<PAGE>
=================================================================
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: June 19, 1995
(Date of earliest event reported)
ALLIANCE GAMING CORPORATION
a Nevada corporation
(Exact name of registrant as specified in its charter)
Nevada 0-4281 88-0104066
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation of File No.) Identification No.)
organization)
4380 Boulder Highway
Las Vegas, Nevada 89121
(Address of principal executive offices, including zip code)
(702) 435-4200
(Registrant's telephone number, including area code)
=================================================================
Page 1
<PAGE>
<PAGE>
ITEM 5. OTHER EVENTS
As of the close of business on June 20, 1995, Alliance
Gaming Corporation, a Nevada corporation ("Alliance"), was the
beneficial owner of 1,000,000 shares of Common Stock of Bally
Gaming International, Inc., a Delaware corporation ("BGII"),
which constitutes 9.3% of the outstanding shares of Common Stock
of BGII (based on 10,749,501 shares of Common Stock outstanding
as of May 12, 1995, as reported by BGII in its Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995). Accordingly,
on June 30, 1995, Alliance filed with the Securities
and Exchange Commission a report on Schedule 13D (the "Schedule
13D") describing such position, which Schedule 13D is attached
hereto as Exhibit 1 under Item 7 and incorporated herein by
reference.
As further described in such Schedule 13D, on June 19,
1995, Steve Greathouse, Chairman, President and Chief Executive
Officer of Alliance, sent a letter to the Board of Directors of
BGII, proposing that a wholly-owned direct or indirect subsidiary
of Alliance acquire all of the outstanding shares of BGII Common
Stock at a price of $12.50 per share of Common Stock. Under this
proposal, approximately 60% of the shares (other than the 4.7%
then owned by Alliance) would be acquired for cash and the
remainder would be acquired for Alliance common stock, with the
number of shares of Alliance common stock resulting in a value to
BGII stockholders of $12.50 per BGII share of Common Stock, based
upon a 10 trading-day period ending five business days prior to
the proposed effective date of the merger of BGII with such
indirect wholly-owned subsidiary of Alliance. On June 21, 1995,
Mr. Greathouse's letter terminated in accordance with its terms
and on June 22, 1995, BGII announced that it had executed a
definitive merger agreement with WMS Industries, Inc. Although
Alliance remains interested in pursuing a business combination
with BGII, it has not determined whether to do so. Alliance is
continuing to monitor its investment and will continue to
consider all alternatives as set forth in the Schedule 13D.
<PAGE>
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
1. Schedule 13D, dated June 20, 1995, filed by Alliance
relating to BGII Common Stock, together with all exhibits
thereto.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ALLIANCE GAMING CORPORATION
Date: July 14, 1995 By: /s/ Steve Greathouse
-----------------------
Name: Steve Greathouse
Title: Chairman/President/Chief
Executive Officer
<PAGE>
<PAGE>
INDEX TO EXHIBITS
1. Schedule 13D dated June 20, 1995 filed by Alliance relating
to BGII Common Stock, together with Exhibits thereto.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Bally Gaming International, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
058731 1
(CUSIP Number)
David D. Johnson, Esq.
Corporate Legal Counsel
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Tel. (702) 435-4200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 20, 1995
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box /__/.
Check the following box if a fee is being paid with the
statement /x/.
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP NO.: 058731 1
(1) NAME OF REPORTING PERSON:
Alliance Gaming Corporation
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
IRS. No. 88-0104066
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
(3) SEC USE ONLY
(4) SOURCE OF FUNDS: WC
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: Nevada
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
(7) SOLE VOTING POWER: 1,000,000
(8) SHARED VOTING POWER: 0
(9) SOLE DISPOSITIVE POWER: 1,000,000
(10) SHARED DISPOSITIVE POWER: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 1,000,000
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.3%
(14) TYPE OF REPORTING PERSON: CO
<PAGE>
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this Statement
on Schedule 13D relates is the common stock, par value $0.01 per
share (the "Common Stock"), of Bally Gaming International, Inc.,
a Delaware corporation (the "Company"), with its principal
executive offices located at 6601 S. Bermuda Road, Las Vegas,
Nevada 89119.
Item 2. Identity and Background.
This Statement is being filed by Alliance Gaming
Corporation, a Nevada corporation ("Alliance"). The principal
executive offices of Alliance are located at 4380 Boulder
Highway, Las Vegas, Nevada 89121.
Alliance is a diversified gaming company which owns,
operates, installs, manages, and services numerous gaming devices
(primarily video poker devices and slot machines) in Nevada and
Louisiana. In addition, Alliance owns and operates one full
service casino in Nevada, owns the general partnership interest
in and operates a dockside casino in Mississippi, and leases and
operates two small casinos in Nevada. Alliance may be deemed to
be controlled by Kirkland Investment Corporation, a Delaware
corporation ("KIC"), which holds a substantial amount of
Alliance stock. KIC's principal business is acting as the
general partner of Kirkland-Ft. Worth Investment Partners, L.P.,
a Delaware limited partnership engaged in making investments
("KFW"). KIC currently has the right, pursuant to a stockholders
agreement among the holders of a majority of the outstanding
shares of common stock of Alliance, to designate a majority of
Alliance's board of directors.
Information regarding the directors and executive
officers of Alliance is set forth on Schedule I-A attached
hereto, which Schedule is incorporated herein by reference.
Except for Alfred H. Wilms, who is a citizen of Belgium, all of
the directors and executive officers of Alliance are citizens of
the United States. Information regarding KIC, KFW and each of
its executive officers, directors and controlling persons is set
forth on Schedule I-B attached hereto, which Schedule is
incorporated herein by reference. The director and executive
officer of KIC is a citizen of the United States.
During the last five years, neither Alliance nor, to
the best knowledge of Alliance, KIC, KFW or any person named in
Schedules I-A or I-B attached hereto has been (a) convicted in a
criminal proceeding (excluding traffic violations or similar
misdemeanors) or (b) a party to a civil proceeding of a judicial
or administration body of competent jurisdiction and as a result
<PAGE>
<PAGE>
of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The 1,000,000 shares of Common Stock beneficially owned
by Alliance were purchased with general working capital funds of
Alliance during the period between February 17 and June 20, 1995,
for an aggregate purchase price of $10,480,794. None of KIC, KFW
or the persons listed on Schedule I-A or I-B hereto has
contributed any funds or other consideration towards the purchase
of the Common Stock.
As indicated below, Alliance may purchase additional
shares of Common Stock in the future. On June 15, 1995, Alliance
received a letter (the "Bank Letter") from Bankers Trust Company
and Indosuez Capital (collectively, the "Lenders") indicating
their interest in committing to provide $150,000,000 in financing
(the "Credit Facility") as a portion of the consideration for the
proposed acquisition by Alliance of all of the outstanding Common
Stock (as more fully described in Item 4 below) and related
refinancings. A copy of the Bank Letter is attached hereto as
Exhibit 1, and is incorporated herein by reference. The term
sheet accompanying the Bank Letter provides that the Credit
Facility would have a twelve-month maturity, and would bear
interest at a rate based on the ten-year treasury rate. To the
extent feasible, the Lenders would take a security interest in
all of Alliance's assets (other than certain assets securing
previous indebtedness of Alliance), including, to the extent
permitted by margin regulations, all shares of Common Stock to be
acquired pursuant to the Proposed Acquisition (as defined in Item
4 below), and following the consummation of the Proposed
Acquisition, substantially all of the assets of the Company. The
loan agreement would contain customary covenants, events of
default and conditions, including that (i) the Lenders will have
completed their due diligence of Alliance and the Company, (ii)
Alliance will have made satisfactory arrangements with regard to
permanent financing necessary to refinance the Credit Facility,
(iii) the Lenders be satisfied with the capital structure of the
Company and its subsidiaries after giving effect to the Proposed
Transaction and (iv) the Lenders be satisfied with the terms,
conditions and structure of the Proposed Acquisition. Alliance
has agreed to indemnify the Lenders and their affiliates against
losses incurred by them in connection with the Credit Facility
and to pay them certain fees, as more fully described in the Bank
Letter.
