As Filed with the Securities and Exchange Commission on June 21, 1999
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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INTERNATIONAL GAME TECHNOLOGY
(Exact name of registrant as specified in its charter)
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Nevada 3990 88-0173041
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
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9295 Prototype Drive
Reno, Nevada 89511
(775) 448-7777
(Address, including zip code, and telephone number, including
area code,
of registrant's principal executive offices)
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Brian McKay copy to:
Senior Vice President J. Jay Herron, Esq.
and General Counsel Stephanie I. Splane,
International Game Esq.
Technology O'Melveny & Myers LLP
9295 Prototype Drive 275 Battery Street,
Reno, Nevada 89511 26th Floor
(775) 448-7777 San Francisco,
California 94111
(415) 984-8900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the Securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. ?
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ?
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.
<PAGE>
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------
Proposed
Maximum Amount of
Title of Amount to Offering Aggregate Registration
Securities Being be Price Per Offering Fee (2)
Registered Registered Unit (1) Price(1)
- --------------------------------------------------------------------
7.875% Senior $400,000,000 100% $400,000,000 $110,152
Exchange Notes
due 2004
- --------------------------------------------------------------------
8.375% Senior $600,000,000 100% $600,000,000 $165,092
Exchange Notes
due 2009
- --------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 of the General Rules and Regulations under the Securities Act.
(2) Calculated pursuant to Rule 457(f)(2) based on the book value on June 18,
1999 of the Exchange Notes to be received by the Registrant in the exchange
described herein.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
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<PAGE>
SUBJECT TO COMPLETION, DATED _____________, 1999
PROSPECTUS
[LOGO]
International Game Technology
Offer to Exchange
All Outstanding 7.875% Senior Notes due 2004
For 7.875% Senior Exchange Notes due 2004
and
All Outstanding 8.375% Senior Notes due 2009
For 8.375% Senior Exchange Notes due 2009
----------------
We are offering to exchange all validly tendered and not validly withdrawn
Outstanding Notes for an equal amount of Exchange Notes that are registered
under the Securities Act of 1933.
The terms of the Exchange Notes we will issue in exchange for the Outstanding
Notes are substantially identical to those of the Outstanding Notes, except that
certain transfer restrictions and registration rights relating to the
Outstanding Notes will not apply to the Exchange Notes.
Our Exchange Offers will expire at 5:00 p.m., New York City time, on ________,
1999, unless extended.
You may withdraw Outstanding Notes tendered for exchange at any time prior to
the expiration of the Exchange Offers.
We will not receive any proceeds from the Exchange Offers.
Before participating in the Exchange Offers, please refer to
the section in this prospectus entitled "Risk Factors" beginning
on page 13.
----------------
Neither the Nevada Gaming Commission, the Nevada State Gaming Control Board,
the Mississippi Gaming Commission, nor any other gaming regulatory authority has
passed upon the adequacy or accuracy of this prospectus or the investment merits
of the notes offered hereby. Any representation to the contrary is unlawful.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
The date of this prospectus is ______________, 1999.
----------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
TABLE OF CONTENTS
Page
Forward-looking Statements ii
Certain Definitions ii
Summary 1
Risk Factors 13
The Exchange Offers 18
Use of Proceeds 26
Capitalization 27
Selected Consolidated Financial Information 28
Business 30
Regulation and Licensing 38
Description of Exchange Notes 40
Exchange Offers; Registration Rights 65
Certain United States Federal Tax Consequences 67
Plan of Distribution 70
Where You Can Find More Information 70
Documents Incorporated By Reference 71
Legal Matters 71
Experts 71
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements relate to analyses and other information which are based
on forecasts of future results and estimates of amounts not yet determinable.
These statements also relate to our future prospects, developments and business
strategies.
