparky’s Business” means the Company’s route operations at the Sparky’s locations.

“Supply Agreement” has the meaning set forth in Section 2.9(a)(iv).

“Surviving Corporation” has the meaning set forth in the Preamble.

“Surviving Corporation 401(k) Plan” has the meaning set forth in Section 8.7.

“Surviving Corporation Plans” has the meaning set forth in Section 8.4.

“Tax” or “Taxes” means any and all taxes imposed or required to be collected by any federal, state or local taxing authority in the United States, or by any other foreign taxing authority under any statute or regulation, including, without limitation, all income, sales and use, property, ad valorem, excise, payroll, and other taxes, all import and export taxes, duties and fees, and all interest, penalties and additions thereto.

“Tax Return” means a report, return or other information required to be supplied to a Governmental Entity with respect to or concerning Taxes including, where permitted or required, combined or consolidated returns for any group of entities that includes the Company.

“Third Party Offer” has the meaning set forth in Section 10.2.

“Transaction Agreements” means this Agreement, the Escrow Agreement, the Supply Agreement and the License Agreement.

“UG” has the meaning set forth in the Preamble.

ARTICLE II

THE MERGER

Section 2.1Purchase Agreement Superseded.  The Purchase Agreement is hereby superseded and replaced in its entirety by this Agreement.  From and after the Signing Date, the Purchase Agreement shall have no force or effect.

Section 2.2.The Merger.

(a)Structure.  At the Effective Time, on and subject to the terms and conditions of this Agreement and in accordance with the NRS, UG will merge with and into the Company.  Following the Merger, the Company shall continue as the Surviving Corporation and the separate existence of UG shall cease.

(b)Actions at the Closing.  At the Closing, (i) the Company and APT will deliver to UG and Century the various certificates, instruments, and documents referred to in Section 2.9(a), (ii) UG and Century will deliver to the Company and APT the various certificates, instruments, and documents referred to in Section 2.9(b), (iii) the Company and UG

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will file with the Nevada Secretary Articles of Merger in the form attached hereto as Exhibit A (the “Articles of Merger”), and (iv) Century will cause Surviving Corporation to deliver the Merger Consideration and the New Common Stock as provided herein.

(c)Effect of Merger.

(i)General.  The Merger shall become effective at the time (the “Effective Time”) the Company and UG file the Articles of Merger with the Nevada Secretary.  The Merger will have the effects prescribed by the NRS.  Surviving Corporation may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name and on behalf of either the Company or UG in order to effectuate or memorialize the transactions contemplated by this Agreement.

(ii)Articles of Incorporation.  At and as of the Effective Time, the articles of incorporation of Surviving Corporation shall be amended and restated to read substantially as set forth in Exhibit B hereto.

(iii)Bylaws.  At and as of the Effective Time, the bylaws of the Surviving Corporation shall be amended and restated to read substantially as set forth in Exhibit C hereto.

(iv)Directors and Officers.  The directors and officers of UG shall become the directors and officers of Surviving Corporation at and as of the Effective Time (retaining their respective positions and terms of office).

(v)Conversion of Pre-Merger Shares.  At and as of the Effective Time, all of the Pre-Merger Shares shall, in the aggregate, be converted into the right to receive the Merger Consideration.  No Pre-Merger Shares shall be deemed outstanding or to have any rights other than the right to receive the Merger Consideration after the Effective Time.

(vi)Conversion of UG’s Capital Stock.  At and as of the Effective Time, each share of UG’s issued and outstanding Capital Stock shall be converted into ten shares of Surviving Corporation’s common stock, $0.001 par value per share (“New Common Stock”), the aggregate effect of which shall be that 100% of the issued and outstanding New Common Stock is owned by Century.

(vii)Closing of Transfer Records.  After the Effective Time, transfers of Pre-Merger Shares shall not be made on the stock transfer books of Surviving Corporation.

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Section 2.3Assumption of Lease Agreement.  On the terms and subject to the conditions of this Agreement and as an integral part of the transactions contemplated hereby,at the Closing Alliance agrees to assign to Surviving Corporation and Surviving Corporation agrees to assume from Alliance, all of Alliance’s rights and obligations under the Lease Agreement, pursuant to the Assignment and Assumption Agreement, substantially in the form attached as Exhibit D hereto (the “Assignment and Assumption Agreement”).  As a further integral part of the transactions contemplated hereby, if within two years after the Closing Date all or substantially all of the gaming operations at the Longs locations are terminated by Longs (or any successor to Longs) and such termination is not caused by any action or omission by Century or Surviving Corporation that constitutes a breach of the covenants set forth below in this Section 2.3), then effective upon such termination all of Surviving Corporation’s rights and obligations under the Lease Agreement shall be assigned back to, and assumed by, Alliance pursuant to the Assignment and Assumption Agreement.  Century and UG hereby consent to such assignments and assumptions.  During the two-year period commencing on the Closing Date, Century and Surviving Corporation covenant that they will not take any affirmative action, or fail to take any reasonable action within their control, that could reasonably be expected to cause a termination by Longs (or any successor to Longs) of all or substantially all of the gaming corporations at the Longs locations.  Century and Surviving Corporation further covenant to act in good faith with the objective of maintaining and preserving the relationship with Longs and the gaming operations at the Longs locations.

Section 2.4Merger Consideration.  Subject to any adjustment provided in Section 2.11 or Section 5.9(b), in exchange for the Pre-Merger Shares the consideration that shall be paid to APT pursuant to the Merger (the “Merger Consideration”) shall be an aggregate amount equal to:

(a)If the Adjusted EBITDA (as defined below) of the Company is equal to or greater than Twenty Four Million, Three Hundred Fifty Thousand Dollars ($24,350,000):

(i)Six times EBITDA of the Company for the twelve months ending on the last day of the most recent month preceding the Closing Date for which the EBITDA of the Company is available at least two days prior to the Closing Date (the “EBITDA Ending Date”), excluding from such calculation the EBITDA attributable to (A) the Company’s agreements with Longs Drug Stores California, Inc. (“Longs”), Food 4 Less Holdings Inc. (“Food 4 Less”), Smiths Food and Drug (“Smiths”), Sparky’s Sports Bar and Grill (“Sparky’s”), and Mountain View Recreation Center, Inc. (“Mountain View”), (B) the Mountain View Proceeds, (C) the Raley’s Proceeds, if any, and (D) any amount of Other Operating Income in excess of Three Hundred Thousand Dollars ($300,000); plus

(ii)Five times EBITDA attributable to the Company’s agreements with Longs for the twelve months ending on the EBITDA Ending Date; plus

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(iii)Six times EBITDA attributable to the Company’s agreements with Food 4 Less calculated as follows:

(1)for stores in which the Company’s gaming machines were installed more than twelve months prior to the EBITDA Ending Date, twelve months actual EBITDA, plus

(2)for any other stores, EBITDA for the period beginning on the first day of the month following the completion of the installation of the Company’s gaming machines in such store and ending on the EBITDA Ending Date, divided by the number of months in such period, times 12; minus

(iv)Nineteen Million, Four Hundred Eighty-Six Thousand Dollars ($19,486,000); plus

(v)as of the Closing Date, the amount of the Company’s prepaid royalties (not yet earned by either of the royalty payees) for the Royalty Games, which shall in no event exceed Two Hundred Twenty-Five Thousand Dollars ($225,000) for Lucky Reels Draw Poker and Three Hundred Thousand Dollars ($300,000) for the Randy Miller Games; plus

(vi)the amount of prepaid gaming Taxes and prepaid gaming license fees to the extent they are attributable to the period after the Closing.

(b)if the Adjusted EBITDA of the Company is less than Twenty-Four Million, Three Hundred Fifty Thousand Dollars ($24,350,000):

(i)Adjusted EBITDA minus Seven Million, Five Hundred Thousand Dollars ($7,500,000); multiplied by

(ii)8.51; minus

(iii)Nineteen Million, Four Hundred Eighty-Six Thousand Dollars ($19,486,000); plus

(iv)as of the Closing Date, the amount of the Company’s prepaid royalties (not yet earned by either of the royalty payees) for the Royalty Games, which shall in no event exceed Two Hundred Twenty-Five Thousand Dollars ($225,000) for Lucky Reels Draw Poker and Three Hundred Thousand Dollars ($300,000) for the Randy Miller Games; plus

(v)the amount of prepaid gaming Taxes and prepaid gaming license fees to the extent they are attributable to the period after the Closing.

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“Adjusted EBITDA” of the Company shall equal:

(i)EBITDA of the Company for the twelve months ending on the EBITDA Ending Date, excluding from such calculation the EBITDA attributable to (A) the Company’s agreements with Food 4 Less, Smiths, Sparky’s and Mountain View, (B) the Mountain View Proceeds, (C) the Raley’s Proceeds, if any, and (D) any amount of Other Operating Income in excess of Three Hundred Thousand Dollars ($300,000); plus

(ii)EBITDA attributable to the Company’s agreements with Food 4 Less calculated as follows:

(1)for stores in which the Company’s gaming machines were installed more than twelve months prior to the EBITDA Ending Date, twelve months actual EBITDA, plus

(2)for any other stores, EBITDA for the period beginning on the first day of the month following the completion of the installation of the Company’s gaming machines in such store and ending on the EBITDA Ending Date, divided by the number of months in such period, times 12.

“EBITDA” for purposes of this Section 2.4 shall be calculated in the same manner as the estimated EBITDA in each of the examples set forth on Schedule 2.4, consistently applied, and shall be derived from the internal unaudited financial statements of the Company as delivered by APT to UG or Century pursuant to Section 5.4.

Section 2.5Payment of Merger Consideration.

(a)As of the Effective Time, Century shall cause a cash payment to be paid to APT, by wire transfer of immediately available funds, in an amount equal to:  the amount of the Merger Consideration minus the Merger Consideration Adjustment, if any, minus the Escrow Funds (as defined below) (the “Cash Payment”).

(b)On the 30^th day of each calendar month from June 2003 through March 2004 inclusive, UG delivered $32,500 into an escrow account (the “Escrow Account”) on the terms and conditions set forth in a June 30, 2003 Escrow Agreement (the “Old Escrow Agreement”) by and among APT, UG and Nevada Title Company.  As of the Signing Date, the Old Escrow Agreement is being superseded and replaced in its entirety by an Amended and Restated Escrow Agreement, substantially in the form attached as Exhibit E hereto (the “Escrow Agreement”), and the Escrow Account shall be governed by the terms and conditions set forth in the Escrow Agreement.  Within 5 days from the Signing Date, UG will deliver $32,500 into the Escrow Account for the payment that was due by April 30, 2004, and hereafteron the 30^th day of each month until the Effective Date, UG shall continue to deliver $32,500 per month into the Escrow Account.  For purposes of this Agreement, the funds previously delivered by UG into the Escrow Account and the funds to be delivered by UG into the Escrow Account hereafter until the Effective Date, as provided in this Section 2.5(b), are referred to in the aggregate as the “Escrow

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Funds.”  At the Effective Time, Century shall cause the Escrow Funds to be delivered to APT as part of the Merger Consideration.

Section 2.6Acknowledgment of Prior Deliveries.  In connection with the parties’ execution and delivery of the Purchase Agreement:

(a)UG caused Rocky Mountain Bank to issue to APT an irrevocable letter of credit in the amount of One Million Dollars ($1,000,000) (the “Deposit”), in the form attached as Exhibit F hereto (as amended after the date hereof with the written consent of APT, the “Letter of Credit”);

(b)UG executed and delivered to APT the Old Escrow Agreement and has deposited Three Hundred Twenty Five Thousand Dollars ($325,000) of Escrow Funds with the Escrow Agent; and

(c)the Principals delivered to APT a Guaranty, dated June 30, 2003 (the “Old Guaranty”), guaranteeing certain obligations of UG under the Purchase Agreement.

Section 2.7Signing Deliveries.  Concurrently with the execution and delivery of this Agreement by the parties hereto:

(a)UG shall execute and deliver to APT the Escrow Agreement, superseding and replacing the Old Escrow Agreement in its entirety.

(b)The Principals shall deliver to APT an Amended and Restated Guaranty, substantially in the form attached as Exhibit G hereto (the “Guaranty”), superseding and replacing the Old Guaranty in its entirety and guaranteeing the performance of (i) UG’s obligations with respect to the Deposit; (ii) UG’s obligations with respect to the Escrow Funds in the Escrow Account; and (iii) UG’s and Century’s obligations under Section 10.1(d)(iii).

Section 2.8Closing.  The closing of the transactions provided for in this Agreement (the “Closing”) will take place at the offices of Gordon & Silver, Ltd., 3960 Howard Hughes Parkway, Las Vegas, NV 89109, within three days after the satisfaction or valid waiver of all of the conditions in Article VII, or at such other time and place as the parties may agree (such time and date, the “Closing Date”).

Section 2.9Closing Deliveries and Other Actions.

(a)At the Closing, APT will deliver to Century and UG:

(i)the Articles of Merger executed by the Company;

(ii)a good standing certificate for the Company from the Nevada Secretary;

(iii)the Assignment and Assumption Agreement, executed by Alliance and the Surviving Corporation;

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(iv)the Supply Agreement between Bally and the Company, substantially in the form attached as Exhibit H hereto (the “Supply Agreement”), executed by Bally and the Company;

(v)estoppel certificates executed by Landlord and any landlord under any lease listed in Schedule 3.6(a), except where failure to obtain such certificates would not have a Material Adverse Effect;

(vi)any consents required under Section 3.19, except where failure to obtain such consents would not have a Material Adverse Effect;

(vii)an opinion from Jones Vargas, counsel for APT, relating to the Merger, the New Common Stock and the Transaction Agreements, dated as of the Closing Date and having such form and content as are reasonably acceptable to Century and UG and customary for transactions of the nature contemplated by the Transaction Agreements;

(viii)the Intellectual Property Licensing Agreement between Alliance and the Company, substantially in the form attached as Exhibit I hereto (the “License Agreement”), executed by Alliance and the Company;

(ix)evidence reasonably acceptable to UG and Century that (1) the Pre-Merger Shares have been released from all Liens other than Permitted Liens, (2) at and as of the Effective Time the New Common Stock is free of all Liens other than Permitted Liens or Liens created by actions taken by UG or Century and (3) the Company has been released from all obligations in connection with Indebtedness of Alliance or APT (other than as contemplated hereby);

(x)certificates evidencing all of the Pre-Merger Shares, duly endorsed by APT for cancellation in exchange for the Merger Consideration;

(xi)the written resignations of all directors and officers of the Company from all of their respective positions as directors and officers of the Company;

(xii)a certificate substantially in the form attached as Exhibit J hereto, executed by APT and Alliance, representing and warranting to UG and Century that (1) each of APT’s and Alliance’s representations and warranties in this Agreement was accurate in all material respects as of the Signing Date and is accurate in all material respects as of the Closing Date as if made on the Closing Date and (2) each of APT’s and Alliance’s and the Company’s covenants and obligations required to be complied with prior to Closing has been so complied with in all material respects.

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(b)At the Closing, UG and Century will deliver, or will cause to be delivered, to APT:

(i)the Cash Payment, by wire transfer to the account set forth on Schedule 2.9(b)(i);

(ii)the Escrow Funds;

(iii)an opinion from Gordon & Silver, Ltd., counsel for Century, relating to the Merger and the Transaction Agreements, dated as of the Closing Date, and having such form and content as are reasonably acceptable to APT and customary for transactions of the nature contemplated by the Transaction Agreements;

(iv)an assignment of the Mountain View Proceeds (as defined in Section 2.10(b)) if not previously paid;

(v)evidence reasonably acceptable to APT that Century owns 100%  of the UG Stock; and

(vi)a certificate substantially in the form attached as Exhibit K hereto, executed by UG and Century, representing and warranting to APT and Alliance that (1) each of UG’s and Century’s respective representations and warranties in this Agreement was accurate in all material respects as of the Signing Date and is accurate in all material respects as of the Closing Date as if made on the Closing Date and (2) each of UG’s and Century’s covenants and obligations required to be complied with prior to Closing has been so complied with in all material respects.

Section 2.10         Excluded Assets.  Notwithstanding anything in this Agreement to the contrary, the following assets of the Company are specifically excluded from the transactions contemplated hereby and shall be transferred to APT prior to the Closing:

(a)all cash and cash equivalents of the Company (except for the Minimum Cash on Hand as set forth in Section 5.6), including, without limitation, all checking accounts, bank accounts, deposit accounts, certificates of deposit, time deposits, securities, uncashed checks received by APT on or prior to the Closing Date, and all interest and dividends thereon (but not including the Refundable Deposit Accounts or Long Term Deposits as shown on the Financial Statements and reflected on Schedule 2.10);

(b)all insurance proceeds payable with respect to the fire at Mountain View on April 29, 2003 (the “Mountain View Proceeds”), regardless of whether such proceeds are paid before, on or after the Closing Date;

(c)all accounts owned or acquired by the Company, including accounts receivable, notes and notes receivable, other receivables, book debts and other forms of obligations owed to the Company from Golden Gaming, Inc. arising from the Company’s

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transactions with Golden Gaming, Inc. regarding the Company’s operations at Sparky’s, Dukes and The Big Game Club; and

(d)all claims and rights relating to the Raley’s Lawsuit, including but not limited to the control and pursuit of such claims and rights, as well as any proceeds resulting from the Raley’s Lawsuit or any settlement thereof.

Section 2.11Merger Consideration Adjustment; Multi-Play Lawsuit.

(a)If at any time before or after the Closing, any judgment or order (i) is entered in the Multi-Play Lawsuit by a court of competent jurisdiction; (ii) is not stayed by an order of the same or a higher court within three months after such judgment or order; and (iii) while such judgment or order is in effect, either (1) causes the Company (or Surviving Corporation) to be required to pay royalties or licensing fees in connection with “Multi-Play Poker,” then the Merger Consideration shall be reduced by the amount of such royalties actually paid by the Company (or Surviving Corporation) up to One Million Dollars ($1,000,000), or (2) eliminates the ability of the Company (or Surviving Corporation) to use “Multi-Play Poker,” then the Merger Consideration shall be reduced by One Million Dollars ($1,000,000) (collectively, the “Merger Consideration Adjustment”); provided, however, that if such judgment or order is reversed on appeal or otherwise ceases to be effective, Surviving Corporation shall return the Merger Consideration Adjustment to APT.

(b)If the Merger Consideration Adjustment becomes due and payable prior to the Closing, the amount of the Cash Payment shall be reduced by the amount of the Merger Consideration Adjustment pursuant to Section 2.11(a).  If the Merger Consideration Adjustment becomes due and payable after the Closing, APT and Alliance jointly and severally agree to pay the Merger Consideration Adjustment to Surviving Corporation within 30 days after written demand by Surviving Corporation for such payment.  Notwithstanding the foregoing, in no event shall the total Merger Consideration Adjustment exceed One Million Dollars ($1,000,000), and in no event shall Alliance be required to make any payments to Surviving Corporation or adjustment to the Merger Consideration based on a Merger Consideration Adjustment pursuant to Section 2.11(a)(iii)(1) until the Company (or Surviving Corporation) actually pays any royalties due pursuant to such judgment or order.  If Surviving Corporation becomes obligated to return the Merger Consideration Adjustment to APT, then Surviving Corporation shall do so within 30 days after written demand therefor by APT or Alliance.

(c)Alliance shall have the sole right to control the defense of the Company (or Surviving Corporation) in the Multi-Play Lawsuit (including settlement thereof) using attorneys selected by Alliance in its sole discretion, which may be the same attorneys as are conducting the defense of Alliance and/or Bally in the Multi-Play Lawsuit; provided, however, that if the Company (or Surviving Corporation) is advised by such legal counsel selected by Alliance to conduct the defense of Alliance, Bally and the Company (or Surviving Corporation), that a conflict of interest exists such that it would be necessary for the Company (or Surviving Corporation) to conduct its own separate defense, Alliance and APT shall be responsible for the reasonable and actual costs, fees and expenses of attorneys, accountants, experts and/or consultants selected by the Company (or Surviving Corporation) to conduct its separate defense.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF APT AND ALLIANCE

Except as set forth in the Disclosure Schedules dated as of the Signing Date, APT and Alliance hereby represent and warrant to UG and Century as of the Signing Date as set forth in this Article III.  To the extent that such representations or warranties pertain to the Company after the Effective Time, the term “Company” as used therein also refers to Surviving Corporation.

Section 3.1.Corporate Existence.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada.

Section 3.2Authority; No Breach.  Except as otherwise disclosed on Schedule 3.2, this Agreement has been duly authorized and validly executed and delivered by APT and the Company and constitutes a legal, valid and binding obligation of APT and the Company, enforceable against them in accordance with its terms, except as enforcement may be limited by bankruptcy and similar laws affecting the enforcement of creditors’ rights generally.  APT and the Company have all necessary corporate power and authority to execute and deliver this Agreement and to perform their respective obligations hereunder and to consummate the transactions contemplated hereby to be consummated by them.  The execution and delivery of this Agreement by APT and the Company and the consummation by APT and the Company of the transactions contemplated hereby to be consummated by them have been duly and validly authorized by all necessary corporate action on the part of APT and the Company and no other corporate proceedings on the part of APT or the Company and no other stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  APT and the Company have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and perform their respective obligations under this Agreement.

Section 3.3Capitalization; Ownership of the Shares.  The authorized Capital Stock of the Company consists of 20,000 shares of Common Stock, par value $10.00 per share, 2,500 of which have been issued.  Other than the Pre-Merger Shares, there are no equity or other ownership interests or securities of the Company issued and outstanding.  Except for Permitted Liens and as otherwise disclosed on Schedule 3.3, APT owns the Pre-Merger Shares, free and clear of all Liens.  All of the outstanding equity securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable.  There are no Contracts relating to the issuance, sale, or transfer of any equity securities or other securities of the Company.

Section 3.4Financial Statements.  APT has delivered to UG or Century true and complete copies of (i) the audited balance sheets of the Company as of June 30, 2002 and June 30, 2003 and the related audited statements of operations for the fiscal years then ended, (ii) the unaudited balance sheet of the Company as of March 31, 2003 (the “Interim Balance Sheet”) and the related unaudited statement of operations for the nine months then ended and (iii) the unaudited balance sheets of the Company as of the last day of each calendar month subsequent to the date of the Interim Balance Sheet and prior to the Signing Date and the related unaudited

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statements of operations of the Company, in each case as of and for each such month and the portion of the fiscal year then ended, as the case may be (collectively, the “Financial Statements”).

(a)Except as otherwise disclosed on Schedule 3.4(a), the Financial Statements fairly present, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the financial position of the Company as of the dates thereof and its statements of operations, shareholders’ equity and cash flows for the periods then ended.

(b)Except as otherwise disclosed on Schedule 3.4(b), since March 31, 2003 there has been no Material Adverse Effect, and to the knowledge of APT there are no facts or circumstances which APT in its reasonable judgment anticipates will cause a Material Adverse Effect.

Section 3.5Licenses and Permits.  Except as otherwise disclosed on Schedule 3.5, the Company has received and holds all permits, registrations, licenses, franchises, certifications and other approvals and authorizations required from any court or tribunal, or administrative, governmental or regulatory body, agency or authority, including any gaming authority (each, a “Governmental Entity”) in order for the Company to conduct and operate its business as currently conducted or operated, and to permit the Company to own or use its assets in the manner in which such assets are currently owned or used, except where failure to hold such permits, registrations, licenses, franchises, certifications or other approvals and authorizations would not have a Material Adverse Effect.

Section 3.6Real Property.

(a)Schedule 3.6(a) contains a true and correct list of (i) each parcel of real property owned by the Company, (ii) each parcel of real property leased by the Company (as lessor or lessee) and (iii) all Liens (other than Permitted Liens) relating to or affecting any parcel of real property referred to in clause (i) of this paragraph (a).

(b)Except as otherwise disclosed on Schedule 3.6(b), the Company has good title to each parcel of real property owned by it.  Except for the real property leased or subleased to others referred to in clause (ii) of Section 3.6(a), the Company is in possession of each parcel of real property owned by it, together with all buildings, structures, facilities, fixtures and other improvements thereon.