<PAGE>
<PAGE>
Item 4. Purpose of Transaction.
The purpose of the purchase by Alliance of the shares
of Common Stock referred to above was to acquire a significant
equity position in the Company as the first step in consummating
a possible business combination with the Company. Alliance does
not consider itself a passive investor and should not be regarded
as such.
In November 1994, Alliance met with management of the
Company to discuss a possible business combination, and in April
1995, presented a proposed transaction to the Board of Directors
of the Company. During this period, Alliance sought access to
non-public information in order to make as definitive a proposal
as possible.
On April 18, 1995, the Company announced that it had
agreed in principle to a business combination with WMS
Industries, Inc. ("WMS") and expected to enter into a definitive
agreement with respect thereto within 25 days. When the Company
had not announced a definitive agreement by this date, Alliance
determined to pursue its interest in the Company. On June 12,
Alliance wrote to Richard Gillman, Chairman of the Board and CEO
of the Company, informing him that Alliance had purchased 4.7% of
the Common Stock, was prepared to negotiate a business
combination in which stockholders of the Company would receive
primarily cash, and had indications of interest from two banks to
provide financing for the transaction. Alliance requested that
the Company work with it to reach agreement in principal on such
a transaction by June 14.
In a series of meetings over the next few days, the
Company and its advisors informed Alliance that Alliance's
proposed timetable was unrealistic because the Board of Directors
of the Company would probably not be meeting until the week of
June 26. They also suggested that Alliance agree to a penalty if
it entered into a letter of intent but then did not consummate
the transaction (a concept Alliance said it would consider).
On June 19, 1995, Steve Greathouse, Chairman, President
and Chief Executive Officer of Alliance, sent a letter (the "June
19 Letter") to the Board of Directors of the Company proposing
that a wholly-owned direct or indirect subsidiary of Alliance
acquire all of the outstanding Common Stock (the "Proposed
Acquisition") at a price of $12.50 per share of Common Stock.
Under this proposal, approximately 60% of the shares (other than
those then owned by Alliance) would be acquired for cash and the
remainder would be acquired for Alliance common stock, valued at
$12.50 over a 10 trading-day period ending five business days
prior to the proposed effective date of the merger, subject to an
<PAGE>
<PAGE>
appropriate collar. The June 19 Letter detailed the benefits and
advantages of Alliance's offer as compared with the proposed WMS
transaction and urged that Alliance and the Lenders be granted
immediate due diligence, so that Alliance could confirm its
willingness to proceed prior to the impending Company board
meeting. The June 19 Letter further stated that consummation of
the Proposed Acquisition would be subject to certain conditions,
including the negotiation and execution of a mutually acceptable
acquisition agreement, the completion of a due diligence
investigation by each party, and the availability of financing
necessary to pay the cash portion of the acquisition price. The
offer in the June 19 Letter terminated by its terms on the day of
the next Company board meeting. Mr. Greathouse indicated that,
as a significant stockholder of the Company, Alliance stood ready
to join with other stockholders of the Company to oppose the
proposed WMS transaction. A copy of the June 19 Letter, which
was released to the press, is attached as Exhibit 2 hereto and is
incorporated herein by reference.
On June 20, 1995, Alliance learned, contrary to the
information the Company had given it, that the Board of Directors
of the Company would be meeting the following day. On June 21,
1995, Alliance sent a letter to the Board of Directors of the
Company detailing the chronology of its involvement with the
Company and the advantages and benefits to stockholders of its
offer as compared with WMS's. The Board of Directors did in fact
meet on June 21, resulting in the termination of Alliance's offer
in accordance with its terms. On June 22, the Company announced
that it had executed a definitive merger agreement with WMS.
Although Alliance remains interested in pursuing a
business combination with the Company, it has not determined
whether to do so. In making such determination, Alliance intends
to consider and review various factors on a continuous basis,
including the Company's financial condition, business and
prospects, other developments concerning the Company, the
reaction of the Company and of stockholders to Alliance's
ownership of Common Stock and Alliance's acquisition proposal,
the status of the WMS transaction, the availability of financing,
regulatory developments and general economic and stock market
conditions. In addition, depending upon, among other things, the
matters referred to above, Alliance may determine at any time to
increase, decrease or entirely dispose of its holdings in the
Company, purchase (by private purchase, in the open market, by
tender offer or otherwise) additional equity securities of the
Company, or acquire or seek to acquire control of the Company by
merger, proxy or consent solicitation, exchange of securities,
asset acquisition, tender offer or in privately negotiated
transactions on such terms and at such times as it may consider
desirable. Acquisition of additional Common Stock and an
<PAGE>
<PAGE>
acquisition of control of the Company would be subject to
additional filings and approvals, including filing and/or
approvals of gaming authorities and filings under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended. Alliance
is continuing to monitor its investment and will continue to
consider all alternatives.
Except as specified above, neither Alliance nor, to the
best knowledge of Alliance, KIC, KFW or any of the persons
referred to in Schedule I-A or I-B attached hereto have any
specific plans or proposals that relate to or would result in any
of the actions specified in Item 4 of Schedule 13D, but each
retains the right to take all such actions as it may deem
appropriate.
Item 5. Interest in Securities of the Issuer.
As of the close of business on June 20, 1995, Alliance
was the beneficial owner of 1,000,000 shares of Common Stock,
which constitutes 9.3% of the outstanding shares of Common Stock
(based on 10,749,501 shares of Common Stock outstanding as of May
12, 1995, as reported by the Company in its Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995). Alliance has
the sole power to vote, direct the voting of, dispose of and
direct the disposition of such shares of Common Stock. Alliance
has the sole right to receive and the power to direct the receipt
of dividends from, and (except as described in Item 6 below with
regard to the Bank Letter) the proceeds from the sale of, such
shares of Common Stock. Transactions in Common Stock by Alliance
effected in the past 60 days are described in Schedule II hereto,
which schedule is hereby incorporated by reference. All such
transactions were effected by Alliance in the over-the-counter
market and reported on the NASDAQ National Market System. To the
best knowledge of Alliance, there were no other transactions by
any Person referred to in Item 2.
Except as described above, and except for Anthony L.
DiCesare, a director and Executive Vice President-Development of
Alliance, who beneficially owns 40 shares of Common Stock,
neither Alliance nor, to the best knowledge of Alliance, KIC, KFW
or any of the persons referred to in Schedule I-A or I-B attached
hereto beneficially owns any shares of Common Stock.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
The fee letter which is attached to the Bank Letter
provides that, if the Company is acquired by an unaffiliated
third party, the Lenders will receive a fee equal to 20% of any
profits realized on the Common Stock owned by Alliance, net of
reasonable out-of-pocket expenses.