These forward-looking statements are identified by their use of terms and
phrases such as "anticipate," "believe," "could," "estimate," "expect,"
"intend," "may," "plan," "predict," "project," "will" and similar terms and
phrases, including references to assumptions. These statements are contained in
sections entitled "Summary," "Risk Factors," "Business" and other sections of
this prospectus and in the documents incorporated by reference in this
prospectus.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to be materially
different. Such factors include, but are not limited to, the following: a
decline in demand for IGT's gaming products or reduction in the growth rate of
new and existing markets; delays of scheduled openings of newly constructed or
planned casinos; the effect of changes in economic conditions; a decline in
public acceptance of gaming; unfavorable public referendums or anti-gaming
legislation; unfavorable legislation affecting or directed at manufacturers or
operators of gaming products and systems; delays in approvals from regulatory
agencies; political and economic instability in developing international markets
for IGT's products; a decline in the demand for replacement machines; a decrease
in the desire of established casinos to upgrade machines in response to added
competition from newly constructed casinos; a decline in the appeal of IGT's
gaming products or an increase in the popularity of existing or new games of
competitors; the loss of a significant distributor; changes in interest rates
causing a reduction of investment income or in market interest rate sensitive
investments; loss or retirement of our key executives; approval of pending
patent applications of parties unrelated to IGT that restrict the ability of IGT
to compete effectively with products that are the subject of such pending
patents or infringement upon existing patents; the effect of regulatory and
governmental actions; unfavorable determination of suitability by gaming
regulatory authorities with respect to our officers, directors or key employees;
the limitation, conditioning, suspension or revocation of any of our gaming
licenses; fluctuations in foreign exchange rates, tariffs and other barriers;
adverse changes in the credit worthiness of parties with whom IGT has forward
currency exchange contracts; the loss of sublessors of the leased properties no
longer used by IGT; IGT's inability to successfully remedy the Year 2000
readiness issue; and, with respect to legal actions pending against IGT, the
discovery of facts not presently known to IGT or determinations by judges,
juries or other finders of fact which do not accord with IGT's evaluation of the
possible liability or outcome of existing litigation.
We do not undertake to update our forward-looking statements to reflect
future events or circumstances.
----------------
CERTAIN DEFINITIONS
In this prospectus, "IGT," "we," "us," and "our" refer to International Game
Technology and its wholly-owned subsidiaries and their subsidiaries;
"IGT-Australia" refers to I.G.T. (Australia) Pty. Limited; "IGT-Japan" refers to
IGT Japan K.K.; and "IGT-UK" refers to IGT-UK Limited. The references in this
prospectus to "fiscal" and "fiscal year" for IGT refer to the fiscal year ended
September 30.
The following trademarks are owned by us and are registered with the U.S.
Patent and Trademark Office: International Game Technology; IGT; the IGT logo
with spade design; Double Diamond; Megabucks; Player's Edge-Plus; and Red, White
& Blue. IGT also owns the trademark rights to the following: Game King; iGame
with Design (interactive gaming); IGS; IGT Gaming System; MegaJackpots; Nickels
Deluxe; Slot Line; S-Plus Limited Series; Super Megabucks; Totem Pole; Vision
Series; and Vision Slot. Wheel of Fortune is a registered trademark of Califon
Productions, Inc. Jeopardy! is a registered trademark of Jeopardy Productions,
Inc. Five-Deck Frenzy is a trademark of Shuffle Master. Elvis is a registered
trademark of Elvis Presley Enterprises.
<PAGE>
SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because it is a summary, it does not contain all of the information you should
consider before investing. You should read this entire prospectus carefully,
including the section entitled "Risk Factors" and the financial statements and
the related notes to those statements.
The Company
IGT is one of the largest manufacturers of computerized casino gaming
products and operators of proprietary gaming systems in the world and was the
first to develop computerized video gaming machines. IGT was founded in 1980 and
principally has served the casino gaming industry in the United States. In 1986,
IGT began expanding its business internationally and currently manufactures its
gaming products in Australia, Japan and the United Kingdom in addition to the
United States. IGT also maintains sales offices in legalized gaming
jurisdictions globally, including Argentina, Brazil, New Zealand, Peru, South
Africa and The Netherlands. IGT is currently licensed to provide gaming products
in every significant legalized gaming jurisdiction in the world. International
jurisdictions accounted for 23% of our total revenue in the fiscal year ended
September 30, 1998 and 31% for the six months ended April 3, 1999.
IGT operates principally in two lines of business: (1) the development,
manufacturing, marketing and distribution of gaming products, what we refer to
as "Gaming Product Sales" and (2) the development, marketing and operation of
wide-area progressive systems, what we refer to as "Gaming Operations."
Gaming Product Sales. IGT manufactures a broad range of microprocessor-based
gaming machines, consisting of traditional spinning reel slot machines, video
gaming machines and government-sponsored and other video gaming devices. We
offer products with such brand names as Double Diamond; Red, White and Blue;
Five Times Pay; Bonus Poker and Deuces Wild. We typically sell our machines
directly to casino operators, but may in certain circumstances finance the sale
or lease of equipment to the operator. In the North American gaming market, IGT
holds an estimated 64% share of the installed base of gaming machines and an
estimated 76% share of the installed base of casino gaming machines. We believe
our market share is the result of our research and development in video and slot
technology, the efforts of our experienced sales force and our focus on customer
service and reliability.
