FIRST AMENDMENT TOWARRANTS

(i) Incidental Registration Rights.  If the Company at any time seeks to register under the Securities Act of 1933, as amended, for sale to the public in an underwritten offering any of its equity securities (other than a registration on Form S-4 or Form S-8, or any successor forms promulgated for similar purposes) and if the form of registration statement to be used may be used for the registration of Shares, on each such occasion it will promptly furnish Holder with prior written notice thereof. At the written request of Holder, given within ten days after the receipt of such notice, to register any of the Shares, the Company will cause such Shares, for which registration will have been requested, to be included in such registration statement in an amount so as to permit the sale or other disposition by Holder as part of such underwritten public offering of such Shares as are registered, provided, that if the managing underwriter advises the Company in writing that, in its opinion, the number of securities requested and otherwise proposed to be included in such offering exceeds the number that can be sold without adversely affecting the marketability of the offering, the Company will include in such registration to the extent of the number which the Company is so advised can be sold in such offering, first, the securities the Company proposes to sell in such registration, second, the securities IGT or its affiliates have requested to be included in such registration (“IGT Securities”), and third, the Shares, which, in the opinion of such managing underwriter, can be sold without having the adverse effect referred to above. If the registration is an underwritten offering and the managing underwriter advises the Company in writing that in its opinion the number of IGT Securities, Shares and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of IGT Securities, Shares and other securities, if any, which can be sold in an orderly manner in such offering within a price range acceptable to the holder of securities initially requesting such registration, without adversely affecting the marketability of the offering, the Company will include in such registration prior to the inclusion of any securities that are not IGT Securities, the number of IGT Securities requested to be included by the holders of IGT Securities pro rata among the respective holders thereof on the basis of the number of IGT Securities owned by each such holder.  To the extent that in such opinion of the managing underwriter after inclusion of all IGT Securities requested to be included that additional securities may be included, the Company will include in such registration prior to the inclusion of any such additional securities that are not Shares, the number of Shares requested to be included by the holders of Shares pro rata among the respective holders thereof on the basis of the number of Shares owned by each such holder.

(ii) Expenses.  All expenses incurred by the Company in complying with this Section 1(c), including all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, listing or quotation fees, and fees of transfer agents and registrars, will be borne in full by the Company. Holder will be responsible for all underwriting commissions, transfer taxes, discounts and fees with respect to Shares and the fees and expenses of accountants and legal counsel for Holder.

 

(iii) Listing.  The Company will cause all Shares registered as provided in this Section 1(c) to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if no similar securities issued by the Company are then listed on any securities exchange, use its reasonable best efforts to cause all such Shares to be listed on the AMEX, the NYSE or the NASDAQ stock market, as determined by the Company.

 

(iv) Indemnification.  The Company will enter into customary and reasonable indemnification and contribution agreements with any underwriter and Holder in the event of an underwritten offering.

 

2. The 2007 Warrant is hereby amended by adding to the end of Section 3 thereof the following new language:

 

“Cashless Exercise.  This Warrant may also be exercised by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of shares of Common Stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

3. Continuation of Warrants.  Each of the Warrants shall remain in full force and effect as amended by this Amendment.

 

4. Acknowledgement of Company.  The Company hereby acknowledges that after giving effect to the transactions contemplated by the Investment Agreement, the Warrants are exercisable to purchase an aggregate of 2,675,000 shares of Common Stock or Common Stock Series A, as applicable, at an exercise price of $1.48 per share.

 

5. Execution and Counterparts. This Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.