<PAGE>
<PAGE>
Except as described herein, neither Alliance nor, to
the best knowledge of Alliance, KIC, KFW or any person referred
to in Schedule I-A or I-B attached hereto has any contracts,
arrangements, understandings or relationships (legal or
otherwise) with any person with respect to any securities of the
Company, including, but not limited to, transfer or voting of any
of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
1. Letters dated June 15, 1995 between Alliance and
the Lenders.
2. Letters dated June 19, 1995 from Steve Greathouse
to the Board of Directors of the Company.
<PAGE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
June 28, 1995
Alliance Gaming Corporation
By:___________________________
Name: Steve Greathouse
Title: Chairman/President/Chief
Executive Officer
<PAGE>
<PAGE>
SCHEDULE I-A
DIRECTORS AND EXECUTIVE OFFICERS OF ALLIANCE
The names, present principal occupations and business
addresses of the directors and executive officers of Alliance are
set forth below. If no address is given, the director's or
executive officer's business address is that of Alliance. Unless
otherwise indicated, each position set forth opposite an
individuals name refers to a position with the Reporting Person.
DIRECTORS
Anthony L. DiCesare, Executive Vice President - Development.
Craig Fields, Vice Chairman of the Board of Directors.
Steve Greathouse, Chairman of the Board of Directors, President
and Chief Executive Officer.
Joel Kirschbaum, Consultant to Alliance.
David Robbins, Attorney - Kramer, Levin, Naftalis, Nessen, Kamin
& Frankel, 919 Third Avenue, New York, New York 10022.
Alfred H. Wilms, President, Aqualandia, a European waterpark;
President, Gibsa, a Spanish real estate company, Sierra Helada,
Partida de Bayo, 03500 Benidorm, Spain.
EXECUTIVE OFFICERS
Steve Greathouse, Chairman Of the Board, President and Chief
Executive Officer.
Shannon L. Bybee, Executive Vice President - Government
Affairs.
Anthony L. DiCesare, Executive Vice President - Development.
John W. Alderfer, Senior Vice President - Finance and
Administration, Chief Financial Officer and Treasurer.
David D. Johnson, Senior Vice President, Secretary and Corporate
Legal Counsel.
Robert L. Miodunski, Senior vice President - Nevada Route Group.
Robert L. Saxton, Vice President - Casino Group.
Robert M. Hester, Vice President - Human Resources and
Administration.
<PAGE>
<PAGE>
Robert A. Woodson, Vice President - Regulatory Compliance.
Johnann F. McIlwain, Vice President - Marketing.
<PAGE>
<PAGE>
SCHEDULE I-B
1. Kirkland-Ft. Worth Investment Partners, L.P., 9 West 57th
Street, New York, NY 10019
GENERAL PARTNER
Kirkland Investment Corporation, 9 West 57th Street, New
York, NY 10019
2. Kirkland Investment Corporation, 9 West 57th Street, New
York, NY 10019
Joel Kirschbaum is the sole director and executive
officer of Kirkland Investment Corporation ("KIC"). His
principal occupation and business address are as specified in
Schedule I-A.
<PAGE>
<PAGE>
SCHEDULE II
SCHEDULE OF TRANSACTIONS IN THE SHARES
No. of Shares Price Per
Date Purchased Share
5/04/95 42,500 $9.625
5/04/95 50,000 $9.75
5/04/95 13,000 $9.8125
5/04/95 89,000 $9.875
5/05/95 12,900 $9.625
5/05/95 1,500 $9.75
5/05/95 16,000 $9.875
5/08/95 15,000 $9.875
5/08/95 7,300 $9.93
5/09/95 19,000 $10.125
5/09/95 20,000 $10.25
5/09/95 10,000 $10.3125
5/09/95 25,000 $10.375
5/10/95 31,100 $10.375
5/10/95 10 $10.125
5/10/95 18,090 $10.25
5/10/95 500 $10.1875
5/11/95 25,000 $10.25
5/12/95 50,000 $ 9.875
5/15/95 200 $ 9.75
5/16/95 2,500 $ 9.875
5/17/95 20,000 $10.0625
<PAGE>
<PAGE>
No. of Shares Price Per
Date Purchased Share
6/20/95 32,500 $10.625
6/20/95 73,300 $10.75
6/20/95 51,000 $10.8125
6/20/95 61,200 $10.875
6/20/95 13,800 $11
6/20/95 88,200 $11.0625
6/20/95 25,000 $10.9375
6/20/95 5,000 $11
6/20/95 50,000 $11.0625
6/20/95 100,000 $11.125
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit No. Description Numbered Page
1. Letters dated June 15, 1995 15
between Alliance and the
Lenders
2. Letters dated June 19, 1995 42
from Steve Greathouse to
the Board of Directors of
the Company
<PAGE>
<PAGE>
Exhibit 1
June 15, 1995
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Attention: Mr. Steve Greathouse
President
Gentlemen:
We understand that Alliance Gaming Inc. ("Alliance" or
"Parent"), through a newly-organized, wholly-owned, single
purpose acquisition vehicle ("Newco"), is considering making a
offer to acquire (the "Acquisition") all of the shares of Bally
Gaming International Inc. ("BGII" or the "Company"). We also
understand that the proposed Acquisition is to be accomplished
through a first-stop cash tender offer for a majority of the
shares of BGII (the "Tender Offer") followed by a second-step
merger (the "Merger"). The Tender Offer is to be conditioned
upon, among other things, the tender of that number of shares
which, when added to the shares already owned by Parent and/or
its affiliates, will constitute a majority of the shares
outstanding on a fully diluted basis (such majority being
hereinafter called the "Minimum Tender Shares") and the
inapplicability to the Merger of Section 203 of the Delaware
General Corporation Law. As soon as practicable following the
consummation of the Tender Offer, the Merger would be effected by
Newco merging with the Company (the corporation surviving being
herein called the "Survivor"), with all remaining shares, if any,
being acquired by Parent. You have further advised us that the
total estimated financing requirements for the Tender Offer and
Merger, including working capital and transaction expenses, are
approximately $175 million and that the proposed Acquisition is
to be financed approximately as follows:
<PAGE>
<PAGE>
($ in millions) Amount
------
Senior Secured Bridge Facility $150.0
Cash-on-Hand 25.0(1)
------
Total Sources of Funds $175.0
------
__________________
(1) Such amount may be reduced by the aggregate cost of BGII
shares held by Alliance at the time of the commencement of
the Tender Offer in excess of 500,000 Shares.
If the financing requirements exceed $175 million, the
excess will not be financed with debt or mandatorily
redeemable preferred stock.
Subject to the matters set forth herein, each of Bankers
Trust Company and Banque Indosuez (collectively, the
"Agents" or "us" or "we") is interested in providing
Alliance with a commitment for $75.0 million (an aggregate
of $150.0 million) of the Senior Secured Bridge Facility,
along the line described above and as more fully provided in
the Summary Term Sheets and fee letter (the "Fee Letter")
attached hereto.