In addition to gaming machines, IGT develops and sells computerized casino
management systems which provide casino operators with slot and table game
accounting, player tracking and specialized bonusing capabilities. We also
develop and sell specialized video lottery terminals for lotteries and other
applications and computerized linked proprietary systems to allow the lottery
authorities to monitor video lottery terminals. We derive revenue related to the
operation of these systems and collect license and franchise fees for the use of
the systems. In fiscal 1998, gaming product sales produced $477.0 million of
revenue and $82.4 million of EBITDA. For the six months ended April 3, 1999,
gaming product sales produced $276.2 million of revenue and $31.1 million of
EBITDA.
Gaming Operations. Approximately 3% of the installed base of gaming machines
are revenue sharing machines, which include wide-area progressive systems and
stand-alone machines in which the manufacturer participates in the revenue from
the machine on a percentage or fee basis. Wide-area progressive systems are
electronically-linked, inter-casino systems that link gaming machines to a
central computer, allowing the system to build a "progressive" jackpot with
every wager made throughout the system until a player hits a winning
combination. In the North American market, IGT estimates it holds more than an
80% share of the installed base of revenue sharing machines.
We have developed and operated wide-area progressive systems for over 10
years. As of September 30, 1998, IGT operated 92 such systems in 14
jurisdictions under such brand names as Jeopardy!, Megabucks, Quartermania and
Wheel of Fortune. IGT operates some of these systems under joint marketing
alliances with Anchor Gaming ("Anchor") and Shuffle Master Gaming. The purpose
of these strategic alliances is to combine the game development efforts of other
companies with IGT's wide-area progressive system expertise. Wide-area
progressive systems are designed to increase gaming machine play for
participating casinos by giving players the opportunity to win larger or more
frequent jackpots than on machines not linked to progressive systems. Win (net
earnings to the operator) per machine on machines linked to progressive systems
are generally higher than on stand-alone machines.
<PAGE>
In fiscal 1998, gaming operations produced $347.1 million of revenue and $181.8
million of EBITDA. For the six months ended April 3, 1999, gaming operations
produced $166.4 million of revenue and $95.2 million of EBITDA.
Strategy. IGT's engineering and game design staff continually work to provide
innovations in slot and video technology. IGT spent approximately $38.1 million
for research and development in fiscal 1998. Innovations from research and
development increase our gaming machines' earning potential and entertainment
value by: improving the ease and speed of play, using local game preferences,
enhancing entertainment via larger jackpots, sound, bonus features and overall
aesthetics and decreasing down time through improved reliability. Historically,
the introduction of innovative products coupled with the addition of new casinos
have fueled the replacement market by encouraging existing casinos to upgrade to
new slot products in order to remain competitive.
In addition to replacement demand, we believe that material machine orders
will come from new casino openings and casino expansions. We have already
shipped products to Mandalay Bay and The Venetian, two mega-resorts that have
recently opened in Las Vegas and have commitments for product purchases from The
Resort at Summerlin. In addition, another mega-resort, Paris Resort, is
scheduled to open in Las Vegas in 1999, three casinos are planned for
development in Atlantic City in 2002 and beyond and three casinos are planned
for development or are under construction in Detroit.
To capitalize on these and other future opportunities, management is
committed to:
o innovative new product development like our Game King,
iGame-Plus, Vision Series and S-Plus Limited lines;
o development and rollout of new wide-area progressive systems
like Jeopardy!, Wheel of Fortune, Elvis and Party Time;
o continued focus on customer service and reliability through our more than
400 trained sales and service personnel; and
o increased focus on opportunities to roll out IGT products and systems into
new markets including international jurisdictions.
Address and Telephone Number
Our principal executive offices are located at 9295 Prototype Drive, Reno,
Nevada 89511; our telephone number is (775) 448-7777.
Recent Developments
Acquisition of Sodak Gaming, Inc.
On March 10, 1999, IGT and Sodak Gaming, Inc. ("Sodak") announced the signing
of a merger agreement by which IGT will acquire Sodak for approximately $228
million plus fees and expenses. Upon the closing of the merger each Sodak
shareholder will receive $10.00 in cash for each share of Sodak common stock.
After the merger closes, which we expect to occur in the second half of 1999,
Sodak will be a wholly-owned subsidiary of IGT.
Sodak distributes and finances gaming products, mainly IGT products, and
provides wide-area progressive systems primarily to Native American casinos.
Sodak also provides financing for gaming ventures on Native American lands,
operates a riverboat casino entertainment facility in Marquette, Iowa and holds
a 50% interest in a joint venture with Hollywood Casino Corporation to develop a
riverboat casino entertainment complex in Shreveport, Louisiana.