(c)The Company has a valid and subsisting leasehold estate in the real properties leased by it referred to in clause (ii) of Section 3.6(a) above for the full term of the lease thereof.  There are no oral or written modifications or amendments to any of such leases that have not been made available to UG or Century.  Each such lease is a legal, valid and binding agreement of the Company, enforceable in accordance with its terms and, to the knowledge of APT, of each other Person that is a party thereto, except as enforcement may be limited by bankruptcy and similar laws affecting the enforcement of creditors’ rights generally.  Except as disclosed on Schedule 3.6(c), no lease provides that the Merger is deemed an assignment of the lease requiring the landlord’s consent.

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Section 3.7Tangible Personal Property.  The Company is in possession of and has good title to, or has valid leasehold interests in or valid rights under Contract to use, all material tangible personal property used in the Business.  Except as otherwise disclosed on Schedule 3.7, all such tangible personal property is free and clear of all Liens, other than Permitted Liens and Liens that neither individually nor in the aggregate could reasonably be expected to have a Material Adverse Effect.

Section 3.8Intellectual Property Rights.  Schedule 3.8 contains a true and correct list of all material Intellectual Property used in the Business.  The Company either has all right, title and interest in or valid and binding rights under Contract to use such Intellectual Property.  Except as otherwise disclosed on Schedule 3.8, to the knowledge of APT (a) all registrations with and applications to any Governmental Entity in respect of the Intellectual Property owned by the Company and disclosed in Schedule 3.8 are valid and in full force and effect, (b) there are no material restrictions on the indirect transfer of the Intellectual Property owned by the Company and disclosed in Schedule 3.8, (c) the Company is not in default (or with the giving of notice or lapse of time or both, would be in default) in any material respect under any Contract to use the Intellectual Property disclosed in Schedule 3.8, and (d) the Intellectual Property owned by the Company and disclosed in Schedule 3.8 to the knowledge of APT is not being infringed upon by any other Person.  Except as otherwise disclosed on Schedule 3.8, the Company has not received written notice of any actual or threatened claim that it is infringing any Intellectual Property of any other Person, no claim is pending to such effect and, to the knowledge of APT, the Company is not infringing any Intellectual Property of any other Person.

Section 3.9Labor and Employment Agreements.  Except as otherwise disclosed on Schedule 3.9:

(a)The Company is not a party to or bound by any collective bargaining agreement and there are no labor unions or other organizations representing, purporting to represent or attempting to represent any employees of the Company.  There has not occurred nor, to the knowledge of APT, has there been threatened any material strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity.  There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending, nor to the knowledge of APT, threatened.

(b)The Company has no Contracts with employees or consultants, nor any severance programs or policies or any other arrangements providing for the payment of, or the acceleration of payment of compensation or other benefits upon termination of employment or a Change of Control.

Section 3.10Employee Benefit Plans and Arrangements; ERISA.  Except as otherwise disclosed on Schedule 3.10:

(a)The Company does not maintain any Employee Benefit Plans, and Alliance, APT, and their Affiliates do not maintain any Employee Benefit Plans which provide benefits to any employees of the Company.

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(b)The Company, Alliance, APT, and their Affiliates do not maintain and are not obligated to provide material benefits under any Employee Benefit Plan (other than as an incidental benefit under a Qualified Plan) which provides benefits to retirees or other terminated employees of the Company other than benefit continuation rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(c)Neither the Company, any ERISA Affiliate nor any other corporation or organization controlled by or under common control with any of the foregoing within the meaning of Section 4001 of ERISA has at any time contributed to any “multiemployer plan,” as that term is defined in Section 4001 of ERISA.

(d)None of the Employee Benefit Plans of the Company and no Plans of any ERISA Affiliate are subject to Title IV of ERISA.

Section 3.11Material Contracts and Relationships.

(a)Schedule 3.11(a) sets forth a complete and correct list of the following agreements to which the Company is a party or by which it is bound (all agreements set forth in Schedule 3.11(a) are collectively referred herein to as the “Material Contracts”):

(i)All Space Lease Agreements;

(ii)All Participation Agreements;

(iii)All Contracts (not otherwise listed in a specific clause) to which the Company is a party or is bound that relate to the Business and provide for annual payments by or to the Company in excess of $150,000;

(iv)All material partnership, joint venture, shareholders’ or other similar Contracts with any Person;

(v)All employment, consulting and similar employment Contracts;

(vi)All Contracts relating to any debt owed by the Company to any Person in excess of $150,000; and

(vii)All Contracts that restrict or limit the Company’s freedom, presently or in the future, to operate its business, compete, or to sell products or services.

(b)All of the Material Contracts are in full force and effect, are valid and binding and are enforceable by the Company in accordance with their terms, except as enforcement may be limited by bankruptcy and similar laws affecting the enforcement of creditors’ rights generally.  There are no liabilities of the Company under any Material Contract arising from any breach or default of any provision thereof and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a breach or default by the Company thereunder.

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Section 3.12Transactions with Affiliates.  Except as otherwise disclosed on Schedule 3.12, (a) there is no Indebtedness between the Company, on the one hand, and APT, any officer, director or Affiliate (other than the Company) of APT, on the other, (b) the Company does not provide or cause to be provided any assets, services or facilities to APT, or any such officer, director or Affiliate which are individually or in the aggregate material to the Business, (c) APT, or any such officer, director or Affiliate does not provide or cause to be provided any assets, services or facilities to the Company which are individually or in the aggregate material to the Business, and (d) the Company does not beneficially own, directly or indirectly, any Investment Assets issued by APT, or any such officer, director or Affiliate.

Section 3.13Compliance with Laws.  Since January 1, 2000, except as otherwise disclosed on Schedule 3.13, the operation of the Business has been conducted, in all material respects, in substantial compliance with all Laws applicable to the Company.

Section 3.14Litigation.  Except as otherwise disclosed on Schedule 3.14, there is no material legal, administrative, arbitration, investigation or other proceeding pending, or to the knowledge of APT threatened, against the Company or any of its assets.

Section 3.15Taxes.  Except as otherwise disclosed on Schedule 3.15:

(a)The Company has timely filed (taking into account all available extensions) all material Tax Returns required to have been filed by it and has paid or adequately reserved all material Taxes required to be paid by it to any taxing authority.  The Tax Returns filed by the Company are true and correct in all material respects;

(b)All Tax deficiencies asserted or assessed against the Company have been fully paid or finally settled;

(c)There is no pending or, to the knowledge of APT, threatened action, audit, proceeding, or investigation by any taxing authority with respect to the assessment or collection of Taxes of the Company;

(d)The Company has not waived any statute of limitations with respect to the assessment of any Tax; and

(e)There are no existing Liens (except for Permitted Liens) for Taxes due and payable upon any assets of the Company.

Section 3.16Insurance.  Schedule 3.16 contains a complete and correct list of all insurance policies owned or held by the Company or its Affiliates on behalf of the Company as of the Signing Date.  Except as otherwise disclosed on Schedule 3.16, no notice or other communication has been received by the Company during the last twelve months from any insurance company canceling or materially amending or materially increasing the annual or other premiums payable under any of its insurance policies.

Section 3.17Environmental Matters.  Except for facts, circumstances or conditions that would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect:

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(a)There has been no disposal or release of Hazardous Material by the Company or, to the knowledge of APT, any other party, on, under, in or from any property owned by the Company (or formerly owned by the Company).

(b)Since January 1, 2000, the Company has not received any notice, demand, letter, claim or request for information relating to the property owned or operated by the Company or property formerly owned or operated by the Company alleging violation of or liability under any applicable Environmental Law.

Section 3.18Brokerage Fees.  Except as otherwise disclosed on Schedule 3.18, no Person is entitled to any brokerage or finder’s fee or other commission from APT, Alliance or the Company in respect of this Agreement or the transactions contemplated hereby.

Section 3.19Consents and Approvals.  Except as otherwise disclosed on Schedule 3.19 and except for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other federal securities laws, state securities or blue sky laws, and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the execution and delivery of this Agreement by APT and the Company do not, and the performance of the transactions contemplated hereby by APT and the Company will not, require any filing with or notification to, or any consent, approval, authorization, waiver or permit from, any Governmental Entity or any other Person.

Section 3.20No Conflicts.  The execution and delivery of this Agreement by APT and the Company and the consummation by APT and the Company of the transactions contemplated hereby will not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a benefit under, or result in the creation of any Lien (except a Permitted Lien) upon any of the assets of APT or the Company under, any provision of (a the articles of incorporation, bylaws or other organizational or governing documents of APT or the Company, (b) except as otherwise disclosed on Schedule 3.20, any contractual obligation of APT or the Company under the Material Contracts, or (c) any Order, other than, in the case of clauses (b) and (c) above, any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate, would not have a Material Adverse Effect.

Section 3.21Bank Accounts.  Schedule 3.21 contains a true and complete list of all deposit and disbursement accounts maintained by the Company with any bank, brokerage house or other financial institution.  Schedule 3.21 lists for each such account the name and address of the financial institution, the name and telephone number of the principal contact person at such institution, the nature of the account, the account number, the name of the account holder, the names of each person with authority to draw on such account or to have access to such account, and any passwords or other information necessary to provide access to such account or to change the persons authorized to draw on the account.

Section 3.22Securities Act Representations.  Neither APT, the Company nor any Person authorized or employed by APT or the Company as agent, broker, dealer or otherwise in connection with the sale of the Pre-Merger Shares or any security of the Company similar to the

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Pre-Merger Shares, has offered the Pre-Merger Shares or any such similar security for sale to, or solicited any offer to buy the Pre-Merger Shares or any such similar security from, or otherwise approached or negotiated with respect thereto with, any Person or Persons, and neither APT, the Company nor any Person acting on their behalf has taken or will take any other action (including, without limitation, any offer, issuance or sale of any security of APT or the Company under circumstances which might require the integration of such security with the Pre-Merger Shares or the New Common Stock under the Securities Act of 1933, as amended (the “Securities Act”) or the rules and regulations promulgated thereunder), in either case so as to subject the offering, issuance or sale of the Pre-Merger Shares or the New Common Stock to the registration provisions of the Securities Act.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF UG AND CENTURY

Except as set forth in the Disclosure Schedules dated as of the Signing Date, UG and Century hereby jointly and severally represent and warrant to APT, Alliance and the Company as of the Signing Date as set forth in this Article IV.

Section 4.1Corporate Existence.  Century is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Montana.  UG is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada.

Section 4.2Authority of UG and Century; No Breach.  This Agreement and the other Transaction Agreements have been duly authorized and validly executed and delivered by UG and Century and constitute a legal, valid and binding obligation of UG and Century, enforceable against them in accordance with their terms, except as enforcement may be limited by bankruptcy and similar laws affecting the enforcement of creditors’ rights generally.  UG and Century have all necessary corporate power and authority to execute and deliver this Agreement and the other Transaction Agreements and to perform their obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby to be consummated by UG and Century, respectively.  The execution and delivery of this Agreement and the other Transaction Agreements by UG and Century and the consummation by UG and Century of the transactions contemplated hereby and thereby to be consummated by UG and Century, respectively, have been duly and validly authorized by all necessary corporate action on the part of UG and Century and no other corporate proceedings on their part and no other stockholder votes are necessary to authorize this Agreement or the other Transaction Agreements or to consummate the transactions contemplated hereby or thereby.  Except as set forth in Schedule 4.5, UG and Century have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the other Transaction Agreements and perform their obligations hereunder and thereunder.

Section 4.3[INTENTIONALLY LEFT BLANK]

Section 4.4Capitalization.  The stockholders of record and holders by name or by category of subscriptions, warrants, options, convertible securities, and other rights (contingent or other) to purchase or otherwise acquire equity securities of UG that are exercisable as of or

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prior to the Effective Time, and the number of shares of UG Capital Stock and the number of such subscriptions, warrants, options, convertible securities, and other such rights held by each, as of immediately prior to the Effective Time are as set forth in the attached Schedule 4.4.  Except as otherwise disclosed on Schedule 4.4 as of immediately prior to the Effective Time, no Person owns of record or is known to UG to own beneficially any share of UG Capital Stock.

Section 4.5Licenses and Permits.  Except as otherwise disclosed on Schedule 4.5, no license or permit or authorization is required from any Governmental Entity for the execution and delivery by UG and Century of this Agreement and the other Transaction Agreements and the consummation of the transactions contemplated hereby and thereby.  To the knowledge of Century, Surviving Corporation is qualified to obtain any permits, licenses, or authorizations necessary for Surviving Corporation to operate the Business from and after the Effective Time.

Section 4.6No Conflicts.  The execution and delivery of this Agreement and the consummation by UG and Century of the transactions contemplated hereby will not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a benefit under, or result in the creation of any Lien (except a Permitted Lien) upon any of the assets of either UG or Century under, any provision of (a) the articles of incorporation, bylaws or other organizational or governing documents of UG or Century, (b) any contractual obligation of UG or Century under any Contract (c) any Order; other than, in the case of clauses (b) and (c), any such conflicts, violations, defaults, rights or Liens that, individually or in the aggregate, would not materially or adversely limit or delay UG’s or Century’s ability to perform its obligations hereunder or consummate the transactions contemplated hereby.

Section 4.7Litigation.  There is no material legal, administrative, arbitration, investigation or other proceeding, pending or to the knowledge of UG and Century threatened against UG, Century or any their respective assets.

Section 4.8Consents and Approvals.  Except as otherwise disclosed on Schedule 4.8 and except for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, other federal securities laws, state securities or blue sky laws, and the HSR Act, the execution and delivery of this Agreement and the other Transaction Agreements by UG and Century do not, and the performance of the transactions contemplated hereby and thereby by UG and Century will not, require any filing with or notification to, or any consent, approval, authorization, waiver or permit from, any Governmental Entity or any other Person.

Section 4.9Securities Act Representations.  Century is acquiring the New Common Stock pursuant to the Merger for investment for its 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.  Century has no present intention of selling, granting any participation in, or otherwise distributing any of the New Common Stock 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.  Century 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 New Common Stock.

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Section 4.10Financing.  To the knowledge of UG, UG has the financial resources to deposit the Escrow Funds and will have at the Closing the financial resources to consummate the transactions contemplated hereby and to cause Surviving Corporation to pay APT the Merger Consideration in the manner set forth in this Agreement.

Section 4.11Century’s Financial Statements.  Century has delivered to APT true and complete copies of (a) the audited balance sheet of Century as of December 31, 2002 and the related audited statement of operations for the year then ended, and (b) the unaudited balance sheet of Century as of April 30, 2003 and the related unaudited statement of operations for the four months then ended.

(a)Except as otherwise disclosed on Schedule 4.11(a), Century’s Financial Statements fairly present, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of Century of the date thereof and its consolidated statements of operations, shareholders’ equity and cash flows for the period then ended.

(b)Except as otherwise disclosed on Schedule 4.11(b) or reflected in Century’s Financial Statements, since April 30, 2003 there has been no material change in or effect on the business of Century that is materially adverse to the business, results of operations, or condition (financial or otherwise) of Century’s business, taken as a whole.

ARTICLE V

COVENANTS OF APT, ALLIANCE AND THE COMPANY

To the extent that any covenants contained in this Article V pertain to the Company after the Effective Time, the term “Company” as used therein also refers to Surviving Corporation.

Section 5.1Regulatory and Other Approvals.  APT and the Company will, as promptly as practicable after the Signing Date (a) take all reasonable steps necessary or desirable to obtain all consents, approvals or actions of, make all filings with and give all notices to any Governmental Entity or other Person required in order to permit APT and the Company to consummate the transactions contemplated hereby, and (b) provide such other information and communications to such Governmental Entity as such Governmental Entity may reasonably request in connection therewith.

Section 5.2HSR Filings.  In addition to and not in limitation of the covenants contained in Section 5.1, APT and the Company will (a) as promptly as practicable after the Signing Date take all actions necessary to make the filings required of them or their Affiliates under the HSR Act, (b) comply at the earliest practicable date with any request for additional information received by them or their respective Affiliates from the Federal Trade Commission or the Antitrust Division of the Department of Justice pursuant to the HSR Act and (c) cooperate with UG and Century in connection with UG’s and Century’s filing under the HSR Act and in connection with resolving any investigation or other inquiry concerning the transactions contemplated hereby commenced by either the Federal Trade Commission or the Antitrust Division of the Department of Justice or state attorneys general.

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Section 5.3Conduct of Business.

(a)Subject to Section 5.3(b), APT will cause the Company to, and the Company will, conduct business only in the ordinary course consistent with past practice.  Without limiting the generality of the foregoing, APT will cause the Company to, and the Company will, use reasonable efforts, to the extent the officers of the Company believe such action to be in the best interests of the Company, to:

(i)preserve intact the present business organization and reputation of the Company in all material respects;

(ii)keep available (subject to dismissals, resignations and retirements in the ordinary course of business) the services of its employees;

(iii)maintain the assets of the Company in good working order and condition, ordinary wear and tear excepted;

(iv)maintain the good will of customers, suppliers and lenders and other Persons with whom the Company otherwise has significant business relationships;

(v)make necessary capital expenditures in the ordinary course of business;

(vi)proceed with or settle any pending or future lawsuits or regulatory actions; and

(vii)diligently pursue all licenses and permits required for the operation of the Business.

(b)Notwithstanding anything to the contrary herein, nothing shall prohibit the Company from entering into, and performing under, the Bully’s Contracts or from selling or committing to sell all, but not less than all, of the Sparky’s Business.

Section 5.4Financial Statements and Reports.  As promptly as practicable and in any event not later than 30 days after the end of each month ending after the Signing Date and before the Closing Date, APT and the Company will deliver to UG or Century true and complete copies of the unaudited balance sheet, and the related unaudited statements of operations of the Company, in each case as of and for each such month and the portion of the fiscal year then ended, as the case may be.

Section 5.5Fulfillment of Conditions.  APT and the Company will take all reasonable steps necessary or desirable and proceed diligently and in good faith to satisfy each condition to the obligations of UG and Century contained in this Agreement and will not take or fail to take any action that could reasonably be expected to result in the nonfulfillment of any such condition.

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Section 5.6Cash on Hand.

(a)The assets of the Company on the Closing Date shall include cash on hand in game loads (net of tokens), location change banks and drawers, LAT drawers, bill loads, bill dispensers, bill dispenser inventory, coin and currency inventory, markers (at 5:00 P.M. on the Closing Date), imprest bank balances, remaining collector credits, together with a sum sufficient to pay the cash suspense jackpot/fills (location and UC share) as calculated in the manner set forth on the day shift Vault Sheet example on Schedule 5.6, which amounts specifically exclude (i) APT’s daily deposit in transit and (ii) non-cash accounts consisting of bill dispenser tapes, jackpots and window 3 location markers that appear on the face of cage accountability on the Vault Sheet (collectively, “Cash on Hand”), in an amount equal to the daily average of the actual Cash for the eight-week period preceding the Closing Date as determined in good faith by APT (the “Minimum Cash on Hand”).  An example of the template for calculating the Cash on Hand and the Minimum Cash on Hand is set forth on Schedule 5.6.

(b)As soon as practicable after such a calculation, APT with representatives of UG or Century present, will count down the Cash on Hand in the vault beginning at 7:00 A.M. on the Closing Date (the “Final Cash Count”).Surviving Corporation will be entitled to all Company collections received on and after 10:30 A.M. on the Closing Date.

(c)On or before the third business day after the Closing Date, a representative of Surviving Corporation or Century and a representative of APT shall jointly prepare a mutually agreed upon schedule based on the Final Cash Count that sets forth (i) the Cash on Hand and (ii) any post-Closing payments required to be made by APT to Surviving Corporation if the Cash on Hand is less than the Minimum Cash on Hand.  APT shall pay Surviving Corporation any amounts less than the Minimum Cash on Hand as provided in this Section 5.6.  Any such payment made pursuant to this Section 5.6 is defined herein as the “Post Closing Adjustment.”

Section 5.7Control of the Company’s Operations.  Nothing contained in this Agreement shall give to UG or Century, directly or indirectly, any right to control or direct the Company’s operations prior to the Closing Date.  Prior to the Closing Date, APT and the Company shall exercise complete control and supervision of the Business consistent with the terms and conditions of this Agreement.

Section 5.8APT’s Bank Accounts.  Pursuant to Section 2.10, the existing bank accounts of the Company shall be designated as APT’s bank accounts.  APT will be liable for any overdrafts in APT’s bank accounts on the Closing Date, and shall be entitled on the Closing Date to all cash in APT’s bank accounts in excess of (a) cash required to cover outstanding items and (b) Minimum Cash on Hand as required by Section 5.6.  Outstanding items shall be determined as of 12:01 A.M. on the Closing Date.

Section 5.9Insurance and Insurance Benefits.

(a)Except as provided in Section 5.9(b), if, from the Signing Date to the Effective Date: (i) any of the Company’s assets are damaged by fire or other casualty, (ii) such damage or other casualty is material,  (iii) APT or the Company would reasonably repair such damage or replace such assets in the ordinary course of business, and (iv) such repair or

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replacement has not been completed as of the Effective Date, then Surviving Corporation will be entitled to receive the insurance proceeds, if any, arising out of such damage or other casualty, including the benefits of business interruption coverage, as provided above.  If, in the circumstances described in the preceding sentence, the insurance proceeds, if any, arising from such damage or other casualty are not sufficient to repair such damage or replace the assets, Surviving Corporation shall receive at Closing a credit against the Merger Consideration equal to the estimated cost of repairing such damage or replacing such assets in excess of the insurance proceeds paid to Surviving Corporation, as such amount shall be determined by a qualified independent third party selected by Century and APT.  Subsequent to the Closing Date, APT will not settle any claim for damage or loss to any of the Company’s assets with any insurer without the prior written consent of Surviving Corporation to the extent Surviving Corporation is entitled to receive the insurance proceeds as provided above, which written consent shall not be unreasonably withheld.

(b)If, from the Signing Date to the Effective Date, any of the Company’s assets located at a customer’s location pursuant to a Participation Agreement or Space Lease Agreement are materially damaged by fire or other casualty, APT shall be entitled to all insurance proceeds, if any, arising out of such damage or other casualty, including the benefits of business interruption coverage, if any, and the Merger Consideration shall be recalculated (in a manner consistent with Section 2.4 and Schedule 2.4) based on any loss of EBITDA previously associated with such assets.

(c)Notwithstanding the foregoing, Century acknowledges and agrees that if Surviving Corporation is paid any Mountain View Proceeds after the Effective Date, Century shall cause Surviving Corporation to, as soon as practicable, pay any such amounts to APT by wire transfer of immediately available funds.