If you are interested in the Agents' pursuing the
proposed Senior Secured Bridge Facility with you and, among other
things, completing our due diligence investigations, please
execute a counterpart of this letter. By executing this letter,
(a) you agree to pay all reasonable out-of-pocket expenses
incurred by each Agent and its affiliates in connection with the
examination, review, documentation, syndication and/or closing of
the Acquisition or the contemplated financing transaction
including but not limited to, travel expenses and legal and
consultants' fees and expenses, whether or not the Acquisition or
such financing transaction closes, and (b) you also agree to
indemnify and to hold harmless each Agent and its respective
affiliates, and the respective officers, directors, employees and
agents of any of them against all claims, damages, liabilities
and expenses which may be incurred by or asserted against any of
them in connection with the Acquisition or the financing
transaction contemplated by this letter, as more fully provided
in Exhibit A. We will promptly inform you when the amount of
expenses referred to in clause (a), or commitments therefor,
exceeds $100,000 or any integral multiple thereof.
- 2 -
<PAGE>
<PAGE>
We have reviewed certain historical financial statements
of Alliance and met with representatives of Alliance and we are
pleased to advise you that the results of our due diligence
investigation of Alliance to date are satisfactory. However,
neither we nor our counsel have had the opportunity to complete
due diligence to substantiate the financial and other premises
upon which our expression of interest is based. Accordingly, to
assist in the evaluation of the Acquisition and the contemplated
financing transaction, Alliance will provide or cause to be
provided to the Agents all access which we may reasonably request
to Alliance's offices, and copies of all documents in your
possession which we may reasonably request including, without
limitation, business plans, financial statements (actual and pro
forma), books, records, and documents regardless of by or for
whom any of such items have been prepared for purposes of
confirming the due diligence the Agents have done thus far with
respect to Alliance. We will enter into an appropriate
confidentiality agreement with respect to such materials.
This letter is an expression of interest only by the
Agents in a financing transaction on the general terms and
conditions outlined above and in the Summary Term Sheets. Except
for your agreements herein concerning expense reimbursement and
fees and indemnification and disclosure, this letter is not
intended to and does not create any binding legal obligations. A
financing commitment, if and when provided, will contain
customary financing conditions, including, but not limited to,
satisfactory completion of confirmatory due diligence with
respect to Alliance as well as satisfactory completion of due
diligence concerning BGII (which would require reasonable access
to BGII's records and officers).
We recognize that you may disclose this letter after the
execution thereof publicly (in an offer to Purchase or otherwise)
or privately, including to BGII, prospective Alliance equity
investors and your advisors. However, except as required by law
you will not make any public disclosure to the content of which
we reasonably object.
If the Agents deliver commitment letters which are on
substantially the terms set forth above and in the Summary Term
Sheets, and Alliance thereafter agrees to finance and in fact
consummates the Acquisition with funds provided by any other debt
source other than both of the Agents, including, without
limitation, the public or private placement of debt securities,
in consideration of the substantial due diligence on which the
delivery of such commitment letters shall have been based, you
will pay to each of the Agents a fee in the amount of $750,000
(the "Compensation Fee") which would be deemed earned at the
closing of such alternative financing and then would be payable
on demand.
- 3 -
<PAGE>
<PAGE>
Upon execution of this letter, we ask that you remit to
each of the Agents $50,000 as a good faith advance against
expenses. The good faith advance against expenses, less any
reasonable out-of-pocket expenses incurred by the Agents or their
respective affiliates, will be refunded on termination of this
letter by Alliance or if both Agents do not approve providing a
credit facility on substantially the terms set forth above and in
the Summary Term Sheet or an alternative facility reasonably
acceptable to you. If the credit facility is funded by the
Agents, to the extent the good faith advance against expenses
exceeds such expenses, such excess will be credited against any
fees due the Agents at closing.
Upon the execution of this letter, Alliance agrees to
pay to the Agents (i) the good faith advance against expenses
referred to above and (ii) a cash fee of $500,000 in the
aggregate, which cash fee shall not be refundable but to the
extent the Agents provide a credit facility on substantially the
terms set forth above and in the Summary Term Sheet or an
alternative facility reasonably acceptable to you, 50% of such
cash fee shall be creditable against fees owing to the Agents at
the time of closing of such financing.
Please acknowledge your agreement to the Agents'
pursuing the contemplated financing transaction on the terms and
otherwise as set out in this letter by signing a copy of this
letter and returning it to Bankers Trust Company and Banque
Indosuez.
We look forward to working with you on this transaction.
Sincerely,
BANKERS TRUST COMPANY
By:____________________________
Name: BRUCE D. CLASSON
Title: MANAGING DIRECTOR
- 4 -
<PAGE>
<PAGE>
INDOSUEZ CAPITAL
By:____________________________
Name: JOHN G. POPP
Title: MANAGING DIRECTOR
Agreed to and Accepted as of
the date first written above:
ALLIANCE GAMING CORPORATION
By:________________________
Name: STEVE GREATHOUSE
Title: PRESIDENT/CEO
- 5 -
<PAGE>
<PAGE>
Alliance Gaming Corporation
Senior Secured Bridge Facility
Summary of Key Economic Terms
-----------------------------
Borrower: Alliance Gaming Corporation, guaranteed on a
senior basis by its subsidiaries other than
Video Services, Inc., a Louisiana corporation
("VSI").
Facility: Senior Secured Bridge Facility (the "Bridge
Facility").
Amount: $150,000,000 in not more than two takedowns.
Agents: Together, Bankers Trust Company and Banque
Indosuez.
Closing Date: The date of the initial borrowing under the
Bridge Facility.
Maturity: Twelve months from the first Closing Date.
Prepayable at any time, in whole or in part,
at par.
Interest: 600 basis points over the ten-year treasury
rate on the date of the initial borrowing
increased by 50 basis points per quarter
commencing six months after the Closing Date.
In addition, if on the six month anniversary
of the Closing Date the ten-year treasury rate
has increased by more than 25 basis points
since the Closing Date, the interest rate on
the Bridge Facility shall be reset to 650
basis points over the ten-year treasury rate
on the six month anniversary of the Closing
Date.
Security: To the extent feasible, perfected first
priority security interests in substantially
all of the Borrower's and its subsidiaries'
assets (other than the those assets which are
pledged to secure (i) indebtedness under VSI's
Loan and Security Agreement made as of August
1994 with N.V. Continental Trust Company as
amended to date or (ii) secured indebtedness,
to the extent not repaid, under the Casino
Financing Agreement dated August 3, 1993, as
amended to date, among Rainbow Casino
<PAGE>
<PAGE>
Corporation, HFS Gaming Corp. and the other
parties thereto (the "CF Agreement") with
respect to which the Borrower shall obtain
necessary consents to the granting of a second
lien (ranking second in priority to the first
priority interest in favor of the secured
indebtedness under the CF Agreement) in favor
of the lenders on terms satisfactory to the
Agents), including without limitation, all
tendered shares (to the extent permitted by
applicable margin regulations) and,
immediately on consummation of the Merger,
substantially all the assets of BGII. To the
extent deemed appropriate for purposes of
margin regulations, the Bridge Facility may be
divided into two separate facilities.
Conditions
Precedent: Conditions precedent to the Bridge Facility
and initial borrowings thereunder will include
those customary for this type of transaction
including but not limited to those set forth
in Schedule I attached hereto.