Sodak has been IGT's exclusive distributor of gaming products to Native
American casinos since 1989. During fiscal 1998, Sodak was the largest purchaser
of IGT's products, accounting for approximately 8% of total product sales.
<PAGE>
Sodak also has an exclusive agreement with IGT to provide and market wide-area
progressive systems to Native American casinos.
In addition to customary and certain other closing conditions, the
acquisition of Sodak is contingent on the following:
(1)the receipt by IGT and Sodak of all government approvals (including those
of gaming authorities) required in connection with the merger;
(2)the disposition of Sodak's Miss Marquette riverboat casino entertainment
complex in accordance with the terms of the merger agreement;
(3)the disposition of Sodak's 50% interest in the joint venture with
Hollywood Casino Corporation in accordance with the terms of the merger
agreement; and
(4)the president and certain other employees having continued in the employ
of Sodak and being employed by Sodak at the effective time of the merger.
On March 31, 1999, Sodak and a subsidiary of Hollywood Casino Corporation
entered into an agreement pursuant to which such subsidiary would purchase Sodak
Louisiana, LLC, the wholly-owned subsidiary of Sodak which owns the 50% joint
venture interest in the Shreveport project. Sodak will receive $2.5 million for
Sodak Louisiana, which is equal to the capital contribution made by Sodak
Louisiana to the Shreveport project. The agreement has been approved by the
Louisiana Gaming Control Board and the transfer of Sodak's interest to the
subsidiary of Hollywood Casino Corporation was finalized on April 23, 1999.
For the twelve months ended December 31, 1998, Sodak generated approximately
$133 million of revenue and $23 million of EBITDA. After giving effect to the
merger, for the twelve months ended January 2, 1999, IGT would have had pro
forma revenue of approximately $966 million and pro forma EBITDA of
approximately $296 million. Pro forma revenue and EBITDA include adjustments for
the effects of sales of IGT products to Sodak.
Sodak's shares trade on the Nasdaq National Market under the symbol "SODK,"
and it files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any reports, statements or other information filed by Sodak at the
SEC's public reference rooms in Washington, D.C., Chicago, Illinois and New
York, New York.
Legislation
On March 22, 1999, legislation was introduced in the Nevada legislature
proposing additional regulations for gaming manufacturers who provide products
to casino customers through revenue sharing arrangements and wide-area
progressive systems. On April 9, 1999, the Judiciary Committee of the Nevada
Assembly approved a compromise version of the bill as agreed upon by the
proponents and opponents of the bill originally introduced. The revised bill
requires gaming manufacturers to pay their "full proportionate share" of: (a)
the Nevada gaming revenue tax; (b) the $80 annual per gaming machine tax; and
(c) the $250 annual tax paid on slot machines by certain Nevada casinos. The
bill also imposes additional regulatory requirements on gaming manufacturers.
The revised bill was passed by the Assembly on April 17, 1999 and passed by the
Senate on May 11, 1999. The bill was approved by the Governor and became
effective on May 21, 1999.
IGT does not believe this legislation will have a material adverse effect on
its results of operations. This legislation was introduced on behalf of some of
our customers, and IGT is working with its customers in an effort to address
their concerns. We cannot predict the outcome of any such efforts or the
financial impact these efforts may have on us.
<PAGE>
Investment in Access Systems Pty. Ltd.
In January 1999, IGT and Access Systems Pty. Ltd. of Sydney, Australia
("Access") signed an agreement to develop a global Internet gaming software
alliance. In June 1999, IGT purchased a 35% interest in Access and agreed to
assist in the marketing of Access' ACES Internet gaming system to major
operators in regulated and legalized Internet gaming markets. Access' ACES
software technology provides gaming operators with a secure, scaleable and
robust high volume transaction-processing platform. The ACES system supports a
broad range of games including lotto, bingo, keno, slots, blackjack and roulette
and also allows Access' customers or other game developers to develop new games
for the ACES system independent of Access. The Austrian Lotteries and Lasseters
Casino are current Access customers.
<PAGE>
SUMMARY OF THE EXCHANGE OFFERS
The following is a summary of the principal terms of the Exchange Offers. A
more detailed description is contained in this prospectus under the caption "The
Exchange Offers." The term "Senior Exchange Notes due 2004" refers to the 7.875%
Senior Exchange Notes due 2004 being offered in our Exchange Offer. The term
"Outstanding Senior Notes due 2004" refers to IGT's currently outstanding 7.875%
Senior Notes due 2004 that IGT is exchanging for its Senior Exchange Notes due
2004. The term "Senior Exchange Notes due 2009" refers to the 8.375% Senior
Notes due 2009 being offered in our Exchange Offer. The term "Outstanding Senior
Notes due 2009" refers to IGT's currently outstanding 8.375% Senior Notes due
2009 that IGT is exchanging for Senior Exchange Notes due 2009. The term
"Outstanding Notes" refers to the Outstanding Senior Notes due 2004 and the
Outstanding Senior Notes due 2009, collectively. The term "Exchange Notes"
refers to the Senior Exchange Notes due 2004 and the Senior Exchange Notes due
2009, collectively. The term "Indenture" refers to the indenture that applies to
both the Outstanding Notes and the Exchange Notes.