Section 5.10Restrictions.  Except for (i) the Company’s execution of, and performance under, the Bully’s Contracts, (ii) the Company’s sale of, or commitment to sell, all (but not less than all) of the Sparky’s Business (if the Company elects to sell it) or (iii) matters disclosed on Schedule 5.10, APT will cause the Company to, and the Company will, refrain from:

(a)amending its articles of incorporation or bylaws (or other comparable corporate charter documents) in any material respect or taking any action with respect to any such amendment or any recapitalization, reorganization, liquidation or dissolution of any such corporation;

(b)other than in the ordinary course of business, acquiring or disposing of, or incurring any Lien (other than a Permitted Lien) on, any assets of the Company individually or in the aggregate material to the Business;

(c)other than in the ordinary course of business, entering into, amending, modifying, terminating (partially or completely), granting any waiver under, or giving any consent with respect to, any Material Contract or license material to the Business other than in the ordinary course of business or as required by Law;

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(d)selling, exchanging, or otherwise disposing of any of its assets or rights exceeding $150,000 individually or $300,000 in the aggregate, other than the sale, exchange or other disposition of its equipment and services in the ordinary course of business and consistent with past practice;

(e)voluntarily incurring Indebtedness or canceling, discharging (in whole or in part) or waiving any right under any Indebtedness owed the Company in an aggregate principal amount exceeding $100,000;

(f)engaging with any Person in any merger or other business combination;

(g)except to the extent required by applicable Law or reasonably and in good faith believed by the officers of the Company to be in the best interests of the Company, making any material change in (i) any pricing, investment, accounting, financial reporting, inventory, credit, allowance or Tax practice or policy, or (ii) any method of calculating any bad debt, contingency or other reserve for accounting, financial reporting or Tax purposes;

(h)other than in the ordinary course of business or to the extent required by applicable Law, adopting, entering into or becoming bound by any material Employee Benefit Plan, employment-related contract or collective bargaining agreement, or amending, modifying or terminating (partially or completely) any such Employee Benefit Plan, employment-related contract or collective bargaining agreement;

(i)making any change in its fiscal year;

(j)selling, assigning, transferring, sublicensing or otherwise disposing of the Intellectual Property, except for the sublicensing in the ordinary course of business to end users not in competition with the Business;

(k)failing to keep the assets of the Company insured in accordance with customary industry practice and the past practices of the Company;

(l)failing to maintain the assets of the Company in good repair, order and condition (reasonable wear and use and damage by fire or other casualty excepted);

(m)failing to maintain the books and records of the Company materially in the usual, regular and ordinary manner on a basis consistent with that heretofore employed including, without limitation, the recording of reserves for Taxes;

(n)failing to comply in all material respects with all Laws applicable to any of the assets of the Company or to the conduct of the Business;

(o)failing to timely file or cause to be timely filed all Tax Returns required to be filed for periods ending prior to the Closing Date or failing to pay any material applicable Taxes due on or before the Closing Date, except for Taxes the liability for which is disputed; and

(p)entering into any contract to do or engage in any of the foregoing.

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Section 5.11Non-competition.

(a)For a period of ten years from the Closing Date, Alliance shall not, and shall cause its subsidiaries, successors and assigns not to compete with the Business as conducted on the Closing Date, in the State of Nevada or the State of Montana, including without limitation as a shareholder, consultant, partner, owner, lender (other than in the ordinary course of business), principal, member, officer, employee or otherwise, of any entity that is conducting such business.

(b)Notwithstanding the foregoing, however, nothing contained in this Agreement shall prohibit Alliance or any of its subsidiaries, successor and assigns from:

(i)purchasing and holding an investment in Surviving Corporation or Century, nor purchasing and holding as an investment not more than 5% of any class of the issued and outstanding and publicly traded (on a recognized national or regional securities exchange or in the over-the-counter market) security of any corporation, partnership or other business entity that conducts a business in competition with the Business; or

(ii)the continued placement by Alliance and its Affiliates in the ordinary course of their business of gaming devices or games under participation agreements or daily fee arrangements, or in wide area progressive networks under authority of the Nevada slot route operator’s license held by Alliance or its Affiliates, or other activities of a distributor or manufacturer of gaming devices or systems, so long as Alliance or its Affiliates perform the customary activities of a distributor or manufacturer of gaming devices or systems or an operator of an inter-casino linked system as defined in NRS Section 463.01643.

(c)Notwithstanding anything in this Section 5.11 to the contrary,

(i)the provisions of this Section 5.11 shall not be deemed violated in the event that a Change of Control of Alliance causes Alliance or its successor entity to compete with the Business as conducted on the Closing Date if (1) the company or entity causing the Change of Control was already competing with the Business prior to such Change of Control and (2) the consummation of such Change of Control occurs at least two years after the Closing Date (“Competing Change of Control”); and

(ii)no Person will be deemed conducting a business in competition with the Business if such business constitutes less than 5% of such Person’s revenues.

(d)Alliance agrees that the remedy at law for any breach of any of the covenants and agreements set forth in this Section 5.11 will be inadequate and that in the event

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of any such breach, Century or Surviving Corporation may, in addition to the other remedies which may be available to them, obtain on an ex parte basis injunctive relief prohibiting Alliance and its subsidiaries, successors, and assigns from the breach of such covenants and agreements.

(e)Alliance is agreeing to these provisions in consideration for the Merger Consideration set forth in Section 2.4.

(f)Alliance acknowledges and agrees that the covenants contained in this Section 5.11 are fair and reasonable and of a special unique character which give them peculiar value and exist in order to protect Surviving Corporation’s and Century’s investment in the Business acquired under this Agreement and that neither UG nor Century would have entered into this Agreement without such covenants being made.  However, if any such covenants shall be determined by any court to be invalid by reason of their duration or geographical scope, or both, as the case may be, shall be considered to be reduced to the longest duration or greatest geographic scope, or both, which will cure such invalidity.

Section 5.12Non-solicitation.  From the Signing Date to the earlier to occur of the Effective Date or the termination of this Agreement, Alliance agrees that neither Alliance nor any of its Affiliates shall, nor shall Alliance authorize or permit any of its or their respective officers, directors, employees, affiliates and agents to, intentionally solicit or initiate discussions or negotiations with any person, entity or group (other than UG, Century or any designees of UG or Century) concerning any merger, disposition, consolidation or similar transaction involving, or any purchase of all or a substantial portion of the assets or any equity securities of, the Company (“Prospective Transaction”); provided, however, that nothing in this Section 5.12 shall be deemed to prohibit Alliance or its Affiliates from pursuing such discussions or negotiations in the event that Alliance or its Affiliates are approached by any person, entity or group with respect to an unsolicited Prospective Transaction.  Alliance will promptly notify UG of any oral communication, written offer, letter of intent, term sheet, or similar document received in connection with a Prospective Transaction, and will promptly provide a copy of any such written communication to UG.

Section 5.13Notification.  From the Signing Date to the Closing Date, APT or the Company will promptly notify UG or Century if to the knowledge of APT: (a) APT or the Company receives notice from any Governmental Entity in connection with the transactions contemplated hereby (except for Tax notices of which APT or the Company must only advise UG or Century if such notices would result in a Lien (except a Permitted Lien) on the Company’s assets); (b) any fact or circumstance makes any representation or warranty of APT or Alliance set forth in this Agreement untrue or inaccurate in any material respect as of the Closing Date or as of the Signing Date; or (c) there occurs material damage to the Company’s assets.

ARTICLE VI

COVENANTS OF UG, CENTURY AND SURVIVING CORPORATION

Section 6.1Regulatory and Other Approvals.  UG and Century will as promptly as practicable after the Signing Date (a) take all reasonable steps necessary or desirable to obtain all consents, approvals or actions of, make all filings with and give all notices to any Governmental

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Entity or any other Person required in order to permit UG and Century to consummate the transactions contemplated hereby, (b) provide such other information and communications to such Governmental Entity or other Persons as such Governmental Entity or other Persons may reasonably request in connection therewith and (c) provide reasonable cooperation to APT and the Company in connection with the performance of their obligations under this Agreement.  UG and Century will provide prompt notification to APT when any such consent, approval, action, filing or notice referred to in clause (a) above is obtained, taken, made or given, as applicable, and will advise APT of any communications (and, unless precluded by Law, provide copies of any such communications that are in writing) with any Governmental Entity or other Person regarding any of the transactions contemplated hereby.

Section 6.2HSR Filings.  In addition to and without limiting UG’s and Century’s covenants contained in Section 6.1, UG and Century will (a) as promptly as practicable after the Signing Date take all actions necessary to make the filings required of UG, Century or their respective Affiliates under the HSR Act, (b) comply at the earliest practicable date with any request for additional information received by UG, Century or their respective Affiliates from the Federal Trade Commission or the Antitrust Division of the Department of Justice pursuant to the HSR Act and (c) cooperate with APT and the Company in connection with their filing under the HSR Act and in connection with resolving any investigation or other inquiry concerning the transactions contemplated hereby commenced by either the Federal Trade Commission or the Antitrust Division of the Department of Justice or state attorneys general.

Section 6.3Fulfillment of Conditions.  UG and Century will take all reasonable steps necessary or desirable and proceed diligently and in good faith to satisfy each condition to the obligations of APT and the Company contained in this Agreement and will not take or fail to take any action that could reasonably be expected to result in the non-fulfillment of any such condition.

Section 6.4Notification.  From the Signing Date to the Closing Date, to the extent known by it, UG and Century will promptly notify APT of any: (a) notice from any Governmental Entity in connection with the transactions contemplated hereby or (b) fact or circumstance that would make any representation or warranty of UG and/or Century set forth in this Agreement untrue or inaccurate in any material respect as of the Closing Date or as of the Signing Date.

Section 6.5Guarantees.  Promptly after the Closing, Century and Surviving Corporation will use their commercially reasonable efforts, at no material cost to Surviving Corporation or Century, to obtain the release of APT or any of its Affiliates from any and all obligations of the Company (or Surviving Corporation) which Alliance, APT or its Affiliates may have guaranteed and/or signed as a co-obligor with the Company, including, but not limited to the obligations listed on Schedule 6.5 and any Company credit lines, guarantees of equipment or asset purchases and leases and from any and all bonds and sureties issued with respect to any and all ongoing projects being done by the Company.

Section 6.6Brokerage Fees.  Century and Surviving Corporation will hold APT and Alliance harmless against any claim for any brokerage or finder’s fee or other commission in

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respect of this Agreement or the transactions contemplated hereby, payable to any person claiming to have been engaged by UG or Century.

Section 6.7Century’s Financial Statements.  From the Signing Date to the Closing Date, Century shall deliver to APT true and complete copies of (a) when available, the audited balance sheet of Century as of each fiscal year end, and the related audited statement of operations for the year then ended, and (b) the unaudited balance sheet of Century as of the latest month end for which such balance sheet is available prior to the Closing Date, and the related unaudited statement of operations for the period then ended.

ARTICLE VII

CLOSING CONDITIONS

Section 7.1Conditions to Obligations of UG and Century.  The obligations of UG and Century to consummate the transactions contemplated hereby are subject to satisfaction or valid waiver by UG and Century of each of the following conditions:

(a)Century and UG shall have received all of the deliveries required pursuant to Section 2.9(a);

(b)The representations and warranties made by APT and Alliance in this Agreement, taken as a whole, shall be true and correct, in all material respects, on and as of the Closing Date as though made on and as of the Closing Date;

(c)APT and the Company shall have performed and complied with, in all material respects, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by APT and the Company at or before the Closing;

(d)There shall not be in effect on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated hereby;

(e)All consents, approvals and actions of, filings with and notices to any Governmental Entity necessary on the part of APT or the Company to permit APT, Alliance and the Company to perform their respective obligations under this Agreement and to consummate the transactions contemplated hereby shall have been duly obtained, made or given and shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental Entity necessary for the consummation of the transactions contemplated hereby, including under the HSR Act, shall have occurred;

(f)The consents and releases (or in lieu thereof waivers) listed in Schedule 7.1(f) shall have been obtained and shall be in full force and effect; and

(g)Since the date of the Interim Balance Sheet, whether or not in the ordinary course of business, there shall have been no Material Adverse Effect.

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Section 7.2Conditions to Obligations of APT, the Company and Alliance.  The obligations of APT, the Company and Alliance to consummate the transactions contemplated hereby are subject to the satisfaction or valid waiver by APT, the Company and Alliance of each of the following conditions:

(a)APT shall have received all of the deliveries required pursuant to Sections 2.7 and 2.9(b);

(b)The representations and warranties made by UG and Century in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though made on and as of the Closing Date;

(c)UG and Century shall have performed and complied with, in all material respects, the agreements, covenants and obligations required by this Agreement to be so performed or complied with by UG and Century at or before the Closing;

(d)There shall not be in effect on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated hereby;

(e)All consents, approvals and actions of, filings with and notices to any Governmental Entity necessary on the part of UG or Century to permit UG and Century to perform their respective obligations under this Agreement and to consummate the transactions contemplated hereby shall have been duly obtained, made or given and shall be in full force and effect, and all terminations or expirations of waiting periods imposed by any Governmental Entity necessary for the consummation of the transactions contemplated hereby, including under the HSR Act, shall have occurred; and

(f)The consents and releases (or in lieu thereof waivers) listed in Schedule 7.2(f) shall have been obtained and shall be in full force and effect.

ARTICLE VIII

EMPLOYEES AND EMPLOYEE BENEFITS MATTERS

Section 8.1Continuation of Benefits.  During the period from the Effective Date until the end of the twelve-month period following the Effective Date, Century and Surviving Corporation shall maintain, or cause to be maintained, wages and employee benefits for employees of Surviving Corporation that are comparable, in the aggregate, to those wages and employee benefits of the Company that are in effect immediately prior to the Closing.

Section 8.2Severance Policy and Other Agreements.  Century and Surviving Corporation will maintain, or cause to be maintained, the Company’s standard severance policy that was in effect as of the Signing Date for a period of at least twelve months from the Effective Date with respect to any employee of the Company as of the Signing Date who is covered by the standard severance policy for the Company’s employees (and who continues as an employee of Surviving Corporation after the Effective Date).

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Section 8.3Bonus.  Century and Surviving Corporation will maintain, or cause to be maintained, the Company’s bonus plans, as in effect on the Signing Date, through the end of the fiscal year in which the Closing occurs, with bonuses to be paid to each of the Company’s employees participating thereunder at either (a) 75% of such employee’s prior year’s bonus, or (b) such bonus as such employee would have earned on a basis consistent with past practice if the transactions contemplated hereby had not occurred.

Section 8.4Waiver of Pre-existing Conditions; Credit for Deductibles; Service Credit.  With respect to Century’s and Surviving Corporation’s respective employee benefit plans, programs and arrangements (“Surviving Corporation Plans”), Century and Surviving Corporation will use, or cause to be used, commercially reasonable efforts to cause the Surviving Corporation Plans to: (a) waive all limitations as to pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the employees of Surviving Corporation under any Surviving Corporation Plan that such employees may be eligible to participate in after the Effective Date, (b) provide each employee of Surviving Corporation with credit for any co-payments and deductibles paid prior to the Effective Date in the plan year in which the Closing occurs for purposes of satisfying any applicable deductible or out-of-pocket requirements under any Surviving Corporation Plans that such employees are eligible to participate in after the Effective Date, and (c) provide each employee of Surviving Corporation with credit for all service with the Company and its Affiliates for all purposes under each Surviving Corporation Plan in which such employees are eligible to participate; provided that in no event shall the employees be entitled to any credit to the extent that it would result in a duplication of benefits with respect to the same period of service.

Section 8.5Welfare Plans.  APT shall retain responsibility for and continue to pay all medical, life insurance, disability and other Employee Welfare Benefit Plans expenses and benefits for each employee and former employee of the Company with respect to claims incurred by such employees or former employees or their covered dependents prior to the Effective Date.  Expenses and benefits with respect to any claims incurred by employees of Surviving Corporation or their covered dependents on or after the Effective Date shall be the responsibility of Surviving Corporation and Century.  For purposes of this paragraph, a claim is deemed incurred (a) when the services that are the subject of the claim are performed, (b) in the case of life insurance, when the death occurs, and, (c) in the case of short-term or long-term disability benefits, when the disability occurs.

Section 8.6COBRA.  On the Effective Date, Surviving Corporation and Century will assume any and all obligations of APT and its Affiliates (including, but not limited to, any health or medical plans sponsored by APT or its Affiliates) to provide continuation coverage to all of Surviving Corporation’s “M&A qualified beneficiaries” (as defined in applicable Treasury regulations) with respect to the transactions contemplated hereby pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

Section 8.7401(k) Plan Assets.  Employees of the Company shall cease to accrue benefits and service credits under the Alliance Gaming Corporation Profit Sharing 401(k) Plan (the “Alliance 401(k) Plan”) as of the Effective Date.  Effective as of the Effective Date, Surviving Corporation or Century shall establish a new plan that is tax-qualified under Section 401(a) of the Code (the “Surviving Corporation 401(k) Plan”) and an associated trust.

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Surviving Corporation 401(k) Plan shall accept rollovers from the Alliance 401(k) Plan on behalf of the Company employees employed by the Company on the Closing Date.  Prior to Closing, either UG or Century shall provide to APT evidence reasonably satisfactory to APT that the Surviving Corporation 401(k) Plan and the associated trust have been established and that the Surviving Corporation 401(k) Plan shall qualify under the requirements of Section 401(a) of the Code.

ARTICLE IX

INDEMNIFICATION

Section 9.1Indemnification by APT and Alliance.  From and after the Closing (except as otherwise provided in this Section 9.1), APT and Alliance will indemnify and hold harmless Surviving Corporation, Century and each of their respective Affiliates, directors, officers, employees, attorneys, agents, representatives, successors and assigns in respect of any and all claims, losses, damages, liabilities, penalties, interest, costs and expenses (including reasonable attorneys’, accountants’ and consultants’ fees and expenses, including any such expenses incurred in connection with investigating, defending against or settling any such claims) (collectively, “Losses”) reasonably incurred by Surviving Corporation or Century in connection with, or resulting from, any or all of the following:

(a)Any breach of any representation or warranty made by APT or Alliance in this Agreement;

(b)Any breach in the performance of any covenant, agreement or obligation of APT, the Company (but only as to pre-Closing breaches) or Alliance contained in this Agreement;

(c)Any Taxes of the Company on or prior to the Closing Date in excess of amounts reserved by the Company for the payment of such Taxes in the Interim Balance Sheet; and

(d)Any actual, direct, final and non-appealable monetary judgments, awards, fines, sanctions, penalties and charges awarded against the Company or Surviving Corporation before or after the Closing in connection with the Multi-Play Lawsuit, and any amount paid or required to be paid by the Company or Surviving Corporation in a settlement thereof approved by Alliance; specifically excluding therefrom any special, incidental or consequential damages from the Multi-Play Lawsuit or settlement thereof, including, but not limited to, the Company’s or Surviving Corporation’s loss of any revenues based on having been found to infringe any claim of either of the Multi-Hand Patents, except as provided in Section 2.11.

Section 9.2Indemnification by Surviving Corporation and Century.  From and after the Closing, Surviving Corporation and Century shall indemnify and hold harmless APT and Alliance and each of their respective Affiliates, directors, officers, employees, attorneys, agents, representatives, successors and assigns in respect of any and all Losses reasonably incurred by APT or Alliance in connection with, or resulting from, any or all of the following:

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(a)Any breach of any representation or warranty made by UG or Century in this Agreement; and

(b)Any breach in the performance of any covenant, agreement or obligation of UG, Surviving Corporation (but only as to post-Closing breaches) or Century in this Agreement.

Section 9.3Claims for Indemnification.  Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the “indemnified party”) shall promptly notify the party obligated to provide indemnification (the “indemnifying party”) of the claim and, when known, the facts constituting the basis for such claim; provided, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of its obligation hereunder to the extent such failure does not result in actual and material prejudice to the indemnifying party.  In the event of any claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by a third party, the notice to the indemnifying party shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom.

Section 9.4Defense of Third Party Claims.  In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a third party, the indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party may (but shall not be obligated to), upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within 15 days after receipt of notice from the indemnified party, its obligations to indemnify the indemnified party with respect to all elements of such claim, (b) the indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third-party claim is not in the good faith judgment of the indemnified party, likely to establish a pattern or practice adverse to the continuing business interests of the indemnified party.  The indemnified party will be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so, the indemnified party may assume the defense of such claim; provided, further,however, that in any circumstance in which the indemnified party has assumed the defense of a claim, the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld.  If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party on a monthly basis for the reasonable fees and expenses of counsel retained by the indemnified party, which counsel shall be reasonably satisfactory to the indemnifying party, and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense.  The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each

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other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder.

Section 9.5Limitation on Century’s and Surviving Corporation’s Indemnity Claims.

(a)No claim, demand, suit or cause of action shall be brought against APT or Alliance under this Article IX, unless and until the aggregate amount of all Losses under this Article IX exceeds $400,000, in which event, Surviving Corporation and/or Century shall be entitled to indemnification from APT and/or Alliance for all Losses.

(b)Notwithstanding any other provisions of this Article IX (except Section 9.5(c)), the aggregate amount of indemnification for Losses that may be asserted by Surviving Corporation and/or Century against APT and/or Alliance shall be limited to $5,000,000.

(c)Notwithstanding the foregoing provisions of this Section 9.5, none of the monetary limitations contained in this Section 9.5 shall apply to any indemnification obligation of APT or Alliance as to any matter that is based upon:

(i)Section 9.1(c);

(ii)Section 9.1(d);

(iii)the fraud or willful misconduct of APT, the Company (prior to the Closing) or Alliance;

(iv)any environmental condition not disclosed herein; or

(v)any breach of Section 5.11.

Section 9.6Limitation on APT’s and Alliance’s Indemnity Claims and Rights to Contribution.

(a)No claim, demand, suit or cause of action shall be brought against Surviving Corporation and/or Century under this Article IX, unless and until the aggregate amount of all Losses under this Article IX exceeds $400,000, in which event, APT and/or Alliance shall be entitled to indemnification from Surviving Corporation and/or Century for all Losses.

(b)Notwithstanding any other provisions of this Article IX (except the proviso below in this sentence relating to fraud or willful misconduct), the aggregate amount of indemnification for Losses that may be asserted by APT and/or Alliance against Surviving Corporation and/or Century shall be limited to $3,000,000; provided, that none of the monetary limitations contained in this Article IX shall apply to any obligation of Surviving Corporation and/or Century as to any matter that is based upon the fraud or willful misconduct of UG, Surviving Corporation (after the Closing) and/or Century.

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(c)Neither APT nor Alliance shall have any right of contribution or indemnification from Surviving Corporation for any pre-Closing breaches by the Company of any representation, warranty covenant, agreement or obligation contained in this Agreement.

ARTICLE X

TERMINATION

Section 10.1Termination.

(a)This Agreement may be terminated (except as set forth in Section 10.1(e)) and the transactions contemplated hereby abandoned at any time prior to the Closing Date:

(i)by mutual written consent of APT and UG;

(ii)by APT if (1) any of the conditions precedent to APT’s, the Company’s and Alliance’s obligations to consummate the transactions contemplated hereby shall have become incapable of fulfillment, and shall not have been waived by Alliance, the Company or APT, (2) any of the covenants or obligations to be performed under this Agreement by UG or Century shall have been materially breached by UG or Century and such breach has not been cured (if capable of being cured) by such breaching party/parties, within 30 days after written notice by Alliance, the Company or APT, (3) all of the gaming license applications required to be submitted to the Nevada Gaming Control Board pursuant to Section 6.1 have not been so submitted within thirty days from the Signing Date or (4) UG and Century do not diligently pursue all gaming license applications;

(iii)by UG if (1) any of the conditions precedent to UG’s and Century’s obligations to consummate the transactions contemplated hereby shall have become incapable of fulfillment, and shall not have been waived by UG or Century, or (2) any of the covenants or obligations to be performed under this Agreement by APT, the Company or Alliance shall have been materially breached by APT, the Company or Alliance and neither APT, the Company nor Alliance has cured such breach (if capable of being cured) within 30 days after written notice by UG or Century, provided however, that such notice shall not be required if APT’s, the Company’s or Alliance’s breach occurs on or after June 30, 2004;

(iv)by APT, if (1) the Closing does not occur on or prior to June 30, 2004, other than by reason of a material breach by APT, the Company or Alliance of any of their respective covenants or obligations under this Agreement, or (2) UG is unable to secure the

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financing for the transaction contemplated hereby within 30 days of the fulfillment of all of the other conditions of Article VII;

(v)by UG, if the Closing does not occur on or prior to June 30, 2004 by reason of the material breach by APT, the Company or Alliance of any of their respective covenants or obligations under this Agreement regardless of whether the 30-day period specified in clause (iii) of this Section 10.1(a) has expired; or

(vi)by APT for any reason other than as set forth in Section 10.1(a)(i), (ii) and (iv).

(b)In the event of termination by APT or UG pursuant to this Section 10.1, written notice thereof shall forthwith be given to the parties and the transactions contemplated hereby shall be terminated, without further action by any of the parties.  If the transactions contemplated hereby are terminated as provided herein:

(i)UG and Century shall return all documents and copies and other material received from APT or the Company relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to APT or the Company; and

(ii)all confidential information received by UG and/or Century with respect to the Business, Alliance or APT shall be treated in accordance with the Confidentiality Agreement, between Alliance and Century, which shall remain in full force and effect notwithstanding the termination of this Agreement.