Affirmative
Covenants: Customary for facilities similar to the Bridge
Facility, including, but not limited to,
maintenance of corporate existence and
rights; compliance with laws; performance of
obligations; maintenance of properties in good
repair; maintenance of appropriate and
adequate insurance; inspection of books and
properties; payment of taxes and other
liabilities; notice of defaults; litigation
and other adverse action; delivery of
financial statements; financial projections
and compliance certificates; and further
assurances.
Negative
Covenants: Customary for facilities similar to the Bridge
Facility and such others as may be required by
the Agents, including, but not limited to,
limitations on indebtedness; limitations
on liens; limitations on loans; investments
and joint ventures; limitations on guarantees
or other contingent obligations; limitations
on restricted payments (including limitations
on dividends, redemptions and repurchases of
capital stock); limitations on fundamental
changes (including limitations on mergers,
- 2 -
<PAGE>
<PAGE>
acquisitions and asset sales); limitations on
operating leases; limitations on sale-
leaseback transactions; limitations on sale or
discount of receivables; limitations on
transactions with affiliates; limitations on
creation of subsidiaries; limitations on
payment restrictions affecting subsidiaries;
limitations on issuance, sale or other
disposition of subsidiary stock; limitations
on capital expenditures; limitations on
changes in business conducted; limitations on
amendment of indebtedness and other material
documents; and limitations on prepayment or
repurchase of other indebtedness.
Financial
Covenants: The Bridge Facility will contain financial
covenants appropriate in the context of the
proposed transaction based upon the financial
information provided to the Agents, including,
but not limited to: minimum net worth,
minimum fixed charge coverage ratio and
maximum leverage. The financial covenants
contemplated above will be tested on a
quarterly basis and will apply to the Borrower
and its subsidiaries on a consolidated basis.
Events of
Default: Customary for facilities similar to the Bridge
Facility, including, but not limited to,
nonpayment of principal, interest, fees or
other amounts when due; violation of
covenants; failure of any representation or
warranty to be true in all material respects;
cross-default and cross-acceleration; change
in control; bankruptcy events; material
judgments; ERISA; and actual or asserted (by
the Borrower or any affiliate) invalidity of
loan documents or security interests.
Takeout
Financing: Arrangements regarding the permanent financing
to refinance the Bridge Facility shall be
satisfactory to each of the Agents in its sole
discretion at the first Closing Date.
Indemnification: As provided in Exhibit A hereto.
Governing Law: The law of the State of New York.
- 3 -
<PAGE>
<PAGE>
Conditions
Precedent: (a) The Agents shall be satisfied with
completion of confirmatory due diligence with
respect to Alliance as well as completion of
due diligence concerning BGII.
(b) The Agents shall be satisfied in their
sole discretion with the capital structure of
the Borrower and its subsidiaries after giving
effect to the Tender Offer and the Merger.
Upon completion of the due diligence review
referred to in clause (a) above, the Agents
may require alternative capital structures or
financing amounts (whether debt or equity or
combinations thereof).
(c) The terms, conditions and structure of
the Tender Offer and the Merger, including any
amendments thereto (and the documentation
therefor) including, without limitation, as to
the price per share, shall be in form and
substance satisfactory to the Agents.
(d) BGII shall not have any "poison pill"
rights or shall have redeemed such rights at a
nominal price, or the Agents shall otherwise
be satisfied that such rights are null and
void as applied to the Tender Offer and the
Merger and Section 203 of the Delaware General
Corporation Law shall not prevent the timely
consummation of the Merger.
(e) All conditions in the Tender Offer and
the Merger, as applicable, shall have been
satisfied, and not waived except with the
consent of the Agents, to the satisfaction of
the Agents.
(f) The Agents shall be satisfied that the
proceeds available pursuant to the Bridge
Facility, together with the equity
contributions referred to in clause (b) above
and cash on hand at the Borrower, shall be
sufficient to effect the Tender Offer and
<PAGE>
<PAGE>
the Merger, to pay all fees and expenses in
connection with the Tender Offer and the
Merger and to provide for the ongoing working
capital needs of the Borrower and its
subsidiaries (after giving effect to the
Tender Offer and the Merger).
(g) There shall be no governmental or
judicial action, actual or threatened, that
would, singly or in the aggregate, reasonably
be expected to restrain, prevent or impose
burdensome conditions on the Tender Offer and
the Merger or any of the other transactions
contemplated hereby.
(h) The Agents shall be satisfied with all
legal, tax and accounting matters relating to
the Tender Offer and the Merger and the other
transactions contemplated hereby. All
agreements (including agreements relating to
outstanding indebtedness) relating to, and the
corporate and capital structure of, the
Borrower and its subsidiaries (before and
after giving effect to the Tender Offer and
the Merger and the other transactions
contemplated hereby), and all organizational
documents of such entities shall be reasonably
satisfactory to the Agents.
(i) All requisite third parties and
governmental authorities (domestic and
foreign) shall have approved or consented to
the Tender Offer and the Merger and the other
transactions contemplated hereby to the extent
required and the Borrower and its subsidiaries
(both before and after giving effect to the
Tender Offer and the Merger and the other
transactions contemplated hereby) shall be in
compliance in all material respects with their
existing agreements. There shall be no
governmental or judicial action, actual or
threatened, that has or would reasonably be
expected to (if adversely determined), singly
or in the aggregate, restrain, prevent or
impose burdensome conditions on the Tender
Offer and the Merger or the other transactions
contemplated hereby. All applicable
waiting periods shall have expired without any
action being taken by any competent authority
which restrains, prevents, or imposes
materially adverse conditions upon the Tender
<PAGE>
- 2 -
<PAGE>
Offer and the Merger or any of the other
transactions contemplated hereby.
Additionally, there shall not exist any
judgment, order, injunction or other restraint
prohibiting or imposing materially adverse
conditions upon the Tender Offer and the
Merger or the other transactions contemplated
hereby.
(j) There shall be no litigation or
administrative proceedings or other legal or
regulatory developments, actual or overtly
threatened, that, in the judgment of the
Agents, singly or in the aggregate, involve a
reasonable possibility of a material adverse
effect on the condition (financial or
otherwise), operations, business, assets,
liabilities (contingent or otherwise) or
prospects of the Borrower or BGII individually
or the Borrower and its subsidiaries taken as
a whole (after giving effect to the
transactions contemplated hereby) or the
ability of the Borrower to fully and timely
perform its obligations under the definitive
credit documentation, or the ability of the
parties to consummate the financing or the
other transactions contemplated hereby or
the validity or enforceability of any of the
definitive credit documentation or the rights,
remedies and benefits available to the Agents
under the definitive credit documentation, or
which would be materially inconsistent with
the stated assumptions underlying any
projection provided to the Agents by the
Borrowers.
(k) All loans and other financing to the
Borrower shall be in full compliance with all
applicable requirements of Regulations G, T, U
and X of the Board of Governors of the Federal
Reserve System.
(l) All costs, fees, expenses (including,
without limitation, legal fees and expenses)
and other compensation contemplated hereby
payable to the Agents shall have been paid to
the extent due.