The Exchange Offers IGT is offering to exchange $1,000 principal
amount of our Senior Exchange Notes due 2004,
which have been registered under the Securities
Act, for each $1,000 principal amount of our
unregistered Outstanding Senior Notes due
2004. IGT is also offering to exchange $1,000
principal amount of its Senior Exchange Notes
due 2009, which have been registered under the
Securities Act, for each $1,000 principal
amount of its unregistered Outstanding Senior
Notes due 2009. IGT issued the Outstanding
Notes on May 19, 1999 in a private offering.
In order for your Outstanding Notes to be exchanged, you
must properly tender them before the expiration of the
Exchange Offers. All Outstanding Notes that are validly
tendered and not validly withdrawn will be exchanged. IGT
will issue the Exchange Notes on or promptly after the
expiration of the Exchange Offers.
Outstanding Notes may be tendered for exchange in whole or
in part in integral multiples of $1,000 principal amount.
Registration Rights
Agreement IGT sold the Outstanding Notes on May 19, 1999
to a group of initial purchasers which included
Salomon Smith Barney, BNY Capital Markets,
Inc., Goldman, Sachs & Co., Lehman Brothers and
Merrill Lynch & Co. Simultaneously with that
sale, IGT signed a registration rights
agreement relating to the Outstanding Notes
with these initial purchasers which requires
IGT to conduct the Exchange Offers.
You have the right under the registration rights agreement
to exchange your Outstanding Notes for Exchange Notes with
substantially identical terms. The Exchange Offers are
intended to satisfy these rights. After the Exchange Offers
are complete, you will no longer be entitled to any
exchange or registration rights with respect to your
Outstanding Notes.
For a description of the procedures for
tendering Outstanding Notes, see "The Exchange
Offers--Procedures for Tendering Outstanding
Notes."
Consequences of
Failure to Exchange
Your Outstanding If you do not exchange your Outstanding Notes
Notes for Exchange Notes in the Exchange Offers, you
will still have the restrictions on transfer provided in
the Outstanding Notes and in the Indenture. In general, the
Outstanding Notes may not be offered or sold unless
registered or exempt from registration under the Securities
Act, or in a transaction not subject to the Securities Act
and applicable state securities laws. IGT does not plan to
register the Outstanding Notes under the Securities Act.
<PAGE>
Expiration Date The Exchange Offers will expire at 5:00 p.m.,
New York City time, on ________, 1999. This
will be the Expiration Date unless extended by
IGT. If IGT does extend the offers, the
Expiration Date will be the latest date and
time to which an Exchange Offer is extended.
See "The Exchange Offers--Expiration Date;
Extensions; Amendments."
Conditions to the
Exchange Offers The Exchange Offers are subject to conditions
which IGT may waive at its sole discretion.
The Exchange Offers are not conditioned upon
any minimum principal amount of Outstanding
Notes being tendered for exchange. See "The
Exchange Offers--Conditions to the Exchange
Offers."
IGT reserves the right in its sole and absolute
discretion, subject to applicable law, at any
time and from time to time:
o to delay the acceptance of the
Outstanding Notes;
o to terminate either or both Exchange
Offers if specified conditions have not been
satisfied;
o to extend the Expiration Date of either or both Exchange
Offers and retain all tendered Outstanding Notes
subject, however, to the right of tendering holders to
withdraw their tender of Outstanding Notes; and
o to waive any condition or otherwise amend
the terms of the Exchange Offer in any
respect.
See "The Exchange Offers--Expiration Date;
Extensions; Amendments."
Procedures for
Tendering If you wish to tender your Outstanding Notes
Outstanding Notes for exchange, you must
o complete and sign a Letter of Transmittal
according to the instructions contained in
the Letter of Transmittal; and
o forward the Letter of Transmittal by
mail, facsimile transmission or hand
delivery, together with any other required
documents, to the relevant Exchange Agent,
either with the Outstanding Notes to be
tendered or in compliance with the specified
procedures for guaranteed delivery of such
Outstanding Notes.
