Progressive Gaming Announces NASDAQ Waiver of Stockholder Approval Requirement Related to Financing Transactions

Business Wire, August 6, 2008

LAS VEGAS -- Progressive Gaming International Corporation, (NASDAQ: PGIC) (the "Company"), previously announced in a press release on August 4, 2008 that it entered into two financing transactions (the "Financing Transactions"), which include (i) a new senior secured credit facility with Private Equity Management Group Financial Corporation ("PEM"), for up to $27.5 million, which consists of a revolving loan of up to $12.5 million and a term loan of $15.0 million and (ii) a $15.0 million senior secured convertible note offering with International Game Technology ("IGT"). The Company expects to initially raise approximately $33.0 million from the Financing Transactions, which are subject to closing conditions and are expected to close by August 15, 2008. The Company intends to use the net proceeds from the Financing Transactions to retire its remaining outstanding $30.0 million of 11.875% senior secured notes and accrued interest and transaction costs. The purpose of this press release is to describe a waiver from the shareholder approval requirements of The NASDAQ Stock Market, LLC that is being relied upon by the Company in connection with these transactions.

Transaction with PEM

In connection with the senior secured credit facility, PEM will receive one million shares of the Company's common stock (the "Initial Shares"), at closing for no cash consideration. If on November 15, 2008, the dollar volume weighted average price for the Company's common stock, as traded on the NASDAQ Global Market, for the 20 trading days (the "20-day VWAP") prior to that date does not equal or exceed $1.50, then PEM would receive additional shares of the Company's common stock (the "Additional Shares"), such that the 20-day VWAP on November 15, 2008 multiplied by the number of Initial Shares plus the Additional Shares equals a total value of $1.5 million, although in no event may the number of Additional Shares exceed 900,000 shares of the Company's common stock. PEM will also receive warrants to purchase one million shares of the Company's common stock with an exercise price equal to $1.05 per share. These warrants will be subject to standard anti-dilution adjustments in the event of stock splits, stock dividends, recapitalization and similar circumstances and will have a five year term.

Transaction with IGT

In connection with the convertible note offering, IGT will receive a $15.0 million senior secured convertible note that bears interest at 7.0% per annum and has a six year term. The interest rate increases to 12.0% in the event the Company issues any equity securities or equity-linked securities in the future at a price below the conversion price of the note, subject to limited exceptions. IGT may convert all or a portion of the note into shares of the Company's common stock at any time after closing. The conversion price for the note will be $0.89 per share, which was the dollar volume weighted average price for the Company's common stock, as traded on the NASDAQ Global Market, for the 20 trading days prior to the signing of the note and warrant purchase agreement, subject to anti-dilution adjustments in the event of stock splits, stock, cash or property dividends, recapitalizations, reorganizations, mergers and similar circumstances.

IGT will also receive warrants to purchase (i) 550,000 shares of the Company's common stock with an exercise price equal to $1.05 per share, and (ii) 891,892 shares of the Company's common stock with an exercise price equal to $0.89 per share ((i) and (ii) together being the "Initial IGT Warrants"). If on November 15, 2008, the 20-day VWAP (determined as of such date) does not equal or exceed $1.50, then IGT would receive additional warrants to acquire shares of the Company's common stock (the "Additional Warrants"), such that the Initial IGT Warrants plus the Additional Warrants equals a total value of $825,000 (calculated in accordance with a Black-Scholes valuation model), although in no event may the Additional Warrants be issuable for more than 1.8 million shares of the Company's common stock. Any Additional Warrants would be issued with an exercise price equal to the 20-day VWAP calculated as of November 15, 2008. These warrants would be subject to anti-dilution adjustments in the event of stock splits, stock, cash or property dividends, recapitalizations, reorganizations, mergers and similar circumstances and will have a five year term.

Potential Effect of Stock Issuances Related to the Financing Transactions

The $15.0 million in principal amount of the convertible promissory note could be initially convertible into approximately 16,853,932 shares of the Company's common stock. The Company will also issue 1,000,000 new shares, and if certain conditions are not met could issue up to 900,000 new shares of common stock to PEM in the future (which includes the Initial Shares and any Additional Shares) and could issue warrants to PEM and IGT (which includes the one million share PEM warrant, the Initial IGT Warrants and any Additional Warrants) to purchase up to approximately an additional 4,241,892 shares of common stock. As of the date of this release, the Company has approximately 62,111,310 shares of common stock outstanding. If the maximum amount of the convertible promissory note is converted, the maximum amount of the common stock issuable pursuant to the Financing Transactions is issued and the maximum amount of all the warrants to be issued pursuant to the Financing Transactions is exercised, the Company will have up to approximately 85,107,134 shares outstanding, representing a potential increase of approximately 37% in the number of shares outstanding prior to the Financing Transactions.