Exhibit 10.21
PREPAYMENT
AGREEMENT
THIS PREPAYMENT AGREEMENT is dated
as of June 28, 2005, and is being entered into by and among
Alliance Gaming Corporation, a Nevada corporation
(“Alliance”), Robert Luciano, Jr.
(“Luciano”), and Luciano, as trustee of the Robert
Luciano Family Trust dated February 27, 1995, as amended
(“Holder”).
RECITALS
WHEREAS, Alliance issued an
Unsecured Subordinated Promissory Note dated December 30, 2004
in the principal sum of $28,000,000 (the “Promissory
Note”) to Luciano, as trustee of the Holder, for the benefit
of the Seller Group.
WHEREAS, pursuant to the terms of
the Promissory Note, Alliance may prepay the amounts due under the
Promissory Note at any time in cash or by the delivery of shares of
Alliance’s common stock, par value $0.10 per share (the
“Alliance Shares”) and Alliance desires to prepay a
portion of the Promissory Note by payment of Alliance Shares on
June [28], 2005 (the “Prepayment
Date”).
WHEREAS, Luciano, as trustee of the
Holder, has instructed and directed Alliance that the Alliance
Shares constituting the prepayment should be paid directly to the
members of the Seller Group in the manner set forth
herein.
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
Definitions
. Capitalized terms not otherwise
defined herein shall have the meanings set forth in that certain
Amended and Restated Stock Purchase Agreement dated as of
March 2, 2004, and as amended by that certain Amendment
No. 1 dated as of December 30, 2004, by and among
Alliance, Sierra Design Group, a Nevada corporation, Luciano and
the Holder, as sole stockholder of Sierra Design Group.
2.
Instruction by Luciano
. Luciano, as trustee of the Holder,
hereby instructs and directs Alliance that the Alliance Shares
constituting the prepayment should be paid directly to the members
of the Seller Group as follows:
(a)
Each individual listed on Schedule 1
that has executed and delivered to Alliance by 5:00 p.m. PDT
on the day immediately prior to the Prepayment Date, an Investor
Representation Letter and Acknowledgement Agreement in the form
attached as Exhibit A hereto (the
“Acknowledgement”), shall receive his share of the
prepayment in a number of unregistered Alliance Shares equal to
one-half of the individual’s pro rata
percentage (set forth on Schedule 1 hereto) of the Outstanding
Balance plus accrued and unpaid interest thereon, divided by
the average per share closing price of the Alliance Shares on the
New York Stock Exchange for the 20 business days immediately prior
to the Prepayment Date.
(b)
Luciano shall receive payment in
Alliance Shares in an amount equal to $14 million minus the
aggregate amount in principal paid under Section 2(a),
plus accrued and unpaid interest thereon, divided by
the average per share closing price of the Alliance Shares on the
New York Stock Exchange for the 20 business days immediately prior
to the Prepayment Date (such amount, the “Luciano
Prepayment”).
3.
Prepayment Procedures
. Upon the Prepayment Date, Luciano
shall cancel and deliver the Promissory Note to Alliance. Alliance
will issue to Luciano, as trustee of the Holder and for the benefit
of such individuals, within two business days thereof, a new
promissory note identical in form to the Promissory Note in the
principal sum of $14 million. Any fractional Alliance Shares that
result from the calculation of the prepayment amount in
Section 2 shall be rounded up to the nearest whole Alliance
Share.
4.
Representation and Warranties of
Luciano . Luciano
represents and warrants to Alliance that he:
(a)
is an “Accredited
Investor”, as such term is defined in
Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended;
(b)
has such knowledge and experience in
financial business matters that he is capable of evaluating the
merits and risks of the prospective investment in the Alliance
Shares; and
(c)
(i) is receiving Alliance
Shares under this Agreement and is acquiring the Alliance Shares
for investment for his own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof
in violation of the Securities Act, (ii) has no present
intention of selling, granting any participation in, or otherwise
distributing any of the shares of Alliance Shares issued hereunder
otherwise than pursuant to an effective registration statement
under the Securities Act or in a transaction exempt from the
registration requirements under the Securities Act and applicable
state securities laws and (iii) has no contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect
to any of the Alliance Shares issued hereunder.
5.
Restrictive Legend
. Each certificate representing
(a) the Alliance Shares, and (b) any other securities
issued in respect of the Alliance Shares upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar
event, shall be stamped or otherwise imprinted with legends in the
following form (in addition to any legend required under applicable
state securities and gaming laws):
“THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY
ACCEPTABLE TO IT STATING THAT
2
SUCH SALE OR TRANSFER IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID
ACT.”
6.
Registration of the Alliance
Shares . Except as
restricted by applicable law, as soon as practicable after Alliance
files its Form 10-K for the fiscal year ending June 30,
2005 with the Commission, Alliance shall prepare and file with the
Commission a registration statement (“Shelf Registration
Statement”) on an appropriate form as provided in the
applicable rules and regulations of the Commission to register
under the Securities Act of 1933, as amended (the “Securities
Act”) the offer and sale of the Alliance Shares prepaid
pursuant to this Agreement to Luciano and the individuals listed in
Schedule 1 that have timely executed and delivered the
Acknowledgement, from time to time in accordance with the methods
of distribution set forth in the Shelf Registration Statement and
Rule 415 under the Securities Act.
7.
Registration
Procedures . Alliance
shall use its best efforts to keep the Shelf Registration Statement
continuously effective, supplemented and amended as required by the
Securities Act, in order to permit the Shelf Registration Statement
to be usable by Luciano and the individuals listed in
Schedule 1 that have timely executed and delivered the
Acknowledgement for a period from the date the Shelf Registration
Statement is declared effective by the Commission until the earlier
of (i) the sec