Specified brokers, dealers, commercial banks, trust
companies and other nominees may also effect tenders by
book-entry transfer.
Please do not send your Letter of Transmittal or
certificates representing your Outstanding Notes to us.
Those documents should only be sent to the Exchange Agent.
Questions regarding how to tender and requests for
information should be directed to the Exchange Agent. See
"The Exchange Offers--Exchange Agent."
<PAGE>
Special Procedures
for Beneficial If your Outstanding Notes are registered in the
Owners name of a broker, dealer, commercial bank,
trust company or other nominee, IGT urges you
to contact such person promptly if you wish to
tender your Outstanding Notes. See "The
Exchange Offers--Procedures for Tendering
Outstanding Notes."
Withdrawal Rights.. You may withdraw the tender of your Outstanding
Notes at any time before the Expiration Date. To do this,
you should deliver a written notice of your withdrawal to
the Exchange Agent according to the withdrawal procedures
described under the heading "The Exchange
Offers--Withdrawal Rights."
Resales of Exchange IGT believes that you will be able to offer for
Notes resale, resell or otherwise transfer the
Exchange Notes issued in the Exchange Offers without
compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that:
o you are acquiring the Exchange Notes in
the ordinary course of your business;
o you are not participating, and have no
arrangement or understanding with any person
to participate, in the distribution of the
Exchange Notes; and
o you are not an affiliate of International
Game Technology.
IGT's belief is based on interpretations by the staff of
the SEC, as shown in no-action letters issued to third
parties unrelated to IGT. The staff of the SEC has not
considered the Exchange Offers in the context of a
no-action letter, and IGT cannot assure you that the staff
of the SEC would make a similar determination with respect
to these Exchange Offers. If IGT's belief is not accurate
and you transfer an Exchange Note without delivering a
prospectus meeting the requirements of the Securities Act
or without an exemption from such requirements, you may
incur liability under the Securities Act. IGT does not and
will not assume, or indemnify you against, such liability.
Each broker-dealer that receives Exchange Notes for its own
account in exchange for Outstanding Notes which were
acquired by such broker-dealer as a result of market-making
or other trading activities must acknowledge that it will
deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such
Exchange Notes. A broker-dealer may use this prospectus for
an offer to sell, resale or other transfer of Exchange
Notes. See "Plan of Distribution."
Exchange Agent The exchange agent for the Exchange Offers is
The Bank of New York. The address, telephone
and facsimile number of the exchange agent are
shown in "The Exchange Offers--Exchange Agent"
section of this prospectus and in the Letter of
Transmittal.
Use of Proceeds IGT will not receive any cash proceeds from the
issuance of the Exchange Notes offered hereby.
See "Use of Proceeds."
<PAGE>
Certain Federal
Income Tax Your acceptance of an Exchange Offer and the
Consequences related exchange of your Outstanding Notes for
Exchange Notes will not be a taxable exchange for United
States federal income tax purposes. You should not
recognize any taxable gain or loss or any interest income
as a result of the exchange.
See "The Exchange Offers" for more detailed information concerning the
Exchange Offers.
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE NOTES
Issuer International Game Technology.
Notes Offered $400,000,000 aggregate principal amount of
7.875% Senior Exchange Notes due 2004 and $600,000,000
aggregate principal amount of 8.375% Senior Exchange Notes
due 2009.
Maturity Date Senior Exchange Notes due 2004: May 15, 2004.
Senior Exchange Notes due 2009: May 15, 2009.
Interest Payment May 15 and November 15 of each year, commencing
Dates November 15, 1999.
Sinking Fund None.
Redemption We may redeem some or all of the Senior
Exchange Notes due 2004 at any time at prices
equal to the greater of (1) 100% of their
principal amount or (2) the sum of the present
value of 100% of the principal amount plus all
required interest payments due on such notes
(excluding accrued but unpaid interest)
discounted to the redemption date at the
treasury yield plus 37.5 basis points, plus
accrued interest on the principal amount being
redeemed to the date of redemption. See
"Description of Exchange Notes -- Optional
Redemption."
We may redeem some or all of the Senior
Exchange Notes due 2009 at any time at prices
equal to the greater of (1) 100% of their
principal amount or (2) the sum of the present
value of 100% of the principal amount plus all
required interest payments due on such notes
(excluding accrued but unpaid interest)
discounted to the redemption date at the
treasury yield plus 50.0 basis points, plus
accrued interest on the principal amount being
redeemed to the date of redemption. See
"Description of Exchange Notes -- Optional
Redemption."
