Product Development And Revenue Sharing Agreement

PRODUCT DEVELOPMENT
AND REVENUE SHARING AGREEMENT


This Agreement is made as of the 18th day of November, 1996, between IGT, a Nevada corporation with offices located at 9295 Prototype Drive, Reno, Nevada ("IGT"), and Innovative Gaming, Inc., a Nevada corporation with offices located at 4750 Turbo Circle, Reno, Nevada ("IGI"), under the following terms and conditions.


INTRODUCTION


IGT is a gaming machine manufacturer, whose products include a slot machine referred to as an S+ Slant Top slot machines ("Slant Top"). IGI is a gaming machine manufacturer, whose products include a bonus top component ("Bonus") which secures to the top of slot machines for bonus play. IGI seeks to combine IGT's Slant Top with its Bonus (hereinafier the "Machine") for casino placement.


IGT shall make the necessary custom software engineering changes to the Slant Top to enable communications between the Slant Top and the Bonus. Upon the completion of the two major components being combined into a Machine, IGT shall submit the Machine to the Nevada Gaming Control Board and Gaming Laboratories International, Inc. for approval as a modification.


NOW, THEREFORE, for good and valuable consideration, as is provided more fully herein, the parties agree as follows:


1. ENGINEERING
IGT shall develop custom engineering modifications for IGI. IGI will own these custom engineering modifications and will pay IGT within 30 days of invoicing. IGT will have the right to utilize this custom engineering in applications that aren't substantially similar to this application.


2. MACHINE PLACEMENT
IGT shall supply IGT Slant Top machine(s) with the above custom engineering modifications to IGI which shall be placed by IGI in strategic casinos for the purpose of product test for consumer acceptance upon such terms as IGI may agree with the casino locations. In the event that the parties mutually agree that the market test was successful, IGT shall supply IGI new or used IGT Slant Top machines in an amount to be mutually agreed upon between the parties for installation at various casino locations pursuant to participation agreements between IGI and each casino location and on a revenue participation basis between IGI and IGT. IGT will provide custom engineering modifications to the Slant Top, which modifications will allow IGI to install its proprietary Bonus video component onto the Machines.


3. PARTICIPATION
The parties will participate jointly in the Net Revenue generated by the Machines as follows:


a. Commencing upon installation of each Machine and continuing
thereafier until IGT has recovered its list price less 40% of the
Slant Top, IGT will receive fifty percent (50%) of the 2
Net Revenue as received by IGI on account of such Machine, and
IGI shall receive fifty percent (50%) of the Net Revenue on
account of such Machine.


b. Upon receipt of the IGT list price less 40% for each Slant Top by IGT, ownership of that Slant Top shall pass to IGI and, thereafier for the term of this Agreement, IGT will receive ten percent (10%) of the Net Revenue and IGI shall receive ninety percent (90%) of the Net Revenue.


c. IGI may place the bonus component on existing IGT manufactured games within a casino if (1) IGT is unable to timely supply new or used IGT Slant Top machines to IGI (timely is defined as within a six week period of IGI placing the order) or (2) the market demands the bonus component only and both IGT and IGI agree that IGI will retrofit existing IGT manufactured games already existing in a casino. In the event the bonus component is added to an existing IGT manufactured casino game, IGT will receive a royalty of 5% of the net revenue for as long as IGI collects net revenue.


"Net Revenue" shall be defined as the actual revenue received by IGI from the casino locations on account of each Machine, less any gaming taxes and license fees, or other personal taxes, fees and other charges, applicable to the Machine or its operation, if any, which are paid by IGI rather than by the casino location pursuant to the participation agreement. Payments under this provision shall be due and payable on a monthly basis following IGI's receipt of Net Revenue from each casino location. IGI shall provide all accounting services and will include with the monthly payment an accounting summary of the machines' performance.


4. SERVICING OF THE MACHINE
IGT and IGI shall be responsible for service and costs of repair of the components of the machines supplied by the respective parties. IGT will not be responsible for servicing the Slant Top on which the bonus components are placed under paragraph 3(c) above.


5. LICENSING
a. Licensing and the machine approval - Each party shall obtain any and all licensing necessary to effectuate the terms of this Agreement, and shall bear their own costs associated with licensing proceedings, governmental investigation and approval as required under all applicable laws, regulations, ordinances, and statutes.


b. Machine approval - IGT will submit the machine for approval to the Nevada Control Board and Gaming Laboratories International by December 31, 1996.


6. RETURNS
IGI agrees to make best efforts to either replace returned machines in a new casino location or alternatively to modify or refurbish machines for placement in new casino locations.


7. WARRANTY
IGT warrants that for a period of ninety (90) days following installation at the casino location, equipment purchased hereunder will be free from defects and in good working order. IGI's sole and exclusive remedy in the event of defect is expressly limited to the restoration of the equipment to


3 good working condition by adjustment, repair, or replacement of defective parts, at IGT's election. Video monitors (covered under separate manufacturer warranty), machines, equipment, and other products not manufactured by IGT, are excluded from this warranty. Except as specifically provided in this Agreement, there are no other warranties, express and implied, including but not limited to, warranties of merchantability of ...