- 3 -
<PAGE>
<PAGE>
(m) The Agents shall have received a pro
forma balance sheet, as at a date within 30
days of the first Closing Date, for the
Borrower and its subsidiaries prepared in
accordance with generally accepted accounting
principles after giving effect to the Tender
Offer and the Merger and the other
transactions contemplated hereby.
(n) The Agents shall have been granted a
perfected security interest in all assets to
the extent described above under the heading
"Security".
(o) There shall have occurred no material
adverse change in the business, assets,
liabilities (contingent or otherwise),
operations, condition (financial or
otherwise), solvency, prospects or material
agreements of (x) BGII and its subsidiaries,
taken as a whole, since December 31, 1994 or
(y) the Borrower and its subsidiaries (before
and after giving effect to the Tender Offer
and the Merger), taken as a whole, since
June 30, 1994.
(p) The Borrower shall have repaid or caused
to have been repaid all indebtedness and other
obligations owing under the CF Agreement and
shall have obtained releases of all security
interests relating to such indebtedness and
other obligations so repaid to permit a
perfected first priority security interest in
favor of the lenders, or obtained consents
from the lending parties under the CF
Agreement to permit a perfected second
priority security interest on the assets
securing obligations under the CF Agreement in
favor of the lenders on terms satisfactory to
the Agents.
(q) The Agents shall have received such other
legal opinions, corporate documents,
appraisals and other instruments and/or
certificates as they may reasonably request.
- 4 -
<PAGE>
<PAGE>
June 15, 1995
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Attention: Mr. Steve Greathouse
President
Gentlemen:
This is the Fee Letter referred to and defined in our
proposal letter to you dated the date hereof. Unless otherwise
defined herein, capitalized terms herein shall have the meanings
given to them in such proposal letter. Upon acceptance of the
Agents' commitments which, if made, would be set out in a
separate writing from each of the Agents, you agree to pay to the
Agents the following aggregate fees and other considerations
described below.
Our proposed fee structure on the Senior Secured Bridge
Facility (the "Bridge Facility"), which would total $150 million,
would include:
. 1.50% commitment fee on the entire Bridge Facility,
payable upon your acceptance of the commitment. This
fee will be refunded to you if the Bridge Facility is
not funded due to the results of our due diligence of
each of Alliance and BGII.
. 2.50% drawdown fee on the amount of the Bridge Facility
drawn, payable upon such drawdown.
. As you choose at the time of the Merger, either (i) a
cash fee of $2 million or (ii) a cash fee of $500,000
and 81/2 year warrants (the "Warrants") to purchase
5.26% of the Adjusted Equity of the Parent at the time
of the first drawdown with an exercise price equal to
85% of the average closing bid and offer price of your
common stock over the ten trading days ending on the
first Closing Date, payable or issuable on the closing
of the Merger. "Adjusted Equity" means the sum of
(A) the number of shares of Parent stock outstanding at
the time of the first drawdown and (B) the number of
shares issuable on conversion or exercise of options,
warrants or convertible securities which are
outstanding on that date ("Outstanding Common Stock
Equivalents") and which are in the money, vested and
exercisable on that date. If while the Warrants remain
outstanding, an Outstanding Common Stock Equivalent not
<PAGE>
<PAGE>
previously included in the calculation of Adjusted
Equity is converted or exercised, the number of shares
then issuable on exercise of the Warrants will be
increased by an amount equal to 5.26% of the shares
issued on such conversion or exercise. If the
conversion or exercise privilege of a security included
pursuant to clause (B) of the preceding sentence
lapses, the number of shares covered by the Warrants
will be proportionately reduced. Payment of the
$2,000,000 cash fee may be deferred for up to one year
but if deferred beyond 30 days from the closing of the
Merger such cash fee will be increased by the aggregate
increase in the market price of the number of shares
$2,000,000 would purchase (based upon the average
closing bid and offer price of your common stock over
the ten trading days ending on the first Closing Date)
from the time of Merger until the time of payment.
. If BGII is acquired by an unaffiliated third party, a
fee equal to 20% of any profits realized on BGII stock
purchased prior to closing of the Tender Offer, net of
reasonable out-of-pocket expenses.
. 20% of any "break-up", "walk away" or other fees paid
to you by BGII, net of reasonable out-of-pocket
expenses.
We look forward to working with you on this
transaction.
Sincerely,
BANKERS TRUST COMPANY
By:____________________________
Name: BRUCE D. CLASSON
Title: MANAGING DIRECTOR
INDOSUEZ CAPITAL
By:____________________________
Name: JOHN G. POPP
Title: MANAGING DIRECTOR
- 2 -
<PAGE>
<PAGE>
Agreed to and Accepted as of
the date first written above:
ALLIANCE GAMING CORPORATION
By:__________________________
Name: STEVE GREATHOUSE
Title: PRESIDENT/CEO
- 3 -
<PAGE>
<PAGE>
June 15, 1995
Alliance Gaming Corporation
4380 Boulder Highway
Las Vegas, Nevada 89121
Attention: Mr. Steve Greathouse
President
Re: Indemnity Letter
Gentlemen:
In connection with our letter dated the date hereof
(the "Agreement"):
You hereby agree to indemnify and hold harmless us and
our affiliates and our and their respective directors, officers,
partners, agents, employees, representatives and control persons
(collectively, the "Indemnified Persons") from and against any
losses, claims, damages, liabilities or expenses incurred by them
(including reasonable fees and disbursements of counsel) which
(i) are related to or arise out of (A) actions taken or omitted
to be taken (including any untrue statements made or any
statements omitted to be made) by you or (B) actions taken or
omitted to be taken by an Indemnified Person with your consent or
in conformity with your actions or omissions thereby or (ii) are
otherwise related to or arise out of or in connection with, in
each case, the proposed transaction giving rise to or
contemplated by the Agreement, or execution of letter agreements
or other related activities, and to promptly reimburse any
Indemnified Person for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel) as
incurred by any Indemnified Person in connection with
investigating, preparing or defending any such action or claim.
You will not, however, be responsible for any losses, claims,
damages, liabilities or expenses of an Indemnified Person
pursuant to the preceding sentence to the extent same have
resulted from the gross negligence, bad faith or recklessness of
any Indemnified Person. You also agree that if any
indemnification sought by an Indemnified Person pursuant to the
Agreement is for any reason held by a court to be unavailable,
then you and we will contribute to the losses, claims,
liabilities, damages and expenses for which such indemnification
is held unavailable in such proportion as is appropriate to
reflect the relative benefits received by you on the one hand and
by us on the other hand from the actual or proposed transactions
giving rise to or contemplated by the Agreement, and also the
relative fault of you, on the one hand, and of us and the
Indemnified Person, on the other, subject to the limitation that
<PAGE>
<PAGE>
in any event our aggregate contribution to all losses, claims,
damages, liabilities and expenses with respect to which
contributions are available hereunder will not exceed the amount
of fees actually received by us from you pursuant to the proposed
transaction giving rise to the Agreement. For purposes of
determining the relative benefits to you on the one hand, and us
on the other hand under the proposed transaction giving rise to
or contemplated by the Agreement, such benefits shall be deemed
to be in the same proportion as (i) the total value paid or
proposed to be paid by you pursuant to the transactions whether
or not consummated for which we are providing services as
provided in the Agreement bears to (ii) the fees paid or proposed
to be paid by you or on your behalf to us in connection with the
proposed transaction giving rise to or contemplated by the
Agreement. Your indemnity, reimbursement and contribution
obligations under this agreement shall be in addition to any
rights that we or any other Indemnified Person may have at common
law or otherwise.