Change of Control Upon a change of control, as defined under the
Indenture, you will have the right to require
us to repurchase all or a portion of your
Exchange Notes at a price equal to 101% of the
principal amount, plus accrued and unpaid
interest, if any, to the date of repurchase.
See "Description of Exchange Notes-- Repurchase
at the Option of Holders Upon a Change of
Control."
Ranking The Exchange Notes are senior unsecured
obligations of IGT, rank equally in right of
payment with any existing and future senior
indebtedness of IGT and rank senior in right of
payment to all future subordinated indebtedness
of IGT. As of April 3, 1999, after giving
effect to the offering of the Outstanding
Notes, the application of the proceeds thereof
and the Exchange Offers, IGT would have had, on
a consolidated basis, approximately $1 billion
of senior indebtedness outstanding.
All existing and future indebtedness and other
liabilities of IGT's subsidiaries, except for
any subsidiaries that become guarantors of the
Exchange Notes in the future, including the
claims of trade creditors and claims of
preferred stockholders, if any, of such
subsidiaries, are effectively senior to the
Exchange Notes. See "Description of Exchange
Notes-- Certain Covenants -- Future Subsidiary
Guarantors." As of April 3, 1999, after giving
effect to the offering of the Outstanding
Notes, the application of the proceeds thereof
and the Exchange Offers, the total balance
sheet liabilities of IGT's subsidiaries were
approximately $643 million of which
approximately $528 million were jackpot
liabilities offset on a dollar-for-dollar basis
by U.S. Treasury securities and cash. The
<PAGE>
Exchange Notes also will be effectively
subordinated to any secured debt of IGT to the
extent of the value of the assets securing such
debt.
Future Subsidiary
Guarantees The Exchange Notes will not be guaranteed when
issued. Subject to limited exceptions, if any
of our domestic subsidiaries have $10 million
or more of indebtedness (other than capital
leases, purchase money obligations and
intercompany indebtedness) or preferred stock
outstanding in the future, they will be
required to guarantee the Exchange Notes. Any
subsidiary guarantees will be released if the
Exchange Notes achieve an investment grade
rating. See "Description of Exchange Notes--
Certain Covenants -- Future Subsidiary
Guarantors."
Certain Covenants The Indenture limits our ability and the
ability of our subsidiaries to, among other
things:
o incur additional indebtedness;
o create liens;
o enter into certain sale and leaseback transactions;
o merge or consolidate with another company; and
o transfer or sell substantially all of our
assets.
All of these limitations are subject to a number of
important qualifications, including the suspension of the
covenants relating to the incurrence of indebtedness and
future subsidiary guarantees if the Exchange Notes achieve
an investment grade rating and the inapplicability of each
of the lien covenant and future subsidiary guarantee
covenant to our subsidiary that holds our domestic gaming
licenses until the earlier of such time as (1) prior
approval of such covenants is received in Nevada or (2) a
registered public offering of the Exchange Notes is made
pursuant to a Nevada regulatory shelf approval that
includes a prior approval of such covenants. See
"Regulation and Licensing" and "Description of Exchange
Notes -- Certain Covenants."
Risk Factors
See "Risk Factors" beginning on page 13 for a discussion of certain factors
that you should carefully consider before exchanging any Outstanding Notes for
Exchange Notes.
<PAGE>
Summary Financial Data
The following table presents financial information with respect to IGT's
operations and financial position. The following information should be read in
conjunction with "Selected Consolidated Financial Information" and IGT's
consolidated financial statements and accompanying notes incorporated by
reference in this prospectus.
<TABLE>
<CAPTION>
Fiscal years ended
Six months ended September 30,
April 3, March 31,
1999 1998 1998 1997 1996
------- -------- ------- ------- -------
(dollars in thousands, except ratios)
<S> <C> <C> <C> <C> <C>
Summary Income Statement Data:
Revenues
Gaming product sales........ $276,220 $ 187,016 $ 477,024 $461,150 $ 481,652
Gaming operations........... 166,357 160,087 347,099 282,820 251,800
------- -------- -------- ------- --------
Total revenue.......... $442,577 $ 347,103 $ 824,123 $743,970 $ 733,452
======== ========= ========= ======== =========
Income from operations........ $ 98,823 $ 96,017 $ 218,877 $191,437 $ 169,833
Other income, net............. 3,842 4,233 15,655 21,188 14,570
----- ------ ------- ------ -------
Income Before Income Taxes.... $102,655 $ 100,250 $ 234,532 $212,625 $ 184,403
======== ========= ========= ======== =========
Net Income.................... $ 68,272 $ 65,163 $ 152,446 $137,247 $ 118,017
======== ========= ========= ======== =========
Other Financial Data:
EBITDA(1)................... $122,145 $ 113,440 $ 260,345 $226,461 $ 200,335
Net cash provided by $100,716 $ 69,721 $ 107,126 $118,082 $ 55,261
operating activities..........