(c)If this Agreement is terminated pursuant to Section 10.1(a)(iii), 10.1(a)(v) or 10.1(a)(vi):

(i)APT shall return the Letter of Credit to UG;

(ii)UG shall receive the Escrow Funds in the Escrow Account and all interest earned thereon; and

(iii)APT shall pay to UG as liquidated damages $4,000,000 in cash.

(d)If this Agreement is terminated pursuant to Sections 10.1(a)(ii) or 10.1(a)(iv):

(i)APT shall be entitled to draw on the Letter of Credit in full;

(ii)APT shall receive the Escrow Funds in the Escrow Account and all interest earned thereon; and

(iii)UG or Century shall deliver to APT funds in the amount of $32,500 per month, payable on the first day of each month, for the

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period beginning on the first day of the month following the termination date and ending five years from the first day of the month immediately preceding June 30, 2003.

(e)If this Agreement is terminated and the transactions contemplated hereby are abandoned as described in this Section 10.1, this Agreement shall become void and of no further force and effect, except for the provisions of (i) Section 13.1 relating to certain expenses, (ii) Sections 3.18 and 6.6 relating to finder’s fees and broker’s fees and (iii) this Section 10.1.  Nothing in this Section 10.1 shall be deemed to impair the right of any party to compel specific performance by the other parties of their obligations under this Agreement.

Section 10.2Written Notice of Offer.  If APT or the Company receives a bona fide written offer from any third party to acquire the Company (a “Third Party Offer”), then prior to exercising any right to terminate this Agreement pursuant to Section 10.1(a)(vi), APT shall provide written notice to UG describing the material terms of the Third Party Offer, and UG shall have seven days from receipt of such notice to counter the Third Party Offer; provided, however, that notwithstanding the foregoing, neither APT nor the Company shall have any obligation to accept UG’s counter offer, even if the terms of such counter offer are superior to the Third Party Offer.

ARTICLE XI

TAX MATTERS

Section 11.1Section 338(h)(10) Election.

(a)The parties hereby agree that they will jointly make an election under Code Section 338(h)(10) (and the Treasury Regulations promulgated thereunder) and any analogous election under state law (collectively, a “Section 338(h)(10) Election”) with respect to the Merger.  The parties agree to cooperate with each other in preparing, executing and filing any tax forms and other documents required under Section 338(h)(10) of the Code and other applicable laws so that the Section 338(h)(10) Election will be made in a proper and timely manner.

(b)Prior to the Closing Date, the parties shall agree on an allocation of the Merger Consideration in the manner required by Section 338 of the Code and the Treasury Regulations promulgated thereunder, as agreed by the parties prior to the Closing (the “Allocation”).  Such Allocation will be used for purposes of determining the aggregate deemed sales price under the applicable Treasury Regulations and in reporting the deemed sale of assets of the Company in connection with the Section 338(h)(10) Election.  The parties each hereby agree not to take any position inconsistent with the Section 338(h)(10) Election or the Allocation in any Tax Return or otherwise, unless required to do so pursuant to a final determination within the meaning of Section 1313(a) of the Code.

(c)On the Closing Date, the parties shall jointly execute necessary copies of Internal Revenue Service Form 8023 and all attachments required to be filed therewith pursuant to applicable Treasury Regulations, and any forms required to make any elections under state

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law that are analogous to a Section 338(h)(10) Election.  Such Forms 8023 and analogous forms will reflect the Allocation as agreed upon by the parties.  In the event of any Merger Consideration Adjustment hereunder, the parties agree to adjust the Allocation to reflect such Merger Consideration Adjustment, and to file consistently any Tax Returns required as a result of such Merger Consideration Adjustment.

ARTICLE XII

SURVIVAL; NO OTHER REPRESENTATIONS

Section 12.1Post Closing Survival of Representations and Warranties.  The representations and warranties contained herein will survive until twelve months following the Closing Date.  The limitations set forth in this Section 12.1 regarding the survival of claims for breach of representation and warranty shall not apply to any claims arising out of fraud or willful misconduct in the making of the representations and warranties set forth herein.

Section 12.2No Other Representation.  Notwithstanding anything to the contrary contained in this Agreement, it is the explicit intent of each party hereto that (a) none of the parties hereto are making any representation or warranty whatsoever, express or implied, other than those express representations and warranties contained in this Agreement, and (b) except as expressly set forth in this Agreement and the other Transaction Agreements, none of the parties hereto has made any representation, warranty, inducement, promise, agreement, assurance or statement, oral or written of any kind to the other parties hereto upon which such other parties are relying, or in connection with which such other parties have made decisions concerning the Merger or the transactions contemplated hereby.

ARTICLE XIII

MISCELLANEOUS

Section 13.1Fees and Expenses.  Each party to this Agreement shall bear its own attorneys’, accountants’ and other fees, costs and expenses incurred in connection with the negotiation and the consummation of the transactions contemplated hereby.

Section 13.2Notices.  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 APT, the Company or Alliance:	Alliance Gaming Corporation
	6601 South Bermuda Road
	Las Vegas, Nevada 89119
	Telecopy:(702) 896-7990
	Attention:Legal Department

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With a copy (which does not constitute notice) to:	Gibson, Dunn & Crutcher LLP
	333 South Grand Avenue
	Los Angeles, California 90071-3197
	Telecopy:(213) 229-7520
	Attention:Peter F. Ziegler, Esq.
If to UG, Surviving Corporation or Century:	Century Gaming, Inc.
	3101 S. Russell
	Missoula, Montana 59801
	Telecopy:(406) 549-1467
	Attention:J. Grant Lincoln
With a copy (which does not constitute notice) to:	Gordon & Silver Ltd.
	3960 Howard Hughes Parkway
	Ninth Floor
	Las Vegas, Nevada 89109
	Telecopy:(702) 369-2666
	Attention:Jeffrey A. Silver, Esq.

Section 13.3Attorneys’ 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.

Section 13.4Assignability and Parties in Interest.  This Agreement shall not be assignable by any of the parties.  This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.

Section 13.5Governing 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.

Section 13.6Counterparts. 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.

Section 13.7Complete Agreement.  This Agreement, the Exhibits and Schedules and the documents delivered or to be delivered pursuant to Sections 2.6(a), 2.7 and 2.9 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.

Section 13.8Modifications, Amendments and Waivers.  This Agreement may be modified, amended or otherwise supplemented only by a writing signed by all of the parties.  No waiver of any right or power hereunder shall be deemed effective unless and until a writing waiving such right or power is executed by the party waiving such right or power.

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Section 13.9Limit on Interest.  Notwithstanding anything in this Agreement to the contrary, no party shall be obligated to pay interest at a rate higher than the maximum rate permitted by applicable law.  In the event that an interest rate provided in this Agreement exceeds the maximum rate permitted by applicable law, such interest rate shall be deemed to be reduced to such maximum permissible rate.

Section 13.10Further Assurances.  Each party will execute and deliver such further instruments and take such further actions as any other party may reasonably request in order to carry out the intent of this Agreement and to consummate the transactions contemplated hereby.

Section 13.11Contract Interpretation; Construction of Agreement.

(a)The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Any reference to article, section, exhibit, schedule, preamble, recital and party references are to this Agreement unless otherwise stated.  Each reference in this Agreement to “including” or words of similar import shall be deemed to be followed by “without limitation.”

(b)No party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against any party.

 Section 13.12Jurisdiction and Venue.  Any action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought exclusively in any court of the United States located in the State of Nevada or in Nevada state court and each party hereto irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit action or proceeding and hereby unconditionally and now or hereafter have to the laying of venue in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any federal court located in the State of Nevada or any Nevada state court in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than a federal or state court sitting in the State of Nevada.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the generality of the foregoing, each party hereto agrees that service of process on such party as provided in Section 13.12 hereof shall be deemed effective service of process on such party.

Section 13.13Specific Performance.  The parties acknowledge and agree that any failure of any party to perform its agreements and obligations hereunder or contemplated hereby will cause irreparable injury to the other parties, for which damages, even if available, will not provide an adequate remedy.  Accordingly, each party hereby consents to the issuance of

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injunctive relief by any court of competent jurisdiction to compel performance of such party’s obligations and to the granting by any court of the remedy of specific performance of its obligations hereunder.

Section 13.14Dispute Resolution.

(a)If the parties are unable to agree on the Merger Consideration prior to the Closing Date or the Merger Consideration Adjustment or the Post Closing Adjustment within 15 days after the Closing Date, and the amount of the disputed difference in the Merger Consideration, the Merger Consideration Adjustment or the Post Closing Adjustment is less than or equal to $500,000, then the Merger Consideration, the Merger Consideration Adjustment or the Post Closing Adjustment, as applicable, shall be deemed the average of the parties’ respective determinations of the Merger Consideration, the Merger Consideration Adjustment or the Post Closing Adjustment.

(b)If the parties are unable to agree on the Merger Consideration prior to the Closing Date or the Merger Consideration Adjustment or the Post Closing Adjustment within such 15-day period, and the amount of the disputed difference in either the Merger Consideration, the Merger Consideration Adjustment or the Post Closing Adjustment is greater than $500,000, then the disputed matters shall be referred for final determination to a nationally recognized accounting firm that is not the auditor for any of the parties hereto; provided, however, that if the parties are unable to select such a firm within three business days after the end of such period, the American Arbitration Association shall make such selection (any person so selected shall be referred to herein as the “Independent Accountant”).

(c)If the dispute relates to the Merger Consideration, the Independent Accountant shall deliver to Century and APT, as promptly as practicable and in any event within 20 days after its appointment, a written report setting forth its determination of the Merger Consideration.  Such report shall be final and binding upon all of the parties hereto for purposes of determining the Merger Consideration.

(d)If the dispute relates to the Merger Consideration Adjustment or the Post Closing Adjustment, the Independent Accountant shall deliver to Century and APT, as promptly as practicable and in any event within 20 days after its appointment, a written report setting forth its determination of the Merger Consideration Adjustment or the Post Closing Adjustment, if any.  Such report shall be final and binding upon all of the parties hereto for purposes of the Merger Consideration Adjustment or the Post Closing Adjustment, as applicable.

(e)The fees, expenses and costs of the Independent Accountant shall be borne (i) one half by UG (or Surviving Corporation) and Century and (ii) one half by APT.

Section 13.15Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS

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AGREEMENT, OR THE TRANSACTIONS.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (a) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (b) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (c) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (d) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.15.

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IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the Signing Date.

APT	APT GAMES, INC.,
	a Nevada corporation
	By:		/s/ Robert Saxton
	Name:					Robert Saxton
	Title:			Treasurer
ALLIANCE	ALLIANCE GAMING CORPORATION,
	a Nevada corporation
	By:		/s/ Robert Saxton
	Name:					Robert Saxton
	Title:			Treasurer
COMPANY	UNITED COIN MACHINE CO.,
	a Nevada corporation
	By:	/s/ Robert Saxton
	Name:					Robert Saxton
	Title:			Treasurer
UG	UNITED GAMING, INC.,
	a Nevada corporation
	By:	/s/ J. Grant Lincoln
	Name:					J. Grant Lincoln
	Title:				President
CENTURY	CENTURY GAMING, INC.,
	a Montana corporation
	By:	/s/ J. Grant Lincoln
	Name:					J. Grant Lincoln
	Title:				President

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EX-10.1

Exhibit 10.1

HADDRILL EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, made and entered into as of this 30 day of June, 2004, by and between Alliance Gaming Corporation, a Nevada corporation with its principal place of business at 6601 South Bermuda Road, Las Vegas, Nevada  89119(the “Company”), and Richard Haddrill, currently residing at 3394 Knollwood Drive, Atlanta, Georgia 30305 (“Haddrill”).

BACKGROUND

Haddrill has significant gaming industry experience and currently serves as a member of the Board of Directors of the Company (the “Board of Directors”).

The Company desires to avail itself on a full-time basis of Haddrill’s expertise and to employ him as the Chief Executive Officer (“CEO”) of the Company to enable him to contribute, on a full-time basis, to the growth and success of the Company.

Haddrill is willing to commit himself to be so employed by the Company.

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and each intending to be legally bound hereby, the parties agree as follows:

1.Employment.  Subject to the terms of this Agreement, the Company hereby employs Haddrill and Haddrill accepts such employment.

2.Position and Duties of Haddrill.

(a)Haddrill shall serve as CEO of the Company.  In such capacity, Haddrill will have such powers and perform such duties as are contemplated by such title and as are appropriate to the management of all aspects of the Company’s business and such other duties consistent with his title as may be assigned, from time to time, by the Board of Directors.  Haddrill will report directly and be subject to the Board of Directors, and will continue to be nominated to serve as a member of the Board of Directors during the term of this Agreement.

(b)(i) Haddrill will devote his full business time and effort to the business and affairs of the Company and shall perform his duties hereunder faithfully, diligently and to the best of his ability.  Haddrill shall not engage in any outside for-profit business, employment or commercial activities, except that Haddrill may serve on the board of directors of no more than two (2) non-affiliate for-profit entities, including employment as Vice Chairman of Manhattan Associates, Inc., which will include some transition duties through January 1, 2005, so long as such service and Haddrill’s service on behalf of any not-for-profit organizations does not materially affect Haddrill’s ability to perform his duties as the Company’s CEO.

(ii) The provisions of this paragraph 2 shall not prevent Haddrill from investing his assets in such form and manner as he chooses; provided, however, that Haddrill shall not have any personal interest, direct or indirect (other than through the Company or its subsidiaries or as part of a broadly diversified mutual fund or managed account not directed by

Haddrill), financial or otherwise, in any supplier to, buyer from, or competitor of the Company, unless such interest has been approved by the Compensation Committee.

(c)Commencing on the Commencement Date, as hereinafter defined, Haddrill shall render services to the Company from the Company’s principal place of business, Las Vegas, Nevada; however, the parties acknowledge and agree that Haddrill may be required to travel extensively in fulfilling his duties hereunder.  The Company shall provide Haddrill with an appropriate office in Las Vegas, Nevada and reasonable secretarial personnel of his choosing.

3.Term.  The term of this Agreement will commence on a mutually agreeable date (the “Commencement Date”), which shall not be later than October 1, 2004. This Agreement will terminate on the day immediately following the third anniversary date of the Commencement Date, unless otherwise terminated as provided herein or renewed as mutually agreed between the parties.

4.Compensation.  The Company shall pay Haddrill, and Haddrill shall accept from the Company, in full payment for Haddrill’s services as CEO, compensation consisting of the following:

(a)Base Salary.  A base salary of $980,000 per year, payable in accordance with the Company’s customary payroll practices.

(b)Company Benefits.  The standard benefits the Company makes available to its similarly situated senior executives, including, but not limited to, 401(k) Plan participation, medical and hospital and disability benefits and four weeks of paid vacation time each year, plus holidays.

(c)Club Initiation Fee.  Payment of the initiation fee (but not annual dues) to the golf or country club of Haddrill’s choice, in the Las Vegas, Nevada, area, subject to approval by the Board of Directors.

(d)Stock Options.  As of the date of this Agreement, Haddrill shall be granted a nonstatutory stock option grant under the Company’s 2001 Long Term Incentive Plan (“the Plan”) to purchase 500,000 shares of the Company’s common stock (“Options”), exercisable at a price and for a period of time and on such other terms as are set forth in Schedule A hereto.

(e)Restricted Stock Grant.  As of the date of this Agreement, Haddrill shall receive a grant of restricted stock units under the Plan (“Restricted Stock Units”), representing the value of $6.5 million of common stock of the Company calculated in accordance with Schedule B hereto.  The Restricted Stock Units shall vest and be subject to the terms and conditions set forth on Schedule B hereto.

(f)During the term of this Agreement, Haddrill shall not be entitled to receive any additional compensation as a Director.

5.Business and other Expenses.  The Company shall reimburse Haddrill for reasonable business expenses (including first-class commercial air travel, as appropriate) in accordance with the Company’s business expense policy.  The Company shall also pay directly

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the legal expenses that Haddrill incurs in connection with the negotiation and preparation of this Agreement, up to a maximum of $15,000.

6.Relocation Expenses.

(a)Haddrill and his family shall be residents of the Las Vegas, Nevada area on the Commencement Date.  The Company shall reimburse Haddrill for the costs associated with his relocation from Atlanta, Georgia to the Las Vegas, Nevada area (such costs, collectively, “Relocation Costs”), including, but not limited to, reasonable moving costs, up to 3 trips to Las Vegas to select a new house, closing costs, brokerage commissions and legal fees, and, if appropriate, temporary housing in Las Vegas for a reasonable period of time (up to 30 days following the Commencement Date), subject to review and approval of the Board of Directors.  There shall be added to the amount of the Relocation Costs an additional amount such that the total payment to Haddrill pursuant to this paragraph 6(a) is equal to the amount of the Relocation Costs divided by the amount that is equal to 1 minus the highest Federal tax rate then in effect.

(b)Promptly after the execution of this Agreement, the Company will, at its expense (the “Appraisal Cost”), engage a recognized independent appraiser reasonably satisfactory to Haddrill to perform an appraisal of Haddrill’s primary residence in Atlanta, Georgia (“Property”).  In the event that, during the three year period commencing on the Commencement Date and ending on June 30, 2007, Haddrill sells the Property and realizes an amount net of expenses less than the amount of the appraised value of the Property, the Company shall pay to Haddrill the difference, up to $150,000, between the amount realized for the sale of the Property and the amount of the appraised value of the Property (any such payment, together with the Appraisal Cost, the “Appraisal Payment”).  There shall be added to the amount of the Appraisal Payment an additional amount such that the total payment to Haddrill pursuant to this paragraph 6(b) is equal to the amount of the Appraisal Payment divided by the amount that is equal to 1 minus the highest Federal tax rate then in effect.

(c)In the event that, at any time during the three year period commencing on the Commencement Date and ending on June 30, 2007, Haddrill determines not to dispose of the Property (the “Determination Date”) the Company will, promptly after the Determination Date, pay to Haddrill an amount representing solely the expenses that he would have incurred had he sold the Property, including, but not limited to, estimated closing costs and brokerage commissions assuming a sale price equal to the appraised value, and estimated legal fees (such expenses, collectively, the “Selling Expenses”).  There shall be added to the amount of the Selling Expenses an additional amount such that the total payment to Haddrill pursuant to this paragraph 6(c) is equal to the amount of the Selling Expenses divided by the amount that is equal to 1 minus the highest Federal tax rate then in effect.

7.Termination.  Haddrill’s employment may be terminated at any time before the end of the term of this Agreement as follows:

(a)By the Company for cause, which shall include but not be limited to an act or acts or an omission to act by Haddrill involving:  (i) willful and continual failure to substantially perform his duties with the Company (other than a failure resulting from Haddrill’s

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incapacity due to physical or mental illness) and such failure continues for a period of thirty (30) days after Haddrill’s receipt of written notice from the Company providing a reasonable description of the basis for the determination that Haddrill has failed to perform his duties; (ii) conviction of a felony other than a conviction not disclosable under the federal securities laws; (iii) breach of this Agreement in any material respect and such breach is not susceptible to remedy or cure or has already materially damaged the Company, or such breach is susceptible to remedy or cure and no such damage has occurred and such breach is not cured or remedied reasonably promptly after Haddrill’s receipt of written notice from the Company providing a reasonable description of the breach; (iv) Haddrill’s failure to qualify (or having so qualified being thereafter disqualified) under a suitability or licensing requirement of any jurisdiction or regulatory authority that is material to the Company and to which Haddrill may be subject by reason of his position with the Company and its affiliates or subsidiaries; (v) the Company obtains from any source information with respect to Haddrill or this Agreement that could reasonably be expected, in the reasonable written opinion of both the Company and its outside counsel, to jeopardize the gaming licenses, permits, or status of the Company or any of its subsidiaries or affiliates with any gaming commission, board, or similar regulatory or law enforcement authority; or (vi) conduct to the material detriment of the Company that is dishonest, fraudulent, unlawful or grossly negligent or which is not in compliance with the Company’s Code of Conduct or similar applicable set of standards or conduct and business practices set forth in writing and provided to Haddrill prior to such conduct and which has a material detriment to the Company and is not susceptible to remedy or cure by Haddrill.

(b)By the Company for other than cause.

(c)By Haddrill for “Good Cause”, which shall mean the occurrence of any one or more of the following events without the consent of Haddrill:

(i) the assignment to Haddrill of any duties materially inconsistent with his duties and position as set forth in this Agreement (including, without limitation, status, titles and reporting requirements), or any other action by the Company that results in a material diminution in such duties or position, excluding for this purpose isolated and inadvertent action not taken in bad faith and remedied by the Company promptly after receipt of notice thereof given by Haddrill;

(ii) a reduction by the Company in Haddrill’s base salary or participation in any other compensation plan, program, arrangement or benefit below that to which Haddrill is entitled hereunder;

(iii) the Company’s requiring Haddrill to be based anywhere other than the Las Vegas, Nevada area, except for reasonably required travel on business of the Company; or

(iv) any material breach by the Company of any provision of this Agreement and such breach continues for a period of thirty (30) days after the Company’s receipt of written notice from Haddrill providing a reasonable description of the material breach claimed by Haddrill.

(d)By Haddrill for other than Good Cause.

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(e)On the date of Haddrill’s death, should Haddrill die before the end of the term of this Agreement.

(f)Upon the disability or incapacitation of Haddrill, which shall mean Haddrill’s failure to discharge his duties under this Agreement for six or more consecutive months or for non-continuous periods aggregating to twenty-two weeks in any twelve-month period as a result of illness or incapacity.

In all cases of termination and upon the expiration of this Agreement, unless otherwise agreed to, Haddrill shall be deemed to have contemporaneously resigned from his position as a member of the Board of Directors, effective as of the date of termination or expiration.  Notwithstanding the foregoing, Haddrill’s resignation from the Board of Directors, for purposes of that certain Stock Option Agreement between Haddrill and the Company dated January 8, 2004, pursuant to which Haddrill has been granted an option to acquire 195,000 shares of the Company’s common stock, shall be deemed to have been at the request of the Board of Directors as provided in paragraph 4(c)(iv) of such Stock Option Agreement, and such resignation shall not otherwise adversely affect any other options to purchase shares of the Company’s common stock granted to Haddrill solely in his capacity as a Director of the Company; so long as, in all cases, that Haddrill’s termination is a result of his having been terminated pursuant to paragraphs 7(b) or 7(c), (e) and (f) hereof, or is a result of the expiration of this Agreement.

8.Payments Upon Termination or Change of Control.

(a)If Haddrill’s employment is terminated under paragraph 7(a) or 7(d) hereof, (i) the Company shall have no further obligation under this Agreement, except the obligation to pay Haddrill an amount equal to the portion of his compensation and out-of-pocket business expenses as may be accrued and unpaid on the date of termination and (ii) Haddrill shall be entitled to retain [a] that number of Restricted Stock Units that have vested through the date of termination in accordance with the vesting schedule set forth on Schedule B hereof and [b] that number of Options that have vested in accordance with the vesting schedule set forth in Schedule A hereof.  All non-vested Restricted Stock Units and Options shall be immediately forfeited.

(b)If Haddrill’s employment is terminated under paragraphs 7(b) or 7(c) hereof, (i) the Company shall [a] pay Haddrill an amount equal to the portion of his compensation and out-of-pocket business expenses as may be accrued and unpaid on the date of termination; [b] pay Haddrill severance pay in an amount equal to the base salary for a period of one year from the date of termination or until the expiration of this Agreement, whichever first occurs; and (ii) Haddrill shall be entitled to retain [a] the Restricted Stock Units to the extent provided in Schedule B hereof, provided that the Restricted Stock Units shall be pro rated through the 12-month period following the month in which the date of termination occurs (i.e., the number of Restricted Stock Units to which Haddrill shall be entitled shall be equal to the aggregate of all Restricted Stock Units multiplied by a fraction, the numerator of which shall be the number of partial or whole months served by Haddrill under this Agreement from and after the Commencement Date plus 12, and the denominator of which shall be 36), and [b] all Options in which price targets have been achieved at the date of termination regardless of the time

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vesting requirement and all other time vesting options with respect to which the price targets have not been achieved (“Time Vested Options”) shall be pro rated through the month in which the date of termination occurs; provided that the Time Vested Options shall be exercisable only to the extent the price targets are achieved within the time periods specified on Schedule A attached hereto.  Except as provided herein, all non-vested Restricted Stock Units and Options shall be immediately forfeited.