You shall not be liable for the settlement, compromise
or consent to entry of any judgment in a pending or threatened
claim, action, suit or proceeding effected without your consent
(not to be unreasonably withheld). You further agree that you
will not, without our prior written consent (not to be
unreasonably withheld), settle or compromise or consent to
the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not we or any other
Indemnified Person is an actual or potential party to such claim,
action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of us and each other
Indemnified Person from all liability and obligations arising
therefrom. You further agree that neither we nor any of our
affiliates, nor any directors, officers, partners, agents,
employees, representatives or control persons of us or any of our
affiliates shall have any liability to you arising out of or in
connection with the proposed transaction giving rise to or
contemplated by the Agreement except for such liability for
losses, claims, damages, liabilities, or expenses to the extent
they have resulted from our or their gross negligence, bad faith
or recklessness. You hereby consent to personal jurisdiction and
service and venue in any court in which any claim which is
subject to the Agreement is brought against us or any other
Indemnified Person. This indemnity agreement may not be amended
or modified except in writing. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, AND ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THE AGREEMENT IS
HEREBY WAIVED. YOU HEREBY SUBMITT TO THE NON-EXCLUSIVE
JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN
- 2 -
<PAGE>
<PAGE>
THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO
THE AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY.
These provisions shall remain in full force and effect
following the expiration or termination of the Agreement. The
provisions hereof shall inure to the benefit of and be binding
upon our successors and assigns, and the successors and assigns
of each other Indemnified Person.
Very truly yours,
BANKERS TRUST COMPANY
By:____________________________
Name: BRUCE D. CLASSON
Title: MANAGING DIRECTOR
INDOSUEZ CAPITAL
By:____________________________
Name: JOHN G. POPP
Title: MANAGING DIRECTOR
Agreed to and Accepted as of
the date first written above:
ALLIANCE GAMING CORPORATION
By:________________________________
Name: STEVE GREATHOUSE
Title: PRESIDENT/CEO
- 3 -
<PAGE>
<PAGE>
Exhibit 2
ALLIANCE GAMING CORPORATION
June 19, 1995
The Board of Directors
Bally Gaming International, Inc.
6601 S. Bermuda Road
Las Vegas, NV 89119
Gentlemen:
Our board of directors has directed me to transmit to
you the enclosed offer to acquire Bally Gaming International,
Inc. ("BGII") for $12.50 per share. Approximately 60% of the
outstanding shares not already held by us would be acquired for
cash, and the remainder would be exchanged for Alliance Gaming
Corporation ("Alliance") stock valued on the basis of Alliance's
market price, subject to an appropriate collar.
We have received a letter from Bankers Trust Company
and Indosuez Capital, the merchant banking arm of Banque
Indosuez, experienced gaming industry lenders, indicating their
interest in committing to provide $150,000,000 in financing for
our offer and related refinancings, subject to their due
diligence review of BGII. They have carefully reviewed Alliance
and are already familiar with all the public information relating
to BGII.
On the basis of the events of the past two months and
our extensive discussions with BGII and its representatives, we
believe that a combination between our two companies makes good
business sense, for the following reasons:
1. The combination of our two companies will create a
company well-equipped to take advantage of opportunities in
an evolving gaming industry that despite its explosive
growth has been relatively slow to modernize its gaming and
security systems.
2. A key focus of Alliance's strategy is to use
advanced technology to improve gaming's entertainment value
and security, and we believe the combination of our systems'
<PAGE>
<PAGE>
capabilities with BGII will create significant value for
stockholders.
3. Alliance brings proven and experienced gaming
management and access to capital.
4. With the combination of BGII's product lines,
distribution and managerial strengths and Alliance's
advanced technological capabilities, Alliance/BGII can be a
key supplier in filling the growing demand for innovative
products in the gaming industry.
We believe our offer is clearly superior to the WMS
offer:
1. The price we are offering represents a substantial
premium over your current market price and is higher than
the value of the WMS offer.
2. The consideration is largely cash, giving your
stockholders more certainty as to the value of our offer.
3. Our offer is not conditioned on disposition of
substantial assets.
4. We believe our offer has a significant timing
advantage over the WMS offer. Our transaction could be
promptly completed in two stages to get the cash portion to
your stockholders quickly. Also, we are well known to your
regulators, are already licensed in Nevada and believe that
we could quickly obtain the needed regulatory approvals.
5. We are prepared to take appropriate steps to
foster continuity of management.
6. We are familiar with BGII and its industry and
believe we could quickly finalize a definitive agreement.
We do not believe your other stockholders will support
a complex, conditional transaction, with regulatory
uncertainties, in the face of our straightforward, primarily cash
offer for your entire company. Continued pursuit of discussions
with WMS are no longer in BGII's best interest. As you know, we
hold 500,000 shares of your stock and are prepared, in light of
our superior proposal, to join with other stockholders in
opposing the WMS deal.
Our offer would be subject to mutually acceptable
documentation, regulatory approvals and other customary
conditions. The offer would give us the exclusive right to
- 2 -
<PAGE>
<PAGE>
negotiate a business combination with you for 30 days. However,
as indicated below, the exclusivity period may be unnecessary.
We understand that the BGII board will not be meeting
before Friday of this week at the earliest, and likely not until
next week. As you know, we would like to have the opportunity to
present our offer to you directly at that meeting, accompanied by
our lenders. Moreover, we request that you grant us and our
lenders immediate due diligence, and we will give the same
opportunity to you. If you are willing to delay your meeting
until the middle or end of next week, we believe both companies
could have their due diligence substantially completed by the
time you meet, thereby eliminating uncertainty and confirming our
willingness to proceed. In this regard we understand that you
are not currently bound by any contract restricting your right to
grant us such access, and we agree to be bound by the
confidentiality provisions of the enclosed offer with respect to
information we receive in connection therewith. We also request
that you instruct your counsel to begin preparing with our
counsel, Milbank, Tweed, Hadley & McCloy, a definitive merger
agreement; we believe it should be possible to have such an
agreement negotiated and finalized by the time you meet as well.
Our offer will expire at the close of business on the
day of your next board meeting but no later than June 30. Our
offer can be accepted by signing a counterpart and returning it
to us or as we reasonably anticipate by signing a definitive
agreement. We expect that you will not take any action with
respect to the WMS proposal or otherwise that will inhibit our
ability to proceed. We should be able to enter into a definitive
agreement concurrently with approval at your board meeting,
rendering the attached offer unnecessary.
In view of the immediacy of our proposal, the public
nature of our mutual due diligence reviews and the impact it will
have on the market for both your and our shares and our
obligations under the securities laws, we have made this letter
public.
Very truly yours,
Steve Greathouse
- 3 -
<PAGE>
<PAGE>
ALLIANCE GAMING CORPORATION
June 19, 1995
Bally Gaming International, Inc.