(c)If Haddrill’s employment is terminated under paragraph 7(e) or 7(f), (i) the Company shall [a] pay to Haddrill or Haddrill’s Estate, as the case may be, an amount equal to the portion of his compensation and out-of-pocket business expenses as may be accrued and unpaid as of the date of his termination; and [b] pay Haddrill or Haddrill’s Estate the base salary for a period of one year from the date of Haddrill’s termination of employment or until expiration of the term of this Agreement, whichever occurs first; and (ii) Haddrill or Haddrill’s Estate shall be entitled to retain [a] that number of Restricted Stock Units that have vested through the date of termination in accordance with the vesting schedule set forth on Schedule B hereof and [b] the number of Options that have vested at the date of termination in accordance with the vesting schedule set forth in Schedule A hereof.  All non-vested Restricted Stock Units and Options shall be immediately forfeited.

(d)(i) Upon a Change of Control, as hereinafter defined, [a] the Company shall pay to Haddrill $980,000, and [b] Haddrill shall be entitled to retain [1] all of the Restricted Stock Units granted to him irrespective of the vesting schedule set forth on Schedule B hereof and [2] all of the Options granted to him irrespective of the vesting schedule set forth in Schedule A hereof, and all such Restricted Stock Units and Options shall vest immediately.  Notwithstanding paragraphs 8(a) through (c), upon a Change of Control the Company shall have no further obligations under this Agreement other than as set forth in this paragraph 8(d).  For purposes of this paragraph 8(d), “Change of Control” shall mean (i) the acquisition, directly or indirectly, by any unaffiliated person, entity or group (a “Third Party”) of beneficial ownership of more than 50% of the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; (ii) consummation of (1) a reorganization, merger or consolidation of the Company, or (2) a liquidation or dissolution of the Company or (3) a sale of all or substantially all of the assets of the Company (whether such assets are held directly or indirectly) to a Third Party; or (iii) the individuals who as of the date of this Agreement are members of the Board of Directors (together with any directors elected or nominated by a majority of such individuals) cease for any reason to constitute at least a majority of the members of the Board of Directors; except that any event or transaction which would be a “Change of Control” under (i) or (ii) (1) of this definition, shall not be a Change of Control if persons who were the equity holders of the Company immediately prior to such event or transaction (other than the acquiror in the case of a reorganization, merger or consolidation), immediately thereafter, beneficially own more than 50% of the combined voting power of the Company’s or the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors.

(ii) Notwithstanding anything in this Agreement to the contrary, in the event that any payment or distribution by the Company, or any acceleration or waiver of any vesting condition or requirement, to or for the benefit of Haddrill, whether paid or payable or distributed or distributable, or otherwise effected, pursuant to the terms of this Agreement or

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otherwise (a “Payment”), is subject to the excise tax imposed by I.R.C. § 4999, or any successor provision, or any interest or penalties are incurred by Haddrill with respect to such excise tax (such excise tax, together with any such interest and penalties, collectively, the “Excise Tax”), then Haddrill shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Haddrill of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Haddrill retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

(e)The payment to Haddrill of any amounts pursuant to this paragraph 8 shall be conditioned upon the execution by Haddrill and the Company of a mutual release agreement providing for the release of all claims against the Company and Haddrill, respectively, except for claims arising under or in connection with such mutual release agreement.

9.Purchase of Company Stock.  Prior to the Commencement Date, Haddrill shall, subject to the Company’s policies relating to the purchase of shares of the Company’s common stock by persons deemed to be Insiders, increase his holdings of shares of the Company’s common stock (such holdings of shares, the “Alliance Stock”) to a point at which, as of the Commencement Date, such holdings have an aggregate acquisition cost to Haddrill of at least $1.0 million.  Subject to his compliance with applicable State and Federal securities laws, Haddrill shall be entitled to sell the Alliance Stock commencing on the earlier of (i) three years from the Commencement Date, or (ii) the day after he is no longer employed as CEO of the Company under this Agreement.

10.Trade Secrets and Confidential Information.  Haddrill shall not, directly or indirectly, disclose or use at any time either during or after employment by the Company, any Confidential Information (as hereinafter defined) of which he becomes aware, whether or not any such information is developed by him, except to the extent such disclosure is required in the performance of the duties assigned to him by the Board of Directors.  Haddrill shall follow all procedures established by the Company to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss or theft.

(a)“Confidential Information” shall mean information that is not generally known to the public, which is used, developed or obtained by the Company and/or any of its affiliates, relating to its or their business and the businesses of its or their clients, vendors or customers including, but not limited to: business and marketing strategies, products or services; fees, costs and pricing structure; marketing information; advertising and pricing strategies; analyses; reports; computer software, including operating systems, applications and program listings; flow charts; manuals and documentation; data bases; accounting and business methods; hardware design; technology, inventions and new development and methods, whether patentable or unpatentable and whether or not reduced to practice; all copyrightable works; the Company’s or any of its affiliates’ existing and prospective clients, customers, and vendor lists and other data related thereto; all trade secret information protected by the federal Economic Espionage Act of 1996, 18 U.S.C. § 1831 et seq.; and all similar and related information in whatever form.

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(b)“Confidential Information” shall not include any information that has been published in a form generally available to the public prior to the date upon which Haddrill proposes to disclose such information.  Information shall not be deemed to have been published merely because individual portions of the information have been separately published, but only if all the material features comprising such information have been published in combination.

11.Creative Works and Other Property.

(a)Haddrill will promptly disclose to the Company all inventions, concepts, processes, improvements, methodologies and other creative works, whether or not they can be patented or copyrighted (collectively “Creative Works”) that during his employment were or were caused to be conceived or developed by him, either solely or jointly with others, relating to the Company’s business or to the business of any affiliate of the Company and Haddrill agrees that all such Creative Works shall be the sole property of the Company.  Upon the request of the Company, Haddrill will at any time (whether during his employment or after its termination for any reason) assist the Company and fully cooperate with it to protect the Company’s interest in such Creative Works and to obtain, for the Company’s benefit, patents or copyrights for any and all Creative Works in the United States and in any and all foreign countries.  This paragraph does not apply to any Creative Work that Haddrill develops entirely on his own time and for which no equipment, supplies, facility or Confidential Information of the Company was used unless: (i) the Creative Work relates to the Company’s business or to the business of an affiliate of the Company or to the actual or anticipated research or development activities of the Company or any of its affiliates; or (ii) the Creative Work results from any work Haddrill performs for the Company.

(b)Upon the termination of Haddrill’s employment for the Company, Haddrill shall immediately, and without request, deliver to the Company all copies and embodiments, in whatever form, of all Confidential Information and all other documents, materials or property belonging to the Company even if they do not contain Confidential Information, including but not limited to: written records, notes, photographs, manuals, computers, notebooks, reports, keys, documentation, flow charts and all magnetic media such as tapes, disk or diskettes, whichever located, and, if requested by the Company, shall provide the Company with written confirmation that all such materials have been returned.  Haddrill has no claim or right to the continued use, possession or custody of such information, documents, materials or property following the termination of his employment with the Company.

12.Covenants Not to Compete.

(a)During his employment under this Agreement and for a period of two (2) years following the termination of this Agreement for whatever reason, Haddrill shall not become employed by, act as a consultant for, contract with, obtain a beneficial ownership interest in or otherwise enter into any form of business relationship with International Game Technology, Inc., WMS Industries, Inc., Shuffle Master, Inc., Aristocrat Leisure, Ltd., Gtech Holdings Corp., Multimedia Games, Inc. or Sigma Game Inc., or any of their present and future affiliates, subsidiaries, divisions, parent companies and successors.

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(b)During his employment under this Agreement and for a period of one (1) year following the termination of this Agreement for whatever reason, Haddrill shall not become employed by, act as a consultant for, contract with, obtain a beneficial ownership interest in or otherwise enter into any form of business relationship with any person, firm, company, corporation, partnership, association or other organization within the United States that is not listed in paragraph 12(a) but that is otherwise engaged in the gaming business.

13.Covenants Not to Solicit.  During his employment under this Agreement and for a period of two (2) years following the termination of this Agreement for whatever reason, Haddrill agrees that, unless he obtains written approval in advance from the Board of Directors, he shall not in any way, directly or indirectly,

(a)contact, employ, solicit, hire or attempt to persuade any employee, agent or independent contractor of the Company or any of its affiliates, or any who served in such capacities within one (1) year of the termination of Haddrill’s employment, to terminate his, her or its relationship with the Company and/or its affiliates or do any act that may result in the impairment of the relationship between the Company or any of its affiliates on the one hand and the employees, agents or independent contractors of the Company or any of its affiliates on the other hand; or

(b)contact, solicit, engage, contract with, any customer or supplier of the Company or any of its affiliates or do any act that may result in the impairment of the relationship between the Company or any of its affiliates on the one hand and the customers and suppliers of the Company or any of its affiliates on the other hand.

14.Reasonableness of Restrictions.  Haddrill agrees and acknowledges that the type and scope of restrictions described in paragraphs 10, 11, 12 or 13 are fair and reasonable and that the restrictions are intended to protect the legitimate interests of the Company and not to prevent him from earning a living.  Haddrill recognizes that his position and his access to Confidential Information makes it necessary for the Company to restrict his post-employment activities.  Haddrill represents and warrants that the knowledge, ability and skill he currently possesses are sufficient to enable him to earn a livelihood satisfactory to him for a period of one (1) or two (2) years, depending on the identity of his future employer, in the event that his employment with the Company terminates, without violating any restriction in this Agreement.  If, however, any of the restrictions set forth in paragraphs 10, 11, 12 or 13 are held invalid by a court by reason of length of time, geographic reach, activity covered or any or all of them, then such restriction or restrictions shall be reduced only by the minimum extent necessary to cure such invalidity.

15.Remedies.  Haddrill agrees that if he should breach or threaten a breach of any of the covenants contained in paragraphs 10, 11, 12, 13 or 16 irreparable damage would occur to the Company and that damages arising out of such breach or threatened breach may be difficult to determine.  Haddrill therefore further agrees that in addition to all other remedies provided at law or at equity, the Company shall be entitled as a matter of course to specific performance and temporary and permanent injunction relief from any court of competent jurisdiction to prevent any further breach or threatened breach of any such covenant by Haddrill, his employers, employees, partners, agents or other associates, or any of them, without the necessity of proving actual damage to the Company by reason of any such breach or threatened breach and without

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the necessity of posting security or a bond.  If the Company prevails in any suit claiming breach or threatened breach of paragraphs 10, 11, 12, 13 or 16 of this Agreement, Haddrill shall reimburse the Company for its expenses incurred in connection with such a suit, including without limitation, its attorneys’ fees and costs.  For purposes of this paragraph, the Company will be considered to have “prevailed” if it is determined that Haddrill breached or threatened to breach any covenant in those paragraphs (or any covenant in those paragraphs that is modified as provided in paragraph 14).

16.Non-Disparagement.  Each of Haddrill and the Company agrees that during the term of this Agreement and for a period of three (3) years following any applicable termination date, neither Haddrill nor the Company 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 Company or Haddrill, as the case may be, except, in each case, to the extent (but solely to the extent) (i) necessary in any judicial or arbitral action to enforce the provisions of this Agreement or (ii) in connection with any judicial, regulatory or administrative proceeding to the extent required by applicable laws.  For purposes of this paragraph 16, references to the Company include its officers, directors, employees, consultants and shareholders (which are reasonably known as such to Haddrill) on the date hereof and hereafter.

17.Cooperation.  At all times during the term of this Agreement and thereafter, Haddrill will reasonably cooperate with the Company (and vice versa) in any litigation or administrative proceedings involving any matters with which Haddrill was involved during his employment by the Company.  The Company will reimburse Haddrill for his reasonable out-of-pocket expenses, if any, incurred in providing such assistance, including reasonable attorneys’ fees.

18.Previous Employment.  Haddrill represents and warrants that he is not under any legal restraint or restriction that would prevent or make unlawful his execution of this Agreement or his performance of the obligations under this Agreement and that Haddrill has disclosed to the Company any and all restraints, confidentiality commitments or employment restrictions that Haddrill has with any other employer or organization.  Haddrill shall use his best efforts to assure that Manhattan Associates, Inc. will keep confidential and not disclose publicly any information relating to Haddrill’s employment hereunder prior to a public announcement regarding such employment by the Company without the prior written consent of the Company.

19.Licenses and Approvals.  Each party shall (a) use its or his commercially reasonable efforts to apply for (and diligently prosecute such applications) all necessary or appropriate licenses and approvals from applicable gaming authorities in conjunction with this Agreement and the obligations of the parties hereunder and (b) diligently cooperate with any requests, inquiries or investigations of such regulatory authorities.  Such actions shall be undertaken at the expense of the Company.

20.Assignment.  Neither the Company nor Haddrill shall have the right to assign this Agreement or any obligation hereunder without the written consent of the other, except that the Company may assign this Agreement to a successor or assignee in connection with a merger, consolidation or sale or transfer of all or substantially all of the assets of the Company.

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21.Indulgences.  The failure of any party hereto at any time or times to enforce its rights under this Agreement strictly in accordance with the same shall not be construed as having created a custom in any way or manner contrary to the specific provisions of this Agreement or as having in any way or manner modified or waived the same.

22.Notices.  Any notice required or permitted to be given by this Agreement shall be in writing and shall be sufficiently given to the parties if delivered in person or sent by United States registered or certified mail or nationally recognized overnight courier (return receipt requested) or by telefax (with evidence of successful transmission) addressed to the receptive parties at the following addresses or at such other addresses as may from time to time be designated in writing by the parties:

If to Haddrill:	If to the Company:
Richard Haddrill 3394 Knollwood Drive Atlanta, Georgia  30305	Alliance Gaming Corporation 6601 South Bermuda Road Las Vegas, Nevada 89119 Attention:  General Counsel Telefax Number:  702-270-7699 Copy to: Kevin Verner 885 Island Park Drive Charleston, SC  29492

23.Controlling Law and Dispute Resolution.  This Agreement shall be construed and applied in accordance with the laws of the State of Nevada without giving effect to the principles of conflicts of law under Nevada law.  The parties agree to submit to the jurisdiction and venue of the state and federal courts located in Nevada in the event that there is any claim that this Agreement has been breached.

24.Entire Agreement.  This Agreement sets forth the entire agreement between the parties with respect to the matters covered herein, and supersedes all other agreements and understandings.  No waiver or amendment to this Agreement shall be effective unless reduced to writing and executed by the parties hereto.

25.Understanding of Haddrill.  Haddrill agrees and acknowledges that he has read this Agreement in its entirety, that he has had the opportunity to review it with legal counsel of his own choosing, that he understands it and that he enters into it voluntarily.

[Signatures on following page.]

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IN WITNESS WHEREOF, this Agreement has been duly executed by and on behalf of the parties hereto as of the day and year first above written.

ALLIANCE GAMING CORPORATION
By:
	Name:
	Title:
	Date:
Name:  RICHARD HADDRILL
Date:

496502.5

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SCHEDULE A

PERFORMANCE STOCK OPTIONS

1.  Haddrill shall be issued non-statutory stock options (“Options”) to purchase 500,000 shares of Company common stock under the Company’s 2001 Long Term Incentive Plan exercisable at $17.16 per share.

2.  Options shall become exercisable on October 1, 2012 and shall remain exercisable until October 1, 2014, at which time any unexercised Options shall expire; provided that Haddrill is an employee on October 1, 2012.

3.  Once Options become exercisable hereunder, they shall remain exercisable until October 1, 2014 without regard to whether Haddrill continues to be employed by the Company prior to or on such date.

4.  Options shall become exercisable earlier than October 1, 2012 as follows:

(a)One twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value (as hereinafter defined) of the Company’s common stock is at least $30.00 and (ii) October 1, 2005, but only if the Fair Market Value of the Company’s common stock is at least $30.00 on or before October 1, 2007.

(b)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35.00 and (ii) October 1, 2005, but only if the Fair Market Value of the Company’s common stock is at least $35.00 on or before October 1, 2007.

(c)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $40.00 and (ii) October 1, 2005, but only if the Fair Market Value of the Company’s common stock is at least $40.00 on or before October 1, 2008.

(d)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45.00 and (ii) October 1, 2005, but only if (x) the Fair Market Value of the Company’s common stock is at least $45.00 on or before October 1, 2008 or (y) the Fair Market Value of the Company’s common stock is at least $40.00 on or before October 1, 2008 and at least $45.00 on or before October 1, 2009.

(e)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $30.00 and (ii) October 1, 2006, but only if the Fair Market Value of the Company’s common stock is at least $30.00 on or before October 1, 2007.

(f)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock

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is at least $35.00 and (ii) October 1, 2006, but only if the Fair Market Value of the Company’s common stock is at least $35.00 on or before October 1, 2007.

(g)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $40.00 and (ii) October 1, 2006, but only if the Fair Market Value of the Company’s common stock is at least $40.00 on or before October 1, 2008.

(h)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45.00 and (ii) October 1, 2006, but only if (x) the Fair Market Value of the Company’s common stock is at least $45.00 on or before October 1, 2008 or (y) the Fair Market Value of the Company’s common stock is at least $40.00 on or before October 1, 2008 and at least $45.00 on or before October 1, 2009.

(i)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $30.00 and (ii) October 1, 2007, but only if the Fair Market Value of the Company’s common stock is at least $30.00 on or before October 1, 2007.

(j)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $35.00 and (ii) October 1, 2007, but only if the Fair Market Value of the Company’s common stock is at least $35.00 on or before October 1, 2007

(k)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $40.00 and (ii) October 1, 2007, but only if the Fair Market Value of the Company’s common stock is at least $40.00 on or before October 1, 2008.

(l)An additional one-twelfth (1/12) of such Options shall become exercisable on the later of (i) the first date on which the Fair Market Value of the Company’s common stock is at least $45.00 and (ii) October 1, 2007, but only if (x) the Fair Market Value of the Company’s common stock is at least $45.00 on or before October 1, 2008 or (y) the Fair Market Value of the Company’s common stock is at least $40.00 on or before October 1, 2008 and at least $45.00 on or before October 1, 2009.

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

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SCHEDULE B

RESTRICTED STOCK UNITS

1.  The Company shall issue to Haddrill 377,030 Restricted Stock Units (“RSUs”) under the Company’s 2001 Long Term Incentive Plan.  The number of RSUs was determined by dividing $6.5 million by the average per share closing price of the Company’s common stock on the stock exchange in which the stock is principally traded for the 20 business days immediately prior to the date of the grant or such other method as the parties shall mutually agree to, provided that such method complies with the Plan.

2.  Except as provided in the Agreement, the RSUs will vest in one-third equal installments on each of October 1, 2005, October 1, 2006 and October 1, 2007, if Haddrill is continuously employed by the Company as CEO until each such respective vesting date.

3.  Each vested RSU represents Haddrill’s right to receive one (1) share of Company stock, as follows:

a.75% of the shares represented by the vested RSUs shall be issued to Haddrill (1) on the later of [a] October 1, 2007 or [b] the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable, or (2) in the event that this Agreement is terminated, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable.

b.The remaining 25% of the shares represented by the vested RSUs shall be issued to Haddrill (1) on the later of [a] October 1, 2008 or [b] the first date on which such payment or any portion thereof is no longer subject to the limits of section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable, or (2) in the event that this Agreement is terminated, on the first date in which such payment or any portion thereof is no longer subject to the limits of Section 162(m) of the Internal Revenue Code in which case that portion of the payment that is no longer subject to such limits shall be issued to Haddrill at the time such limits become inapplicable.

c.Notwithstanding anything herein to the contrary, if the vesting of any RSUs pursuant to paragraph 2 of this Schedule B shall be taxable to Haddrill prior to the date on which Haddrill is otherwise entitled to receive shares of the Company’s stock pursuant to this paragraph 3 with respect to such RSUs, then the Company shall promptly upon request issue to Haddrill all of the shares represented by such RSUs that have become taxable, which shares shall be freely transferable by Haddrill subject only to any applicable securities laws.

4.  Except as provided in the Agreement, if Haddrill ceases to be the CEO, all nonvested RSUs shall be immediately forfeited.

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EX-10.2

Exhibit 10.2

SEPARATION AND CONSULTING AGREEMENT

This Separation and Consulting Agreement (the “Agreement”) is entered into as of June 30, 2004 by and between Alliance Gaming Corporation, a Nevada Corporation (the “Company”) and Robert L. Miodunski (the “Executive”).

WHEREAS, the Executive is a member of the Company’s Board of Directors and employed by the Company as its President and Chief Executive Officer pursuant to the terms of an Executive Employment Agreement, dated and effective as of April 24, 2001 (the “Employment Agreement”);

WHEREAS, the Company and the Executive have agreed that the Executive will resign from his position as a member of the Company’s Board of Directors and as President and Chief Executive Officer of the Company effective as of October 1, 2004, or such other date as provided herein;

WHEREAS, the Company and the Executive wish to fully settle all matters between them arising out of the Employment Agreement, Executive’s employment, and his resignation from his position as a member of the Board of Directors and President and Chief Executive Officer of the Company;

WHEREAS, this Agreement shall supercede and replace the Employment Agreement in its entirety; and

WHEREAS, as a result of the experience and personalized knowledge gained by the Executive during his employment by the Company, the Company desires to retain the services of the Executive as an independent consultant following his resignation.

NOW THEREFORE, in consideration of the mutual promises contained herein, the parties hereto, intending to be legally bound, agree as follows:

1.Agreement to Resign; Salary; Bonuses and Benefits.

1.1The Executive hereby resigns, effective October 1, 2004, or such other date as provided below (the “Resignation Date”), from his position as the Company’s President and Chief Executive Officer, as a member of the Company’s Board of Directors and any other positions that he may hold in the Company or any of its subsidiaries, except as otherwise specifically provided for herein.  Notwithstanding the foregoing, the Company may, in its sole discretion, modify the Resignation Date to any date from the date hereof until December 31, 2004.  Until the Resignation Date, the Executive will continue to serve as a member of the Company’s Board of Directors and devote his full time and best efforts to performing his duties as the Company’s President and Chief Executive Officer.  Notwithstanding the Resignation Date, the Executive will continue to be an employee of the Company, subject to the terms of this Agreement until December 31, 2004, at which time he will cease to be an employee of the Company.

1.2At such time as a new Chief Executive Officer has been selected by the Company, Executive will cooperate and work with the new Chief Executive Officer to provide a smooth transition (the “Transition Plan”).

1.3Until December 31, 2004, the Company will continue to pay the Executive his regular base salary of $500,000 per year in installments on the regularly recurring paydays in accordance with the Company’s practice.  Executive shall be entitled to an annual cash bonus based upon performance of the Company through the fiscal year ending June 30, 2005 pursuant to the Bonus Matrix attached as Exhibit A hereto for fiscal 2004 and a substantially similar Bonus Matrix for fiscal 2005 payable in August 2004 with respect to fiscal 2004, and payable in August 2005 with respect to fiscal 2005, in such manner as the Company normally pays such bonuses (less required withholding for 2004 and not subject to withholding for 2005).  The Bonus Matrix for 2005 shall be a matrix substantially similar to Exhibit A with the “Budget/Guidance” EPS target to be the Board of Directors approved EPS budget figure for Fiscal 2005 expanded and contracted by 20% in the same number of increments as in Exhibit A.  The “% of Target EPS” and “% of Base Salary” columns in Exhibit A will be the same for the Bonus Matrix for Fiscal 2005, and the Base Salary to be used in the calculation shall be $500,000.

1.4Until December 31, 2004, the Executive may continue to utilize any vacation time he has accrued under the Company’s vacation policy.  As soon as practicable following December 31, 2004, the Company shall pay the Executive in a single lump sum payment, less applicable withholding, for any accrued, but unused vacation time in accordance with the terms of the Company’s vacation policy.  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.

1.5Until December 31, 2004, the Executive may continue to participate in the Company’s various retirement, life insurance, medical and hospitalization, disability, welfare and fringe benefit plans, programs, policies and arrangements (“Executive Benefit Plans”) for which the Executive is otherwise eligible, pursuant to the terms of such plans.  Following December 31, 2004, the Executive generally will cease to participate in the Executive Benefit Plans, except to the extent provided in the Executive Benefit Plan, herein, or by applicable law.  Nothing in this Agreement or the Consulting Agreement (as defined in Section 6.1) shall be interpreted to expand any right the Executive may have under the Executive Benefit Plans unless otherwise expressly provided herein.

1.6Following December 31, 2004, the Executive will be eligible for continued medical and dental coverage for himself and his dependants in accordance with the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  The Executive shall be required to pay one-hundred percent (100%) of the COBRA premiums for such coverage.

1.7As recognition of the contributions of Executive in the successful divestiture of United Coin Machine Co., a Nevada corporation and an indirect wholly owned subsidiary of the Company, Executive shall receive a special bonus of $1,000,000

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upon the consummation of the transaction (the “United Coin Bonus”).  The United Coin Bonus shall be payable as follows:  (a) $500,000 within 30 days of the consummation of the transaction and (b) $500,000 payable in twenty four (24) equal monthly installments of $20,833.33 on the first business day of each month commencing on January 1, 2005.

2.Stock Options.  The Company agrees that any issued and outstanding stock options granted to the Executive under the Company’s Stock Option Plans (the “Options”) shall continue to vest and be exercisable as if the Executive were still actively employed by the Company.  In addition, the Company agrees that upon any “Change of Control” (as defined below) of the Company, all of the Options shall immediately vest and become exercisable.  “Change of Control” shall be deemed to have occurred upon (i) the consummation of a tender for or purchase of fifty percent (50%) or more of the Company’s Common Stock by a third party, (ii) a merger, consolidation or recapitalization of the Company such that the stockholders of the Company immediately prior to the consummation of such transaction possess less than fifty percent (50%) of the voting securities of the surviving entity immediately after the transaction (determined on a fully-diluted basis assuming the conversion of all convertible securities of such person), or (iii) the sale, lease or other disposition of all or substantially all of the assets of the Company, in any of cases (i), (ii) or (iii) in a single transaction or series of transactions.  Exhibit B details the outstanding options held by Executive at June 30, 2004.

3.Perquisites.  The Company agrees to provide to Executive such computer network access as is required by the Executive to fulfill his obligations under this Agreement through the Term (as defined in Section 7.7 below); provided that, the Company expressly reserves the right to remove or block any and all secret, confidential, proprietary or other sensitive information, software, program, or application relating to the Company that the Company determines, in its sole and absolute discretion, is necessary or advisable.  The Company shall continue to pay for Executive’s cell phone usage related to the Consulting Agreement throughout the Term.

4.No Other Severance.  Except as provided in this Agreement, the Executive shall not be entitled to receive any other payment, benefit or other form of compensation as a result of his employment or his resignation therefrom.  Specifically, the Executive shall not be eligible for severance benefits under any plan, program or arrangement sponsored or funded by the Company, and he hereby waives any right to any such benefits.

5.Return of Company Property.  Subject to Section 3 above, no later than December 31, 2004, the Executive agrees to return any Company property in the Executive’s possession or control, including all equipment, the original and all copies of books, notebooks, documents, reports, files, memoranda, records, computer software and programs, correspondence, mailing lists, client or contact lists, calendars, card files, rolodexes, cardkey passes, door, file and computer keys, computer access codes or disks, company charge cards, instructional employee manuals, and other Company property which the Executive received or had control over during his employment with the Company, except to the extent the Company and the Executive mutually agree such item or items may be required by the Executive in connection with the performance of services under the Consulting Agreement.

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6.Consulting Agreement.

6.1Agreement for Services.  For four years from January 1, 2005 until December 31, 2008 (each such year shall be referred to hereinafter as a “Consulting Year”), the Executive agrees to make himself available at the Company’s reasonable request (made by either members of the Board of Directors or the Chief Executive Officer) to provide services that the Company may reasonably request in accordance with the terms set forth below (the “Consulting Agreement”).  Such services may include, but not be limited to, implementing the Transition Plan, attending and participating in meetings with the executive officers of the Company, and attending and participating in meetings of the Board of Directors of the Company and any committees thereof (including any meetings of the Office of the Chairman).  Such services shall be performed principally in Las Vegas, Nevada, but also at such locations as the Company may reasonably request, and the Executive agrees to use his best skill, efforts and judgment in performing such services.  The Company and the Executive agree and understand that the services performed by the Executive under the Consulting Agreement will not require the Executive to engage in full-time efforts or work, but instead shall be periodic and limited in nature and that the Executive shall be entitled to accept other employment and pursue other activities and interests, so long as such employment, activities and interests do not otherwise breach the Executives covenants and obligations under Section 8 of this Agreement.  The Company shall not terminate the Agreement, or any part of it, for any failure or inability by the Company to utilize or request the services of the Executive under the Consulting Agreement.  The Company agrees to pay the Executive an “Annual Consulting Fee” as set forth below.  The Annual Consulting Fee shall be payable in twelve (12) equal monthly installments, in arrears.  The Company agrees to reimburse the Executive for all reasonable travel and other reasonable and necessary out-of-pocket business related expenses incurred by the Executive at the request of the Company in connection with the performance of services under the Consulting Agreement; provided that the Executive shall be required to submit reasonable documentation of such expenses to the Company prior to receiving reimbursement.  The Annual Consulting Fee for each of the Consulting Years following the Executive’s Resignation Date shall be as follows:

Consulting Year	Annual Consulting Fee
2005	$	250,000
2006	$	250,000
2007	$	250,000
2008	$	250,000

6.2Independent Contractor.  The Executive shall perform the services requested by the Company under the Consulting Agreement as an independent contractor and shall not be deemed an employee of the Company.  Accordingly, the Company will not withhold federal or state income, social security, or other taxes from the consulting fee paid under the terms of the Consulting Agreement, unless otherwise required by law.

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7.Termination.

7.1Disability.  If the Executive, becomes disabled or incapacitated for six or more consecutive months or for noncontinuous periods aggregating to twenty-six weeks in any twelve-month period, the Company may terminate this Agreement on thirty days’ notice, whereupon the obligations of the Company and the rights of the Executive under this Agreement shall terminate, except that:

(a)The Company shall pay the Executive’s salary or Annual Consulting Fee, as applicable, on a pro-rata basis through the date of termination, offset by any benefits payable to the Executive under any disability insurance policy paid for by the Company; and

(b)One-half of any unvested Options shall vest and become exercisable by the Executive for two years after the date of termination.

7.2Death.  In the event of the Executive’s death, this Agreement shall terminate as of the date of his death, in which case the obligations of the Company and the rights of the Executive under this Agreement shall terminate except that:

(a)The Company shall continue to pay the Executive’s salary or Annual Consulting Fee, as applicable, for six months after the date of death, offset by any benefits payable to the Executive or the Executive’s estate under any life insurance policy paid for by the Company; and

(b)The Company shall reimburse the Executive’s estate for all expenses incurred and reimbursable under Section 6.1; and

(c)One-half of any unvested Options shall vest and become exercisable by the Executive’s estate for two years after the date of the Executive’s death.

7.3Termination by Company for Cause.

(a)The Company may terminate this Agreement for “Cause” (as defined below) at any time immediately on notice to the Executive, in which case the Company’s obligations and the Executive’s rights under this Agreement shall terminate.  For purposes of this provision, the term “Cause” includes, but is not limited to:

(1)The Executive’s insubordination, fraud, disloyalty, dishonesty, willful misconduct, or gross negligence in the performance of the Executive’s duties under this Agreement, including willful failure to perform such duties as may properly be assigned to the Executive under this Agreement.

(2)The Executive’s material breach of any provision of this Agreement.

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(3)The Executive’s failure to qualify (or having so qualified being thereafter disqualified) under any suitability or licensing requirement of any jurisdiction or regulatory authority to which the Executive may be subject by reason of his position as an officer, director or employee of the Company or its affiliates or subsidiaries.

(4)The Executive’s commission of a crime against the Company or violation of any law, order, rule, or regulation pertaining to the Company’s business.

(5)The Executive’s inability (other than because of death or disability under Sections 7.1 and 7.2) to perform the job functions and responsibilities assigned in accordance with standards established, whether or not in writing, from time to time by the Company, in its sole discretion.

(6)The Company obtains from any source information with respect to the Executive or this Agreement that would, in the opinion of both the Company and its outside counsel, jeopardize the gaming licenses, permits, or status of the Company or any of its subsidiaries or affiliates with any gaming commission, board, or similar regulatory or law enforcement authority.

(b)Any termination by the Company for Cause shall not be in limitation of any other right or remedy the Company may have under this Agreement or otherwise.

7.4Termination by Company without Cause.  The Company may terminate this Agreement at any time without Cause, whereupon the Company’s obligations and the Executive’s rights under this Agreement shall terminate, except that the Company shall continue to pay (a) the Executive’s salary, Annual Consulting Fee, bonuses and benefits otherwise due under this Agreement until December 31, 2008, and (b) furnish the benefits described in Sections 1.5 and 1.6 for twelve months after the date of termination of this Agreement.

7.5Termination by Executive with Good Reason.  If the Executive resigns or terminates this Agreement with “Good Reason” (as defined below), the Company’s obligations and the Executive’s rights under this Agreement shall terminate, except that the Company shall continue to pay (a) the Executive’s salary, Annual Consulting Fee, bonuses otherwise due under this Agreement until December 31, 2008, and (b) furnish the benefits described in Sections 1.5 and 1.6 for twelve months after the date of termination.  As used in this provision, “Good Reason” is limited to the Company’s failure to cure either of the following within thirty days after written notice of demand by the Executive (i) the Company’s failure to pay any portion of the base salary, bonuses or Annual Consulting Fees within thirty days after they are due, and (ii) the assignment to the Executive of duties materially inconsistent with the duties and position set forth in this Agreement.

7.6Termination by Executive without Good Reason.  If the Executive resigns or terminates this Agreement without Good Reason, this Agreement shall terminate as of the date of his resignation, and the Company’s obligations and the Executive’s rights under this Agreement shall terminate.

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7.7Term.  The term of this Agreement shall commence on execution of this Agreement and shall expire on December 31, 2008, unless terminated earlier pursuant to the terms this Section 7 (the “Term”).

7.8Survival of restrictive covenants.  Notwithstanding the expiration or termination of this Agreement for any reason the Executive’s covenants in Section 8 and his obligations under that section shall survive the termination of this Agreement as set forth in that section.

8.Restrictive Covenants.

8.1Covenant not to compete.

(a)During the period commencing on the date hereof through December 31, 2006 (unless this Agreement is terminated for any reason prior to December 31, 2004, and in which case, through two years after such termination), the Executive will not, directly or indirectly, whether as employee, owner, partner, agent, employee, officer, consultant, advisor, stockholder (except as the beneficial owner of not more than 3 percent of the outstanding shares of a corporation, any of the capital stock of which is listed on any national or regional securities exchange or quoted in the daily listing of over-the-counter market securities and, in each case, in which the Executive does not undertake any management or operational or advisory role) or in any other capacity, for the Executive’s own account or for the benefit of any person or entity, establish, engage, or be connected with any person or entity that is at the time engaged in the gaming equipment business.

(b)During the period commencing on the date hereof through December 31, 2007 (unless this Agreement is terminated for any reason prior to December 31, 2004, and in which case, through three years after such termination), the Executive will not, directly or indirectly, whether as employee, owner, partner, agent, employee, officer, consultant, advisor, stockholder (except as the beneficial owner of not more than 3 percent of the outstanding shares of a corporation, any of the capital stock of which is listed on any national or regional securities exchange or quoted in the daily listing of over-the-counter market securities and, in each case, in which the Executive does not undertake any management or operational or advisory role) or in any other capacity, for the Executive’s own account or for the benefit of any person or entity, engage, or be connected with International Game Technology, WMS Industries, Inc., Shuffle Master, Inc., Aristocrat Leisure, Ltd., Gtech Holdings Corp, Sigma Games or Multimedia Games, Inc. or any of their present and future affiliates, subsidiaries, divisions, parent companies or successors.

(c)The Company and the Executive acknowledge and agree that the scope of the noncompete provisions in this Section 8.1 are unlimited geographically and that the scope and duration of the covenant are reasonable and fair; however, if a court of competent jurisdiction determines that this covenant is overbroad or unenforceable in any respect, the Company and the Executive acknowledge and agree that the covenant shall be enforced to the greatest extent any such court deems appropriate, and such court may modify this covenant to that extent.

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8.2Covenant not to solicit customers, employees, or consultants.  Executive shall not, directly or indirectly, during the period commencing on the date hereof through December 31, 2008 (unless this Agreement is terminated for any reason prior to December 31, 2004, and in which case, through three years after such termination), (a) solicit the trade or patronage of any of the customers or prospective customers of the Company (which, for purposes of this paragraph, shall include any of the Company’s subsidiaries or affiliates) or of anyone who has heretofore traded or dealt with the Company, regardless of the location of such customers or prospective customers of the Company with respect to any technologies, services, products, trade secrets, or other matters in which the Company is active, or (b) aid or endeavor to solicit or induce any other employee or consultant of the Company to leave the Company to accept employment of any kind with any other person or entity.

8.3Confidential Information and Non-Disparagement.

(a)In accordance with the Nevada Revised Statutes (“NRS”) Sections 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, and proprietary information, knowledge, and data relating to the Company (and any of its subsidiaries or affiliates), obtained by the Executive during or by reason of the Executive’s employment by the Company.  During the Term and after the expiration or termination of this Agreement for any reason, the Executive shall not, without the prior written consent of the Company or except as may be required by law, communicate or divulge any such information, knowledge, or data to any person or entity other than the Company (or as applicable to it subsidiaries or affiliates) and those designated by them that 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, and other persons or entities engaged in business with the Company from time to time.

(b)Each of the Executive and the Company agrees that during the Term and for a period of three years following any applicable termination date, 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) (i) necessary in any judicial or arbitral action to enforce the provisions of this Agreement or (ii) in connection with any judicial, regulatory or administrative proceeding to the extent required by applicable laws.  For purposes of this Section 8.3(b), references to the Company include its officers, directors, employees, consultants and shareholders (which are reasonably known as such to the Executive) on the date hereof and hereafter.

8.4Standstill.  During the Term and for twenty-four months after the expiration or termination of this Agreement for any reason, the Executive shall not, singly or with any other person, directly or indirectly:

(a)Propose, enter into, agree to enter into, or encourage any other person to propose, enter into, or agree to enter into (i) any form of business combination, acquisition, or other transaction relating to the Company or any of its subsidiaries or affiliates, or (ii) any form

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of restructuring, recapitalization, or similar transaction with respect to the Company or any of its subsidiaries or affiliates; or

(b)Acquire, or offer, propose, or agree to acquire by tender offer, purchase, or otherwise, any voting securities of the Company or of its subsidiaries or affiliates, except through the exercise of options or warrants beneficially owned as of the date of this Agreement; or

(c)Make or in any way participate in any solicitation of proxies or written consents with respect to voting securities of the Company or any of its affiliates or subsidiaries (it being understood that the mere execution of a proxy or written consent for his own securities beneficially owned shall not be treated as constituting participation in such a solicitation); or

(d)Become a participant in any election contest with respect to the Company or a nominee to or member of its board of directors or the board of directors of any affiliate or subsidiary of the Company or any of its affiliates or subsidiaries; or

(e)Seek to influence any person with respect to the voting or disposition of any voting securities of the Company or any of its affiliates or subsidiaries; or

(f)Demand a copy of the list of stockholders or other books and records of the Company or any of its subsidiaries or affiliates; or

(g)Participate in or encourage the formation of any partnership, syndicate, or other group that owns or seeks or offers to acquire beneficial ownership of any voting securities of the Company or any of its affiliates or subsidiaries or that seeks to affect control of the Company or any of its affiliates or subsidiaries or for the purpose of circumventing any provision of this Agreement; or

(h)Propose or support any director or slate of directors for nomination, appointment, or election to the board of directors of the Company or any of its affiliates or subsidiaries (it being understood that the mere execution of a proxy or written shareholder consent for his own securities beneficially owned shall not be treated as constituting such support); or

(i)Otherwise act to seek or to offer to control or influence, in any manner, the management, the board of directors, or the policies of the Company or any of its affiliates or subsidiaries; or

(j)Seek to amend or change this provision.

8.5Injunctive Relief; Jurisdiction.  The Executive acknowledges that the Company will suffer irreparable injury, not readily susceptible of valuation in monetary damages, if the Executive breaches or threatens to breach any of his obligations under this section.  Accordingly, the Executive agrees that the Company will be entitled, at the Company’s option, to injunctive relief without the necessity of posting a bond against any breach or prospective breach by the Executive of the Executive’s obligations under this section in any federal or state court of competent jurisdiction sitting in the State of Nevada, in addition to monetary damages and any other remedies available at law or in equity. The Executive hereby submits to the jurisdiction of

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such courts for the purposes of any actions or proceedings instituted by the Company to obtain such injunctive relief, and agrees that process may be served on the Executive by registered mail, addressed to the last address of the Executive known to the Company, or in any other manner authorized by law.

9.Indemnification and Liability Insurance.  For the longer of the (a) Term and (b) six years from the date hereof:

9.1Indemnification.  The Company shall indemnify and hold the Executive harmless, to the fullest extent legally permitted to Section 78.751 of the Nevada Corporation Code (as amended and to 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, officer, employee or consultant to the Company under this Agreement, or the Employment Agreement in each case, except to the extent of the Executive’s intentional misconduct, fraud, or knowing violation of law.

9.2Insurance.  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 or officer or both of the Company (or any affiliate or subsidiary of the Company) in accordance with its customary practices as in effect from time to time.  The parties acknowledge and agree that the policy may cover other officers and directors of the Company in addition to the Executive.

10.Ongoing Assistance.  Following the termination of this Agreement, the Executive shall execute any and all documents and take any and all actions which the Company may reasonably request to effect the transition of the projects being worked on by the Executive at the time of termination and, subject to mutual agreement regarding time and compensation, the Executive agrees to make himself available with respect to, and to cooperate in conjunction with, any litigation or investigation arising from events that occurred during the Executive’s employment or provision of services under the Consulting Agreement (whether such litigation or investigation is pending or subsequently initiated) involving the Company or any of its affiliates or other Released Parties (as defined below), including providing testimony and preparing to provide testimony if so requested by the Company or any of its affiliates.

11.Releases.  The Executive hereby releases the Company and its agents, employees, representatives, officers, directors, shareholders, trustees, attorneys, affiliates, subsidiaries, joint ventures, partnerships and any employee benefit plan fiduciary, and the successors and assigns of each (collectively referred to as the “Released Parties”) from any debts, duty, claim, counterclaim, cost, expense, cause of action, liability or other obligation, whether known or unknown, against the Released Parties, which the Executive may have relating to the employment of the Executive or the Executive’s resignation therefrom, including, without limitation, any dispute arising prior to the date of execution of the Agreement under the Age Discrimination in Employment Act of 1967; the Civil Rights Acts of 1964 and 1991; the Americans with Disabilities Act of 1990; and any other federal or state statute or regulation under which the Executive may have a potential claim; and any claim based on theories of contract, tort, or other equitable or legal grounds; provided, however, that (a) this Release shall

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only relate to claims relating to Executive’s employment or the termination thereof, and (b) this Section 11 shall not apply to any claim the Executive may have for accrued vested benefits under any federal or state workers’ compensation act, under the Executive Retirement Income Security Act of 1974, or with respect to any obligation of the Company specifically provided for in or pursuant to this Agreement.  The Executive affirms that he will not cause or permit to be filed on his behalf any charge, complaint or action before any court or administrative agency alleging discrimination or any unfair employment practices, whether know or unknown, against the Released Parties relating to the employment of the Executive or the Executive’s resignation.  The Executive agrees to provide to the Company on December 31, 2004 a substantially similar release to the release provided in this Section 11.

12.Taxes.  The Executive agrees that the Executive will be fully and solely responsible for any income or other tax liability imposed on Executive in his capacity as an “independent contractor.”

13.Acknowledgement.  The Executive acknowledges that he has carefully read and fully understands all of the terms of this Agreement, including without limitation the releases contained herein.  The Executive further acknowledges that the consideration provided for herein represents amounts and benefits greater than he otherwise would be entitled to receive absent this Agreement, and that the Executive has entered into this Agreement willingly, freely, without threat, duress, coercion, undue influence, or intimidation of any kind.  The Executive further acknowledges that he has been advised to consult with an attorney of his choosing prior to executing this Agreement.  In compliance with the terms of the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act, Executive agrees to waive the twenty-one day period to review this Agreement before signing it.  Executive understands that he may revoke this Agreement within seven (7) calendar days after it has been signed by him, and that it is not effective or enforceable until that seven (7) day period has expired.  After the expiration of seven (7) days, this Agreement will become effective and legally binding in all aspects.

14.Fees.  The Company shall pay the reasonable and documented fees and expenses of counsel to Executive, up to a maximum amount of $10,000.

15.Entire Agreement.  In executing this Agreement, the Executive is not relying on any oral representation or statement by any employee, agent, or representative of the Company regarding the subject matter, basis, or effect of this Agreement.  Rather this Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supercedes all prior agreements between the parties with respect to such matters, including, but not limited to, the Employment Agreement, unless specifically provided otherwise herein.  This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto.

16.Reformation.  If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, in whole or in part, neither the validity of the remaining parts of such provision nor the validity of any other provision of this Agreement shall in any way be affected thereby.  In lieu of such invalid, illegal, or unenforceable provision, there shall be added

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automatically as part of this Agreement a provision as similar in terms to such invalid, illegal, or unenforceable provision as may be possible to be valid, legal, and enforceable.

17.Arbitration.  Any controversy or claim arising out of or relating to this Agreement or its breach (except, at the option of the Company, a controversy or claim arising out of or relating to Section 8, which the Company may choose to be adjudicated in a federal or state court sitting in Las Vegas, Nevada), shall be settled by arbitration in Las Vegas, Nevada, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment on the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof.  If any arbitration or other legal or equitable action or proceeding is instituted to enforce any provisions of this Agreement, the prevailing party shall be entitled to recover as costs such amounts as the court or arbitrator may judge to be reasonable, including costs and attorneys’ fees.

18.Modification, rescission, and assignment.  This Agreement may be modified or rescinded only with the written consent of the other, provided, that (i) if the Executive dies during the Term, the Executive’s estate and his heirs, executors, administrators, legatees, and distributees shall have the rights and obligations as provided in this Agreement, 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 continues to be bound by the provisions of this Agreement now binding on the Company.  Except as provided above, none of the rights of the Executive to receive any form of compensation payable pursuant to this Agreement shall be assignable or transferable.  Any attempted assignment, transfer, conveyance, or other disposition of any interest in the rights of the Executive herein shall be void.  This Agreement and the Consulting Agreement are for the Executive’s personal services and the Executive may not assign, transfer, or delegate any duty or obligation to perform such services.  Any attempted assignment, transfer or delegation in violation of this Section 18 shall be null and void and shall constitute a breach of this Agreement.

19.Controlling law, severability.  This agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nevada without reference to its conflicts of law provisions, and shall be binding upon the parties and their respective heirs, executors, successors and assigns.  If any provision is unenforceable for any reason, it shall be deemed stricken from the Agreement but shall not otherwise affect the intention of the parties or the remaining provisions of the Agreement.

20.Binding effect.  This Agreement shall bind and inure to the benefit of each of the parties and their respective heirs, successors, administrators, executors, and assigns.