6601 S. Bermuda Road
Las Vegas, NV 89119
Attn: Richard Gillman, Chairman of the Board
and Chief Executive Officer
Dear Dick:
The purpose of this letter is to confirm our present
mutual intentions regarding the proposed acquisition (the
"Acquisition") by a wholly-owned direct or indirect subsidiary
formed for the purpose ("Sub") of Alliance Gaming Corporation, a
Nevada corporation ("Alliance"), of Bally Gaming International,
Inc., a Delaware corporation (the "Company").
The acquisition price would be $12.50 per share,
approximately 60% of which would be payable in cash and the
remainder of which would be Alliance stock, valued at the same
price over a ten trading day period ending five business days
prior to the proposed effective date of the merger, subject to an
appropriate collar.
Consummation of the Acquisition is subject to (1) the
negotiation and execution of a mutually acceptable definitive
acquisition agreement setting forth the terms and conditions of
the Acquisition, (2) the completion of a due diligence
investigation by each party with respect to the other in all
respects satisfactory to the investigating party and (3) the
availability to Alliance of financing necessary to pay the cash
portion of the acquisition price. We are prepared to commence
negotiation of a definitive acquisition agreement and our due
diligence investigation immediately and believe we can complete
both promptly. We expect that a definitive acquisition agreement
would contain customary terms and conditions for an acquisition
of this nature, including (i) customary representations and
warranties from the Company and Alliance (none of which shall
survive the consummation of the Acquisition), (ii) covenants with
<PAGE>
<PAGE>
respect to the operation of the business of the Company and
Alliance and their respective subsidiaries between the time of
the execution of the definitive acquisition agreement and the
closing, (iii) conditions to the parties' obligations to close,
including, without limitation, continued accuracy of
representations and warranties and compliance with covenants and
receipt by all parties of all corporate, regulatory and other
third party approvals and authorizations necessary to consummate
the Acquisition. Our legal counsel is prepared to commence the
preparation of a first draft of such a definitive acquisition
agreement as soon as you return a signed copy of this letter to
us.
Promptly following your execution and delivery of this
letter in the manner provided below and until the Termination
Date (as defined below), each party (the "Providing Party") will
provide to the other (and in the case of Alliance, any person or
organization who is considering providing financing to Alliance
to finance all or any portion of the acquisition price) (the
"Receiving Party") and their respective officers, directors,
employees, agents, counsel, accountants, financial advisors,
consultants and other representatives (together,
"Representatives") with full access, upon reasonable prior
notice, to all officers, employees and accountants of the
Providing Party and its subsidiaries and to their assets,
properties, contracts, books, records and all such other
information and data concerning the business and operations of
the Providing Party and its subsidiaries as the Receiving Party
or any of such other persons reasonably may request in connection
with such investigation. The Receiving Party will, and will use
its best efforts to cause such other persons to, hold in strict
confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law
(including, without limitation, in connection with obtaining the
necessary approvals of the Acquisition of governmental or
regulatory authorities), and to refrain from using for any
purpose other than determining the desirability of the
Acquisition, all documents and information concerning the
Providing Party and its subsidiaries made available pursuant to
this letter in connection with the Receiving Party's due
diligence investigation, except to the extent that such documents
or information can be shown to have been or become available to
the Receiving Party or its Representatives on a non-confidential
basis.
In consideration of the substantial expenditure of
time, effort and expense to be undertaken by Alliance and its
Representatives immediately upon your execution and delivery of
this letter, you hereby undertake and agree (and will undertake
and agree in the definitive acquisition agreement) that, for the
period from the date hereof until the consummation of the
- 2 -
<PAGE>
<PAGE>
Acquisition, or if a definitive acquisition agreement is not
executed and delivered on or prior to July 19, 1995(1) (the
"Termination Date"), until the Termination Date, the Company will
not, nor will the Company permit any of its subsidiaries or
affiliates (or authorize or permit any of their respective
Representatives) to, take, directly or indirectly, any action to
initiate, assist, solicit, receive, negotiate, encourage or
accept any offer or inquiry from any person (a) to engage in any
Business Combination (as defined below), (b) to reach any
agreement or understanding (whether or not such agreement or
understanding is absolute, revocable, contingent or conditional)
for, or otherwise attempt to consummate, any Business Combination
or (c) to furnish or cause to be furnished any information with
respect to the Company or any of its subsidiaries to any person
(other than as contemplated by this letter) who the Company or
any such subsidiary, affiliate or Representative knows or has
reason to believe is in the process of considering any Business
Combination. If the Company or any such subsidiary, affiliate or
Representative receives from any person any offer, inquiry or
informational request referred to above, the Company will
promptly advise such person, by written notice, of the terms of
this paragraph and will promptly, orally and in writing, advise
Alliance of such offer, inquiry or request and deliver a copy of
the foregoing notice to Alliance. For purposes hereof, "Business
Combination" means any merger, consolidation or combination to
which the Company or any of its subsidiaries is a party, any
sale, dividend, split or other disposition of capital stock or
other equity interest of the Company or any of its subsidiaries
or any sale, dividend or other disposition of all or a
substantial part of the assets and properties of the Company or
any of its subsidiaries.
Alliance and the Company agree that money damages would
not be a sufficient remedy for any breach of any provision of the
two preceding paragraphs by the other, and that in addition to
all other remedies which any party hereto may have, each party
will be entitled to specific performance and injunctive or other
equitable relief as a remedy for any such breach. No failure or
delay by any party hereto in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will
any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or
privilege hereunder.
This letter is intended to be a summary evidencing the
current intentions of the parties with respect to the Acquisition
as reflected in discussions between our Representatives to date,
__________________
(1) Outside date; we believe this could be accelerated with
prompt access for due diligence.
- 3 -
<PAGE>
<PAGE>
and it is expressly understood that (1) this letter is not
intended to, and does not, constitute an agreement to consummate
the Acquisition or to enter into a definitive acquisition
agreement and (2) the parties hereto will have no rights or
obligations of any kind whatsoever relating to the Acquisition by
virtue of this letter or any other written or oral expression by
our respective Representatives unless and until a definitive
acquisition agreement is executed and delivered; provided that
the respective obligations of the Company and Alliance contained
in the preceding three paragraphs and in the following paragraph
will be binding on the Company and Alliance, as the case may be,
when the Company has signed and returned a copy of this letter to
Alliance in the manner provided below.
Whether or not the transactions contemplated hereby are
consummated, each of the Company and Alliance will pay its own
costs and expenses incurred in connection with the preparation
and negotiation of this letter and any definitive acquisition
agreement and their respective due diligence investigations.
This letter shall be governed by and construed in
accordance with the laws of the State of New York without giving
effect to the conflicts of laws principles thereof.
If you are in agreement with the foregoing, please so
indicate by signing two copies of this letter in the space set
forth below and returning one of such signed copies to the
undersigned, whereupon this letter shall constitute our binding
agreement in accordance with the terms and provisions set
forth above. Notwithstanding anything to the contrary contained
herein, this letter shall not be effective against either
Alliance or the Company unless signed by the Company and returned
to Alliance on or prior to the day of your next board meeting,
but not later than June 30, 1995.
Very truly yours,
Alliance Gaming Corporation
By:__________________________
Name: Steve Greathouse
Title: Chief Executive Officer
<PAGE>
<PAGE>
Accepted and agreed to as of the
______ day of June, 1995:
Bally Gaming International, Inc.
By:_______________________
Name:
Title:
- 4 -
<PAGE>