21.No third party benefits.  This Agreement is for the benefit of the parties and their permitted successors and assigns.  The parties intend neither to confer any benefit hereunder on any Person, firm, or corporation other than the parties thereto, nor that any such third party shall have any rights under this Agreement.

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22.Indulgence.  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 other 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.

23.Notice.  All notices required by this Agreement must be in writing and must be delivered, mailed or telecopied to the addresses given below or such other addresses as the parties may designate in writing.

“Company”	Alliance Gaming
	6601 S. Bermuda Road
	Las Vegas, Nevada   89119
	Attn: General Counsel
with a copy to:	Gibson Dunn & Crutcher LLP
	333 South Grand Avenue
	Los Angeles, CA  90071
	Attention:  Peter F. Ziegler
“Executive”	Robert Miodunski
	115 Augusta Street
	Henderson, Nevada  89074

24.Counterparts, facsimiles.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.  This Agreement may be executed and delivered by exchange of facsimile copies showing the signatures of the parties, and those signatures need not be affixed to the same copy.  The facsimile copies so signed will constitute originally signed copies of the same consent requiring no further execution.

25.Captions; construction; drafting ambiguities.  The captions in this Agreement are for convenience only and shall not be used in interpreting it.  In interpreting this Agreement any change in gender or number shall be made as appropriate to fit the context.  Each party has reviewed and revised this Agreement with independent counsel or has had the opportunity to do so.  The rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or of any amendments or exhibits to this Agreement.

26.Condition precedent.  This Agreement is subject to approval by the Company’s board of directors and shall be of no force and effect until that approval is given and is evidenced by a written resolution of the board.

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

ALLIANCE GAMING CORPORATION

By:

Title:

EXECUTIVE

Robert L. Miodunski

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EXHIBIT A

BONUS MATRIX-FISCAL 2004

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EX-10.3

Exhibit 10.3

AGREEMENT

This Agreement (this “Agreement”) is dated as of July 1, 2004, and is between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and David Robbins, an individual (“Robbins”).

BACKGROUND

Robbins is currently, and has been since December 1997, the Chairman of the Board of Directors of the Company (the “Board”).  The Company and industry are currently experiencing a period of rapid growth in an increasingly complex multi jurisdictional gaming industry which is dynamic and challenging.  Contemporaneously, the Company is preparing for a transition in management and is engaging in a program of succession planning.  To address, among others, these issues, the Company would like to procure the services of Robbins as Chairman of the Board and as a director member of the Office of the Chairman of the Company.  Robbins is willing to serve in such capacities and provide such functions pursuant to the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and promises set forth in this Agreement, and intending to be legally bound, the parties agree as follows:

1.Functions.

(a)The Company hereby appoints Robbins to continue to serve, and Robbins hereby accepts such appointment to continue to serve, as Chairman of the Board.  As Chairman, Robbins shall have such powers and perform such duties as are contemplated by the Amended and Restated Bylaws of the Company and as may be delegated to Robbins by the Board.

(b)Robbins shall also serve as a director member of the Office of the Chairman and in that regard shall, without limitation, perform the following, as may be reasonably requested by the Company:

(i)Providing for the establishment, management and oversight of specific goals related to the CEO’s accountabilities in mentoring and training identified succession candidate(s).

(ii)Coordinating by working with the CEO, the development of a detailed Management Development Plan for the identified succession candidate(s).

(iii)Meeting with the incumbent CEO and succession candidate(s) quarterly to monitor and discuss progress on established objectives (for both the incumbent CEO and succession candidate(s)).

(iv)Providing on-going mentoring of succession candidate(s) and monitoring of development progress through the indicated transition period.

(v)Providing on-going consultation, advice and mentoring to Alliance Executive Management following transition as reasonable and appropriate.

(c)In serving as Chairman and undertaking such functions (collectively, the “Functions”), Robbins shall devote such time and attention as is reasonable and appropriate to perform such functions hereunder.

2.Term and Termination.

(a)Term.   The term of this Agreement shall be for a period of three and one-half (3.5) years commencing on July 1, 2004 and terminating on December 31, 2007 (the “Term”), unless earlier terminated as provided herein.

(b)Termination.  This Agreement may be terminated prior to expiration of the Term as follows:

(i)By Robbins.  If Robbins voluntarily resigns from the Board, or otherwise provides the Company with written notice of his voluntary termination of this Agreement prior to the expiration of the Term, this Agreement shall terminate as of the date of such resignation or termination, and the Company shall have no further obligations to Robbins or his heirs or estate under this Agreement.

(ii)By the Board.  [a] If the Board requests in writing that Robbins resign from the Board, or Robbins is not re-nominated or having been renominated is not re-elected to serve on the Board, or otherwise provides Robbins with written notice of termination of this Agreement, other than for Cause (as herein defined) prior to the expiration of the Term, this Agreement shall terminate as of the date of the Board’s request or notice.  In such circumstances, the Company shall pay Robbins the remainder, if any, of the fees due under Sections 3(a) and 3(b) of this Agreement for the remainder of the Term, to be paid in accordance with the payment provisions set forth in Section 3(c) hereof, and the options referred to in Section 3(b) shall be fully vested and exercisable.  [b] For purposes of this Agreement, “Cause” shall mean (i) Robbins’ willful and continual failure to substantially perform his duties with the Company (other than a failure resulting from Robbins’ becoming Disabled) and such failure continues for a period of thirty (30) days after Robbins’ receipt of written notice from the Company providing a reasonable description of the basis for the determination that Robbins has failed to perform his duties; (ii) Robbins’ conviction of a felony other than a conviction not disclosable under the federal securities laws; (iii) Robbins’ breach of this Agreement in any material respect and such breach is not susceptible to remedy or cure or has already materially damaged the Company, or such breach is susceptible to remedy or cure and no such damage has occurred and such breach is not cured or remedied reasonably promptly after Robbins’ receipt of written notice from the Company providing a reasonable description of

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the breach; (iv) Robbins’ failure to qualify (or having so qualified being thereafter disqualified) under a suitability or licensing requirement of any jurisdiction or regulatory authority that is material to the Company and to which Robbins may be subject by reason of his position with the Company and its affiliates or subsidiaries; (v) the Company’s having obtained from any source information with respect to Robbins or this Agreement that could reasonably be expected, in the reasonable written opinion of both the Company and its outside counsel, to jeopardize the gaming licenses, permits, or status of the Company or any of its subsidiaries or affiliates with any gaming commission, board, or similar regulatory or law enforcement authority; or (vi) conduct to the material detriment of the Company that is dishonest, fraudulent, unlawful or grossly negligent or which is not in compliance with the Company’s Code of Conduct or similar applicable set of standards or conduct and business practices set forth in writing and provided to Robbins prior to such conduct and which has a material detriment to the Company and is not susceptible to remedy or cure by Robbins.

(c)By Death or Disability.  If Robbins dies before the expiration of the Term, this Agreement shall terminate on the date of his death.  If Robbins becomes disabled or incapacitated (“Disabled”) for any period of six (6) or more consecutive months or for a noncontinuous period aggregating to twenty-six weeks in any twelve month period as a result of illness or incapacity before the expiration of the Term, the Board shall have the right to terminate this Agreement upon written notice to Robbins.  In the event Robbins dies or becomes Disabled, and the Board terminates the Agreement, the Company shall have no further obligations to Robbins or his heirs or estate under this Agreement.

3.Compensation.

(a)As compensation for his services as Chairman of the Board hereunder, the Company shall pay Robbins $235,000 per year.  Robbins shall not be entitled to receive any other cash fees or compensation for service on the Board during the Term; provided, however, that this Section 3(a) is not intended to limit or restrict the Company from providing equity incentive awards to Robbins in accordance with it stock incentive plans or otherwise and Robbins shall be granted options/equity compensation in accordance with regular grants applicable to non-employee Board members.

(b)As compensation for his role as a director member of the Office of the Chairman hereunder, the Company shall pay Robbins $90,000 per year.

(c)The Company hereby grants to Robbins stock options to purchase 39,000 shares of the Company’s Common Stock with an exercise price of $17.16 and an exercise period of ten years.  The options shall vest in equal increments on the first, second and third anniversary dates of this Agreement.

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(d)The Company shall pay the fees and compensation contemplated in Section 3(a) and Section 3(b) in 12 monthly installments per year.  Each installment shall be due and paid in arrears by the first day of each month beginning August 1, 2004.

4.Business Expenses.  The Company shall reimburse Robbins for all reasonable and necessary out-of-pocket expenses incurred or paid by Robbins in connection with, or related to, the performance of Functions under this Agreement.  Robbins shall submit to the Company periodic itemized statements, in a form satisfactory to the Company, of such expenses as incurred.  The Company shall pay to Robbins amounts shown on each statement in accordance with its regular procedures, but in any event, within thirty (30) days after receipt thereof.  Notwithstanding the foregoing, Robbins shall not incur total expenses in excess of $5,000.00 per month without the prior written approval of the Company.

5.Independent Contractor.  The parties acknowledge and confirm that Robbins in his capacity as a chairman and a director shall, for tax purposes, be treated as an independent contractor to the Company and, as such, shall be responsible for the payment of all taxes including, but not limited to, social security and income tax relating to the compensation paid to Robbins pursuant to the terms of this Agreement.  Nothing herein contained shall be construed or deemed by the parties hereto as creating or having created any relationship of employer and employee, principal and agent or partnership or joint venture between Robbins and the Company.

6.Confidential Information.  Robbins recognizes and acknowledges that he has had, and will have, during the Term, access to certain Confidential Information (as defined below) of the Company and that such information constitutes valuable, special and unique property of the Company.  Robbins agrees that he will not, during or after the Term, disclose any of such Confidential Information to any person or entity without the consent of the Company, except as necessary or appropriate in the ordinary course of performing the Functions hereunder or as required by law, rule or regulation.

(a)“Confidential Information” shall mean information that is not generally known to the public, which is used, developed or obtained by the Company and/or any of its affiliates, relating to its or their business and the businesses of its or their clients, vendors or customers including, but not limited to:  business and marketing strategies, products or services; fees, costs and pricing structure; marketing information; advertising and pricing strategies; analyses; reports; computer software, including operating systems, applications and program listings; flow charts; manuals and documentation; data bases; accounting and business methods; hardware design; technology, inventions and new development and methods, whether patentable or unpatentable and whether or not reduced to practice; all copyrightable works; the Company’s or any of its affiliates’ existing and prospective clients, customers, and vendor lists and other data related thereto; all trade secret information protected by the federal Economic Espionage Act of 1996, 18 U.S.C. § 1831 et seq.; and all similar and related information in whatever form.

(b)“Confidential Information” shall not include any information that has been published in a form generally available to the public prior to the date upon which Robbins proposes to disclose such information.  Information shall not be deemed to have been published

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merely because individual portions of the information have been separately published, but only if all the material features comprising such information have been published in combination.

7.Covenant Not to Compete.  During his engagement under this Agreement, and in the event of Robbins termination pursuant to paragraph 2(b)(ii) hereof, during the period the Company is obligated to pay Robbins the remainder of his fees due under Sections 3(a) and 3(b) of this Agreement, Robbins shall not become employed by, act as a consultant for, contract with, obtain a beneficial ownership interest in or otherwise enter into any form of business relationship with International Game Technology, Inc., WMS Industries, Inc., Shuffle Master, Inc., Aristocrat Leisure, Ltd., Gtech Holdings Corp., Multimedia Games, Inc., Sigma Game Inc., or any of their present and future subsidiaries, divisions, parent companies and successors (“Peer Group”).  The provisions of this Section 7 shall not prevent Robbins from investing his assets in such form and manner as he chooses; provided, however, that Robbins shall not have any personal interest, direct or indirect (other than through the Company or its subsidiaries), financial or otherwise, in any member of the Peer Group unless such interest has been approved by the Compensation Committee or such interest is, or arises solely from ownership of, less than three percent (3%) of the outstanding capital stock of such member and such capital stock is available to the general public through trading on any national, regional or over-the-counter securities market.

8.Notices.  All notices, requests and other communications hereunder shall be in writing.  Any notice, request or other communication hereunder shall be deemed duly given if it is sent by facsimile, with confirmation received, by hand delivery, by overnight delivery service or by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

(a)If to the Company:

Alliance Gaming Corporation
6601 South Bermuda Road
Las Vegas, Nevada 89119
Attention:  Chief Executive Officer
Copy to:  General Counsel
Facsimile:  (702) 270-7699

(b)If to Robbins:

David Robbins
c/o Reitler Brown & Rosenblatt LLC
800 Third Avenue, 21st Floor
New York, New York 10022
Facsimile:  (212) 371-5500

9.Entire Agreement.  This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.

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10.Amendment.  This Agreement may be amended or modified only by a written instrument executed by both the Company and Robbins.

11.Successors and Assigns.  This Agreement is personal to Robbins and may not be transferred or assigned by him.  Neither this Agreement nor any right or interest under it shall be assignable by the Company without the prior written consent of Robbins; provided, however, that the Company shall be obligated to cause the assignment of this Agreement pursuant to a Change of Control, as set forth in Section 12 below.  This Agreement shall be binding upon and inure to the benefit of the heirs, estate, successors and permitted assigns of each party.

12.Change of Control.  Upon a Change of Control of the Company (as defined below), the Company shall be obligated to cause any surviving or successor entity to assume, be responsible for and honor Sections 2(b)(ii), 3(a) and 3(b) of this Agreement.  For purposes of this Agreement, a “Change of Control” means (a) the acquisition, directly or indirectly, by any unaffiliated person, entity or group (a “Third Party”) of beneficial ownership of 50% or greater of the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; or (b) consummation of (i) a reorganization, merger or consolidation of the Company, or (ii) a liquidation or dissolution of the Company or (iii) a sale of all or substantially all of the assets of the Company (whether such assets are held directly or indirectly) to a Third Party; or (c) the individuals who as of the date of this Agreement are members of the Board of Directors (together with any directors elected or nominated by a majority of such individuals) cease for any reason to constitute at least a majority of the members of the Board of Directors; except that any event or transaction which would be a “Change of Control” under clause (a) or b)(i) or (iii) of this definition, shall not be a change of control if persons who were the equity holders of the Company immediately prior to such event or transaction (other than the acquiror in the case of a reorganization, merger or consolidation), immediately thereafter, beneficially own more than 50% of the combined voting power of the Company’s or the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors.

13.Other Activities.  The Company explicitly acknowledges and agrees that during the Term, Robbins will also be engaged in a variety of other substantial business activities that do not relate to the business of the Company.

14.Waiver.  Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions as to any future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement.

15.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 provision shall, to the full extent consistent with applicable law, continue in full force and effect, irrespective of such invalid or unenforceable provision.

16.Governing Law.  This Agreement shall be construed, interpreted and enforced in accordance with the laws of Nevada, without regard to principles of conflicts of law.

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17.Counterparts.  This Agreement may be executed in counterparts, each of which when so executed and delivered shall be an original and all of which taken together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first set forth above.

ALLIANCE GAMING CORPORATION
By:
	Name:
	Title:
DAVID ROBBINS

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EX-10.4

Exhibit 10.4

AGREEMENT

This Agreement (this “Agreement”) is dated as of July 1, 2004, and is between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and Joel Kirschbaum, an individual (“Kirschbaum”).

BACKGROUND

Kirschbaum is currently a member of the Board of Directors of the Company (the “Board”).  The Company and industry are currently experiencing a period of rapid growth in an increasingly complex multi-jurisdictional gaming industry which is dynamic and challenging.  Contemporaneously, the Company is preparing for a transition in management and is engaging in a program of succession planning.  To address, among others, these issues, the Company has created an Office of the Chairman and would like to secure the services of Kirschbaum as a member of the Office of the Chairman during this period.  Kirschbaum is willing to serve in such capacities and provide such services pursuant to the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and promises set forth in this Agreement, and intending to be legally bound, the parties agree as follows:

1.Services.

(a)The Company hereby appoints Kirschbaum to serve, and Kirschbaum hereby accepts such appointment to serve, as a member of the Office of the Chairman.  As a member of the Office of the Chairman, Kirschbaum shall have such powers and perform such duties as are contemplated by the Amended and Restated Bylaws of the Company and as may be delegated to Kirschbaum by the Board.

(b)In serving as a member of the Office of the Chairman, Kirschbaum shall devote such time and attention as is reasonable and appropriate to perform his services hereunder.

2.Term and Termination.

(a)Term.  The term of this Agreement shall be for a period of three and one-half (3.5) years commencing on July 1, 2004 and terminating on December 31, 2007  (the “Term”), unless earlier terminated as provided herein.

(b)Termination.  This Agreement may be terminated prior to expiration of the Term as follows:

(i)By Kirschbaum.  If Kirschbaum voluntarily resigns from the Board, or otherwise provides the Company with written notice of his voluntary termination of this Agreement prior to the expiration of the Term, this Agreement shall terminate as of the date of such resignation or termination, and the Company shall have no further obligations to Kirschbaum or his heirs or estate under this Agreement.

(ii)By the Company.  [a]  If the Board requests in writing that Kirschbaum resign from the Board, or Kirschbaum is not re-nominated or having been re-nominated is not re-elected to serve on the Board, or otherwise provides Kirschbaum with written notice of termination of this Agreement, other than for Cause (as herein defined) prior to the expiration of the Term, this Agreement shall terminate as of the date of the Board’s request or notice.  In such circumstances, the Company shall pay Kirschbaum the remainder, if any, of the fees for his serving as a member of the Office of the Chairman due under Section 3(a) of this Agreement for the remainder of the Term, to be paid in accordance with the payment provisions set forth in Section 3(b) hereof and the options referred to in Section 3(a) shall be fully vested and exercisable.  [b]  For purposes of this Agreement, “Cause” shall mean (i) Kirschbaum’s willful and continual failure to substantially perform his duties with the Company (other than a failure resulting from Kirschbaum becoming Disabled) and such failure continues for a period of thirty (30) days after Kirschbaum’s receipt of written notice from the Company providing a reasonable description of the basis for the determination that Kirschbaum has failed to perform his duties; (ii) Kirschbaum’s conviction of a felony other than a conviction not disclosable under the federal securities laws; (iii) Kirschbaum’s breach of this Agreement in any material respect and such breach is not susceptible to remedy or cure or has already materially damaged the Company, or such breach is susceptible to remedy or cure and no such damage has occurred and such breach is not cured or remedied reasonably promptly after Kirschbaum’s receipt of written notice from the Company providing a reasonable description of the breach; (iv) Kirschbaum’s failure to qualify (or having so qualified being thereafter disqualified) under a suitability or licensing requirement of any jurisdiction or regulatory authority that is material to the Company and to which Kirschbaum may be subject by reason of his position with the Company and its affiliates or subsidiaries; (v) the Company’s having obtained from any source information with respect to Kirschbaum or this Agreement that could reasonably be expected, in the reasonable written opinion of both the Company and its outside counsel, to jeopardize the gaming licenses, permits, or status of the Company or any of its subsidiaries or affiliates with any gaming commission, board, or similar regulatory or law enforcement authority; or (vi) conduct to the material detriment of the Company that is dishonest, fraudulent, unlawful or grossly negligent or which is not in compliance with the Company’s Code of Conduct or similar applicable set of standards or conduct and business practices set forth in writing and provided to Kirschbaum prior to such conduct and which has a material detriment to the Company and is not susceptible to remedy or cure by Kirschbaum.

(c)By Death or Disability.  If Kirschbaum dies before the expiration of the Term, this Agreement shall terminate on the date of his death.  If Kirschbaum becomes disabled or incapacitated (“Disabled”) for any period of six (6) or more consecutive months or for a non-

continuous period aggregating to twenty-six weeks in any twelve month period as a result of illness or incapacity before the expiration of the Term, the Board shall have the right to terminate this Agreement upon written notice to Kirschbaum.  In the event Kirschbaum dies or becomes Disabled, and the Board terminates the Agreement, the Company shall have no further obligations to Kirschbaum or his heirs or estate under this Agreement.

3.Compensation.

(a)Cash and Options.  As compensation for his services as a member of the Office of the Chairman hereunder, the Company shall: (i) pay Kirschbaum $100,000 per year; and (ii) grant to Kirschbaum stock options to purchase 39,000 shares of the Company’s Common Stock with an exercise price of $17.16 and an exercise period of 10 years.  The options shall vest in equal increments on the first, second and third anniversary dates of this Agreement.  Kirschbaum shall not be entitled to receive any other cash fees or compensation for service on the Board during the Term; provided, however, that this Section 3(a)is not intended to limit or restrict the Company from providing equity incentive awards to Kirschbaum in accordance with it stock incentive plans or otherwise and Kirschbaum shall be granted options/equity compensation in accordance with regular grants applicable to non-employee Board members.

(b)Payment of Fees.  The Company shall pay the fees and compensation contemplated in Section 3(a) in 12 monthly installments per year.  Each installment shall be due and paid in arrears by the first day of each month beginning August 1, 2004.

4.Business Expenses.  The Company shall reimburse Kirschbaum for all reasonable and necessary out-of-pocket expenses incurred or paid by Kirschbaum in connection with, or related to, the performance of his service under this Agreement.  Kirschbaum shall submit to the Company periodic itemized statements, in a form satisfactory to the Company, of such expenses as incurred.  The Company shall pay to Kirschbaum amounts shown on each statement in accordance with its regular procedures, but in any event within thirty (30) days after receipt thereof.  Notwithstanding the foregoing, Kirschbaum shall not incur total expenses in excess of $5,000.00 per month without the prior written approval of the Company.

5.Independent Contractor.  The parties acknowledge and confirm that Kirschbaum is an independent contractor to the Company and, as such, shall be responsible for the payment of all taxes including, but not limited to, social security and income tax relating to the compensation paid to Kirschbaum pursuant to the terms of this Agreement.  Nothing herein contained shall be construed or deemed by the parties hereto as creating or having created any relationship of employer and employee, principal and agent or partnership or joint venture between Kirschbaum and the Company.

6.Confidential Information.  Kirschbaum recognizes and acknowledges that he has had, and will have, during the Term, access to certain Confidential Information (as defined below) of the Company and that such information constitutes valuable, special and unique property of the Company.  Kirschbaum agrees that he will not, during or after the Term, disclose any of such Confidential Information to any person or entity without the consent of the Company, except as necessary or appropriate in the ordinary course of performing the Services hereunder or as required by law, rule or regulation.

(a)  “Confidential Information” shall mean information that is not generally known to the public, which is used, developed or obtained by the Company and/or any of its affiliates, relating to its or their business and the businesses of its or their clients, vendors or customers including, but not limited to: business and marketing strategies, products or services; fees, costs and pricing structure; marketing information; advertising and pricing strategies; analyses; reports; computer software, including operating systems, applications and program listings; flow charts; manuals and documentation; data bases; accounting and business methods; hardware design; technology, inventions and new development and methods, whether patentable or unpatentable and whether or not reduced to practice; all copyrightable works; the Company’s or any of its affiliates’ existing and prospective clients, customers, and vendor lists and other data related thereto; all trade secret information protected by the federal Economic Espionage Act of 1996, 18 U.S.C. § 1831 et seq.; and all similar and related information in whatever form.

(b)  “Confidential Information” shall not include any information that has been published in a form generally available to the public prior to the date upon which Kirschbaum proposes to disclose such information.  Information shall not be deemed to have been published merely because individual portions of the information have been separately published, but only if all the material features comprising such information have been published in combination.

7.Covenant Not to Compete.  During his engagement under this Agreement, and in the event of Kirschbaum’s termination pursuant to paragraph 2(b)(ii) hereof, during the period the Company is obligated to pay Kirschbaum the remainder of his fees due under Section 3(a) of this Agreement, Kirschbaum shall not become employed by, act as a consultant for, contract with, obtain a beneficial ownership interest in or otherwise enter into any form of business relationship with International Game Technology, Inc., WMS Industries, Inc., Shuffle Master, Inc., Aristocrat Leisure, Ltd., Gtech Holdings Corp., Multimedia Games, Inc., Sigma Game Inc., or any of their present and future subsidiaries, divisions, parent companies and successors (“Peer Group”).  The provisions of this Section 7 shall not prevent Kirschbaum from investing his assets in such form and manner as he chooses; provided, however, that Kirschbaum shall not have any personal interest, direct or indirect (other than through the Company or its subsidiaries), financial or otherwise, in any member of the Peer Group unless such interest has been approved by the Compensation Committee or such interest is, or arises solely from ownership of, less than three percent (3%) of the outstanding capital stock of such member and such capital stock is available to the general public through trading on any national, regional or over-the-counter securities market.

8.Notices.  All notices, requests and other communications hereunder shall be in writing.  Any notice, request or other communication hereunder shall be deemed duly given if it is sent by facsimile, with confirmation received, by hand delivery, by overnight delivery service

or by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

(a)If to the Company:

Alliance Gaming Corporation

6601 South Bermuda Road

Las Vegas, Nevada  89119

Attention:  Chief Executive Officer

Copy to:  General Counsel
Facsimile:  (702) 270-7699

(b)If to Kirschbaum:

Joel Kirschbaum

527 Madison Avenue, 17th Floor
New York, New York  10022

Facsimile:  (212) 888-1253

9.Entire Agreement.  This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement.

10.Amendment.  This Agreement may be amended or modified only by a written instrument executed by both the Company and Kirschbaum.

11.Successors and Assigns.  This Agreement is personal to Kirschbaum and may not be transferred or assigned by him.  Neither this Agreement nor any right or interest under it shall be assignable by the Company without the prior written consent of Kirschbaum; provided, however, that the Company shall be obligated to cause the assignment of this Agreement pursuant to a Change of Control, as set forth in Section 12 below.  This Agreement shall be binding upon and inure to the benefit of the heirs, estate, successors and permitted assigns of each party.

12.Change of Control.  Upon a Change of Control of the Company (as defined below), the Company shall be obligated to cause any surviving or successor entity to assume, be responsible for and honor Sections 2(b)(ii) and 3(a) of this Agreement.  For purposes of this Agreement, a “Change of Control” means (a) the acquisition, directly or indirectly, by any unaffiliated person, entity or group (a “Third Party”) of beneficial ownership of 50% or greater of the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; or (b) consummation of (i) a reorganization, merger or consolidation of the Company, or (ii) a liquidation or dissolution of the Company or (iii) a sale of all or substantially all of the assets of the Company (whether such assets are held directly or indirectly) to a Third Party; or (c) the individuals who as of the date of this Agreement are members of the Board of Directors (together with any directors elected or nominated by a majority of such individuals) cease for any reason to constitute at least a majority of the members of the Board of Directors; except that any event or transaction which would be a “Change of

Control” under clause (a) or (b)(i) or (iii) of this definition, shall not be a change of control if persons who were the equity holders of the Company immediately prior to such event or transaction (other than the acquiror in the case of a reorganization, merger or consolidation), immediately thereafter, beneficially own more than 50% of the combined voting power of the Company’s or the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors.

13.Other Activities.  The Company explicitly acknowledges and agrees that during the Term, Kirschbaum will also be engaged in a variety of other substantial business activities that do not relate to the business of the Company.

14.Waiver.  Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions as to any future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement.

15.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 provision shall, to the full extent consistent with applicable law, continue in full force and effect, irrespective of such invalid or unenforceable provision.

16.Governing Law.  This Agreement shall be construed, interpreted and enforced in accordance with the laws of Nevada, without regard to principles of conflicts of law.

17.Counterparts.  This Agreement may be executed in counterparts, each of which when so executed and delivered shall be an original and all of which taken together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first set forth above.

ALLIANCE GAMING CORPORATION
By:
	Name:
	Title:
JOEL KIRSCHBAUM

EX-10.5

Exhibit 10.5

ADVISORY SERVICES AGREEMENT

This Advisory Services Agreement (this “Agreement”), dated as of July 1, 2004, is by and between Alliance Gaming Corporation, a Nevada corporation (the “Company”), and Kirkland Investment Corporation, a Delaware corporation (“Kirkland”).

BACKGROUND

The Company and Kirkland are parties to a letter agreement, dated July 1, 1997, as amended by an amendment thereto dated July 31, 1997 and an amendment thereto dated January 4, 2000 (as amended, the “Letter Agreement”), pursuant to which Kirkland has provided certain financial advisory services and related support services to the Company.  Joel Kirschbaum (“Kirschbaum”) owns 100% of the stock of Kirkland.  In addition, Kirschbaum is currently an employee and a director of the Company, and has an employment agreement with the Company.  The Letter Agreement and Kirschbaum’s employment agreement with the Company expire on June 30, 2004.

The Company is currently experiencing a period of rapid growth in an increasingly complex multi-jurisdictional gaming industry which is dynamic and challenging.  In recognition of the industry experience and experience with the Company possessed by Kirkland, the Company desires to engage the services of Kirkland and Kirkland is willing to provide the requested Services (as defined herein) pursuant to the terms and conditions of this Agreement.  .

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and intending to be legally bound, the parties agree as follows:

1.Services. 

(a)During the term of this Agreement, as set forth in Section 3 hereof (the “Term”), Kirkland shall provide the Company with such advisory and related services as the Company may reasonably request from time to time which shall include, but not be limited to, (the “Services”):

(i)Providing analysis and advice relating to (a) out-of-the ordinary transactions, including, but not limited to, merger and acquisition transactions, which is contemplated to include the type of research and analysis that is customarily undertaken, on a summary or preliminary basis, by third-party investment banking firms, and (b) capital structure, financing and refinancing transactions, application of excess cash flow and working capital balances and similar matters.  Such advice is anticipated to include reasoned, informed and detailed opinions and analysis, but is not contemplated to include the level of comprehensive financial advisory work that would be undertaken by an investment banking firm for significant transactions in the absence of a specific engagement;

(ii)Providing analysis, advice and suggestions to senior management and the Alliance Gaming Board about industry trends and business opportunities, including but not limited to joint ventures, intellectual property and other licensing, investments, financing commitments (e.g., funding Indian gaming ventures) and other strategic transactions,

including review of terms and conditions, comparison to other similar transactions and recommendations as to suggested courses of action;

(iii)Maintaining on-going general and specific industry experience and expertise, consistent with the level currently provided, as a resource for both the Alliance Gaming Board and senior management with particular emphasis on the application of this expertise to actionable recommendations related to business strategy and development of strategic alternatives;

(iv)Providing the services summarized in paragraph 1(a)(i) through 1(a)(iii) above on a proactive, on-going basis.  Kirkland will also provide financial and business advisory services and related services as the Alliance Gaming Board and senior management may reasonably request from time to time.

(b)The Company, in its sole discretion, may request Kirkland to work on a strategic financing and/or M&A transaction with compensation as currently established and approved by the Board of Directors on April 22, 2003.

2.Compensation.

(a)Annual Fee.  As compensation for the provision of the Services provided pursuant to this Agreement, the Company shall pay to Kirkland an annual fee of $600,000, to be paid in 12 monthly installments per year.  Each installment shall be due and paid in advance by the first day of each month beginning July 1, 2004.

(b)Business Expenses.  The Company shall reimburse Kirkland for all reasonable and necessary out-of-pocket expenses incurred or paid by Kirkland and its officers and employees which relate directly to the provision of Services under this Agreement; provided, however, that any single expense item in excess of $5,000 must be approved in advance by the Chief Executive Officer or the Chief Financial Officer of the Company, which approval shall not be unreasonably withheld or delayed.  Kirkland shall provide appropriate supporting documentation for such expenses.  The Company shall pay Kirkland for such expenses within thirty (30) days after receipt of an invoice for such reimbursement.

3.Term and Termination.

(a)Term.  The Term of this Agreement shall be for a period of three and one-half (3.5) years, commencing on July 1, 2004 and terminating on December 31, 2007 (the “Term”), unless earlier terminated as provided herein.

(b)Termination.  This Agreement may be terminated prior to expiration of the Term as follows:

(i)By Kirkland.  If Kirschbaum voluntarily resigns from the Board, or otherwise provides the Company with written notice of his voluntary termination of this Agreement prior to the expiration of the Term, this Agreement shall terminate as of the date of such resignation or termination, and the Company shall have no further obligations to

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Kirkland or Kirschbaum or his heirs or estates or its successors and assigns under this Agreement.

(ii)By the Company.  [a]  If the Board requests in writing that Kirschbaum resign from the Board, or Kirschbaum is not re-nominated or having been nominated is not re-elected to serve on the Board, or otherwise provides Kirschbaum with written notice of termination of this Agreement, other than for Cause (as herein defined) prior to the expiration of the Term, this Agreement shall terminate as of the date of the Board’s request or notice.  In such circumstances, the Company shall pay Kirkland the remainder, if any, of the fees due under Section 2(a) of this Agreement for the remainder of the Term, to be paid in accordance with the payment provisions set forth in such section.  [b]  For purposes of this Agreement, “Cause” shall mean (i) Kirkland’s or Kirschbaum’s willful and continual failure to substantially perform its or his duties with the Company (other than a failure resulting from Kirschbaum’s becoming Disabled) and such failure continues for a period of thirty (30) days after its receipt of written notice from the Company providing a reasonable description of the basis for the determination that Kirkland has failed to perform its duties; (ii) Kirkland’s or Kirschbaum’s conviction of a felony other than a conviction not disclosable under the federal securities laws; (iii) Kirkland’s or Kirschbaum’s breach of this Agreement in any material respect and such breach is not susceptible to remedy or cure or has already materially damaged the Company, or such breach is susceptible to remedy or cure and no such damage has occurred and such breach is not cured or remedied reasonably promptly after Kirkland’s or Kirschbaum’s receipt of written notice from the Company providing a reasonable description of the breach; (iv) Kirkland’s or Kirschbaum’s failure to qualify (or having so qualified being thereafter disqualified) under a suitability or licensing requirement of any jurisdiction or regulatory authority that is material to the Company and to which Kirkland or Kirschbaum may be subject by reason of its or his position with the Company and its affiliates or subsidiaries; (v) the Company’s having obtained from any source information with respect to Kirkland or Kirschbaum or this Agreement that could reasonably be expected, in the reasonable written opinion of both the Company and its outside counsel, to jeopardize the gaming licenses, permits, or status of the Company or any of its subsidiaries or affiliates with any gaming commission, board, or similar regulatory or law enforcement authority; or (vi) conduct to the material detriment of the Company that is dishonest, fraudulent, unlawful or grossly negligent or which is not in compliance with the Company’s Code of Conduct or similar applicable set of standards or conduct and business practices set forth in writing and provided to Kirkland or Kirschbaum prior to such conduct and which has a material detriment to the Company and is not susceptible to remedy or cure by Kirkland or Kirschbaum, as the case may be.

(c)By Death or Disability.  If Kirschbaum dies before the expiration of the Term, this Agreement shall terminate on the date of his death.  If Kirschbaum becomes disabled or incapacitated (“Disabled”) for any period of six (6) or more consecutive months or for a non-continuous period aggregating to 26 weeks in any twelve month period as a result of illness or incapacity before the expiration of the Term, the Company shall have the right to terminate this Agreement upon written notice to Kirschbaum.  In the event Kirschbaum dies or becomes Disabled, and the Company terminates the Agreement, the Company shall have no further obligations to Kirkland or Kirschbaum or its or his heirs, estate, successors or assigns under this Agreement.

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(d)In the event that this Agreement is terminated and Kirschbaum remains on the Board, he shall be entitled to secure compensation on the same basis as other non-management directors.

4.Other Activities.  The Company explicitly acknowledges and agrees that, during the Term,  Kirkland and its officers and employees, including Kirschbaum, will also be engaged in a variety of other substantial business activities that do not relate to the business of the Company.

5.Successors and Assigns.  Neither this Agreement nor any right or interest under it shall be assignable by either of Kirkland or the Company without the prior written consent of the other; provided, however, that Kirkland may assign its rights and interests hereunder to its parent or any subsidiary entity without such prior written consent from the Company; and provided, further, that the Company shall be obligated to cause the assignment of this Agreement pursuant to a Change of Control, as set forth in Section 6 below.  This Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of each party.

6.Change of Control.  Upon a Change of Control of the Company (as defined below), the Company shall be obligated to cause any surviving or successor entity to assume, be responsible for and honor Sections 2 and 3(b)(ii) of this Agreement.  For purposes of this Agreement, a “Change of Control” means (a) the acquisition, directly or indirectly, by any unaffiliated person, entity or group (a “Third Party”) of beneficial ownership of 50% or greater of the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; or (b) consummation of (i) a reorganization, merger or consolidation of the Company, or (ii) a liquidation or dissolution of the Company or (iii) a sale of all or substantially all of the assets of the Company (whether such assets are held directly or indirectly) to a Third Party; or (c) the individuals who as of the date of this Agreement are members of the Board of Directors (together with any directors elected or nominated by a majority of such individuals) cease for any reason to constitute at least a majority of the members of the Board of Directors; except that any event or transaction which would be a “Change of Control” under clause (a) or (b)(i) or (iii) of this definition, shall not be a change of control if persons who were the equity holders of the Company immediately prior to such event or transaction (other than the acquiror in the case of a reorganization, merger or consolidation), immediately thereafter, beneficially own more than 50% of the combined voting power of the Company’s or the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors.

7.Confidential Information.  Kirkland recognizes and acknowledges that it has had, and will have, during the Term, access to certain Confidential Information (as defined below) of the Company and that such information constitutes valuable, special and unique property of the Company.  Kirkland agrees that it will not, during or after the Term, disclose any of such Confidential Information to any person or entity without the prior written consent of the Company, except as necessary in the ordinary course of performing the Services hereunder or as required by law, rule or regulation.

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(a)“Confidential Information” shall mean information that is not generally known to the public, which is used, developed or obtained by the Company and/or any of its affiliates, relating to its or their business and the businesses of its or their clients, vendors or customers including, but not limited to: business and marketing strategies, products or services; fees, costs and pricing structure; marketing information; advertising and pricing strategies; analyses; reports; computer software, including operating systems, applications and program listings; flow charts; manuals and documentation; data bases; accounting and business methods; hardware design; technology, inventions and new development and methods, whether patentable or unpatentable and whether or not reduced to practice; all copyrightable works; the Company’s or any of its affiliates’ existing and prospective clients, customers, and vendor lists and other data related thereto; all trade secret information protected by the federal Economic Espionage Act of 1996, 18 U.S.C. § 1831 et seq.; and all similar and related information in whatever form.

(b)“Confidential Information” shall not include any information that has been published in a form generally available to the public prior to the date upon which Kirkland proposes to disclose such information.  Information shall not be deemed to have been published merely because individual portions of the information have been separately published, but only if all the material features comprising such information have been published in combination.

8.Covenant Not to Compete.  During Kirkland’s engagement under this Agreement, and in the event of Kirkland’s termination pursuant to paragraph 3(b)(ii) hereof, during the period the Company is obligated to pay Kirkland the remainder of its fees due under Section 2(a) of this Agreement, Kirkland shall not become employed by, act as a consultant for, contract with, obtain a beneficial ownership interest in or otherwise enter into any form of business relationship with International Game Technology, Inc., WMS Industries, Inc., Shuffle Master, Inc., Aristocrat Leisure, Ltd., Gtech Holdings Corp., Multimedia Games, Inc., Sigma Game Inc., or any of their present and future subsidiaries, divisions, parent companies and successors (“Peer Group”).  The provisions of this Section 8 shall not prevent Kirkland from investing its assets in such form and manner as it chooses; provided, however, that Kirkland shall not have any interest, direct or indirect (other than through the Company or its subsidiaries), financial or otherwise, in any member of the Peer Group unless such interest has been approved by the Compensation Committee or such interest is, or arises solely from ownership of, less than three percent (3%) of the outstanding capital stock of such member and such capital stock is available to the general public through trading on any national, regional or over-the-counter securities market..

9.Notices.  Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered, if sent by facsimile, with confirmation received, or by hand delivery, (b) one business day after

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sending, if sent by a national overnight delivery service, such as Fed Ex, or (c) three business days after being mailed, if sent by United States certified or registered mail, return receipt requested and postage prepaid to the addresses set forth below:

If to the Company:	If to Kirkland:
Alliance Gaming Corporation	Kirkland Investment Corporation
6601 South Bermuda Road	527 Madison Avenue, 17th Floor
Las Vegas, Nevada 89119	New York, New York 10022
Attention:  Chief Executive Officer	Attention:
(copy to)    General Counsel
Facsimile:  (702) 270-7699	Facsimile:  (212) 888-1253

10.Entire Agreement.  This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, including, without limitation, the Letter Agreement, whether written or oral, relating to the relationship between the Company and Kirkland.

11.Modification.  This Agreement may not be modified or amended except by an instrument in writing signed by Kirkland and the Company.

12.Waiver.  Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions as to any future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement.

13.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 provision shall, to the full extent consistent with applicable law, continue in full force and effect, irrespective of such invalid or unenforceable provision.

14.Successors and Assigns.  This Agreement is personal to Kirkland and may not be transferred or assigned by Kirkland.  Neither this Agreement nor any interest under it shall be assigned by the Company without the prior written consent of Kirkland; provided, however, that the Company shall be obligated to cause the assignment of this Agreement pursuant to a Change of Control, as set forth in Section 6 hereof.  This Agreement shall be binding upon and inure to the benefit of the heirs, estate, successors and permitted assigns of each party.

15.Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to principles of conflicts of law.

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16.Counterparts.  This Agreement may be executed in counterparts, each of which when so executed and delivered shall be an original and all of which taken together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written.

ALLIANCE GAMING CORPORATION
By:
	Name:
	Title:
KIRKLAND INVESTMENT CORPORATION
By:
	Name:
	Title:
FOR PURPOSES OF SECTIONS 3 AND 4 HEREOF:
JOEL KIRSCHBAUM

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Investor and Media Contact: Robert L. Saxton

Alliance Gaming

(702) 270-7600

ALLIANCE GAMING PROVIDES UPDATES ON
THE DIVESTITURE OF ITS NEVADA AND
LOUISIANA ROUTE OPERATIONS

LAS VEGAS, July 1, 2004 — Alliance Gaming Corp. (NYSE: AGI) provided an update today on the planned divestitures of its Nevada route company, United Coin Machine Company (UCMC), and its Louisiana route company, Video Services, Inc. (VSI).

United Coin

Alliance Gaming announced that it has completed its sale of its 100 percent interest in UCMC to Montana-based Century Gaming on June 30, 2004.  Under the terms of the amended sale agreement, Alliance Gaming received approximately $100 million in cash and the assumption by Century of approximately $5 million in debt, and there will be no ongoing equity interest by Alliance in UCMC. The agreement also contains a requirement for the buyer to acquire a certain number of gaming devices from the Company’s Bally Gaming business unit over a 5-year period.

Video Services, Inc.

The sale of VSI was not completed on June 30, 2004, as contemplated in a June 30, 2003, agreement entered into with Gentilly Gaming, LLC.  Alliance, through a wholly owned subsidiary, owns 49 percent of VSI.  The purchase price for 100 percent of the stock of VSI was expected to be approximately $4 million, of which approximately $1.95 million would have been paid to Alliance.  As a consequence of Gentilly’s decision not to proceed with the transaction, the sale agreement provides for a 12-month extension of the renewal term of VSI’s current operating agreement with the Fair Grounds Corporation of New Orleans.   Alliance Gaming intends to continue its efforts to divest this subsidiary, and as such will continue to carry the asset as a discontinued operation.

Alliance Gaming is a diversified gaming company with headquarters in Las Vegas. The Company is engaged in the design, manufacture, operation and distribution of advanced gaming devices and systems worldwide, and operates Rainbow Casino in Vicksburg, Miss. Additional information about the Company can be found at www.alliancegaming.com.

This news release may contain “forward-looking” statements within the meaning of the Securities Act of 1933, as amended, and is subject to the safe harbor created thereby. Such information involves important risks and uncertainties that could significantly affect the results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements. Future operating results may be adversely affected as a result of a number of risks that are detailed from time to time in the company’s filings with the Securities and Exchange Commission.

-ALLIANCE GAMING CORP. -

EX-99.2

Exhibit 99.2

FOR IMMEDIATE RELEASE

Investor and Media Contact: Robert L. Saxton

Alliance Gaming

(702) 270-7600

ALLIANCE GAMING ANNOUNCES APPOINTMENT OF
RICHARD HADDRILL AS CHIEF EXECUTIVE OFFICER

Office of the Chairman Formed to Oversee Transition

LAS VEGAS, July 1, 2004 — Alliance Gaming Corp. (NYSE: AGI) announced today that Richard (Dick) Haddrill has been appointed President and Chief Executive Officer effective October 1, 2004.  Dick Haddrill succeeds Robert Miodunski who will remain CEO until September 30, 2004, and will serve as a consultant to the Board of Directors. Alliance Gaming Corp. also announced today the formation of the Office of the Chairman to oversee seamless transition and management succession.  The Office of the Chairman shall consist of Board members David Robbins (Chairman) and Joel Kirschbaum, Dick Haddrill, newly appointed CEO, and Robert Miodunski.

Haddrill has served on the Board of Directors for Alliance since April 2003 and most recently completed five years as CEO of Manhattan Associates, Inc., a leader in software solutions to the supply chain industry throughout the world.  During his tenure at Manhattan, the company expanded its product offerings and market share, more than tripled revenues to almost $200 million and increased its share price more than eight fold.  Mr. Haddrill previously served as President and CEO for Powerhouse Technologies, Inc., a successful technology and gaming company from September 1996 until June 1999, when Powerhouse was acquired by Anchor Gaming, a publicly traded gaming company that was acquired by International Game Technology in 2001.

“We are delighted to have a talented and proven executive like Dick Haddrill leading our management team. Dick’s strong technology and software background coupled with his knowledge of the gaming industry provides the type of leadership background which will guide Alliance to the next level,” said David Robbins, Chairman of Alliance Gaming.  “We are also very pleased to be able to retain the services of Bob Miodunski who was instrumental in the success and transformation of Alliance into the technology focused company that it is today.  Bob has done an outstanding job leading Alliance and positioning the company for continued growth – he will be a valuable member of the Office of the Chairman.”

“This is an exciting time in the gaming industry and Alliance is very well positioned to take advantage of the many growth opportunities ahead,” commented Dick Haddrill. “I look forward to working with the strong management team in place at Alliance to further build on the success of the last four years.”

- MORE -

“The company is truly fortunate to have a senior executive like Dick Haddrill leading the management team,” said Bob Miodunski.  “Alliance Gaming has an incredibly dedicated and creative employee base that I have been proud to work with over these past several years.  I look forward to working with Dick and the Board of Directors as the company continues to grow in the coming years.”

Alliance Gaming has scheduled a conference call for Tuesday, July 6, 2004, at 10:00 a.m. Pacific Time, (1:00 p.m. Eastern Time), to discuss the transition plan in more detail followed by a question and answer session.  On the call will be Robert Miodunski, President and CEO and Dick Haddrill, newly appointed CEO.

The live call will be held:

Date:	July 6, 2004
Time:	10 a.m. Pacific Time (1 p.m. Eastern Time)

The call can be accessed either by:

Webcast:	www.alliancegaming.com
	Go to Investor Relations tab (please allow 10 minutes to register, download and install any necessary software)
Or
Participant Dial In Number:	(719) 457-2641

If you are unable to participate, the call will be available on our website address listed above until 5 p.m. Pacific Time on Friday, July 9, 2004.

Alliance Gaming is a diversified gaming company with headquarters in Las Vegas. The Company is engaged in the design, manufacture, operation and distribution of advanced gaming devices and systems worldwide, and is the nation’s largest gaming machine route operator and operates Rainbow Casino in Vicksburg, Miss.  Additional information about the Company can be found at www.alliancegaming.com.

This news release may contain “forward-looking” statements within the meaning of the Securities Act of 1933, as amended, and is subject to the safe harbor created thereby. Such information involves important risks and uncertainties that could significantly affect the results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements. Future operating results may be adversely affected as a result of a number of risks that are detailed from time to time in the company’s filings with the Securities and Exchange Commission.

-    ALLIANCE GAMING CORP. -