Net cash provided by (used $ 4,782 $(221,231) $(240,061) $(56,572) $(159,800)
in) investing activities....
Net cash provided by (used $(84,054) $ 193,209 $ 164,047 $(79,202) $ 32,376
in)financing activities.....
Ratio of EBITDA to interest 10.5x 20.4x 16.8x 23.4x 19.3x
expense(1)(2)...............
Ratio of total long-term -- -- 1.2x 0.6x 0.5x
debt to EBITDA(1)...........
Ratio of earnings to fixed 9.4x 14.1x 13.8x 19.3x 15.5x
charges(3)..................
Pro forma ratio of earnings 2.8x -- 2.8x -- --
to fixed charges(4).........
Diluted earnings per share.. $ 0.64 $ 0.56 $ 1.33 $ 1.13 $ 0.93
</TABLE>
<TABLE>
<CAPTION>
As of April 3,
1999
<S> <C>
Summary Balance Sheet Data:
Working capital.................................. $ 450,421
Total assets..................................... 1,532,941
Long-term notes payable and capital lease 377,985
obligations, net of current maturities...........
Stockholders' equity............................. 469,151
(Footnotes on following page)
<PAGE>
- ------------
<FN>
(1)EBITDA consists of income from operations excluding depreciation and
amortization as reflected on IGT's Consolidated Statements of Cash Flows.
EBITDA is a measure commonly used by the financial community but is not
prepared in accordance with United States generally accepted accounting
principles. While many in the financial community consider EBITDA to be an
important measure of comparative operating performance, it should be
considered in addition to, but not as a substitute for, income from
operations, net income, cash flows provided by operating activities and other
measures of financial performance prepared in accordance with generally
accepted accounting principles that are included or incorporated by reference
in this prospectus. EBITDA is defined differently for purposes of the
Indenture and may not be comparable to similarly titled measures reported by
other companies. See "Description of Exchange Notes."
(2)Interest expense includes capitalized interest and excludes interest expense
related to jackpot liabilities.
(3)For the purpose of computing this ratio, earnings represent net income
before taxes on income and fixed charges (such fixed charges have been
adjusted to exclude capitalized interest), and equity in undistributed
earnings of 50% owned equity investments. Fixed charges represent interest
expense, excluding the portion related to jackpot liabilities and including
capitalized interest, one-third of total rental expense and amortization of
loan expense related to long-term debt.
(4)For the purpose of computing the pro forma ratio of earnings to fixed
charges, the actual ratio of earnings to fixed charges computed in accordance
with footnote 3 above has been adjusted to reflect the pro forma effect, as
of October 1, 1997 for fiscal 1998, and as of October 1, 1998 for the
six-month period ended April 3, 1999, on fixed charges resulting from the
issuance of the notes and the application of the proceeds thereof. The
foregoing is not pro forma for the acquisition of Sodak. See "Use of
Proceeds."
</FN>
</TABLE>
<PAGE>
RISK FACTORS
You should carefully read this entire prospectus and the documents
incorporated by reference in this prospectus before participating in the
Exchange Offers. Among the factors that may adversely affect an investment in
the notes are the following:
There are consequences associated with failing to exchange the Outstanding Notes
for the Exchange Notes.
If you do not exchange your Outstanding Notes for Exchange Notes in the
Exchange Offers, you will still have the restrictions on transfer provided in
the Outstanding Notes and in the Indenture. In general, the Outstanding Notes
may not be offered or sold unless registered or exempt from registration under
the Securities Act, or in a transaction not subject to the Securities Act and
applicable state securities laws. IGT does not plan to register the Outstanding
Notes under the Securities Act.
Leverage may impair our financial condition and we may incur significant
additional indebtedness.
After the issuance of the Outstanding Notes, we have a significant amount of
indebtedness. As of April 3, 1999, after giving effect to the offering of the
Outstanding Notes, the application of the proceeds thereof and the Exchange
Offers, our total consolidated indebtedness would have been approximately $1
billion. See "Capitalization."
Our significant indebtedness could have important consequences for the
holders of the Exchange Notes, including:
o increasing our vulnerability to general adverse economic and
industry conditions;
o limiting our ability to obtain additional financing to fund future working
capital, capital expenditures, acquisitions and other general corporate
requirements;
o requiring a substantial portion of our cash flow from operations for the
payment of interest on our indebtedness and reducing our ability to use our
cash flow to fund working capital, capital expenditures, acquisitions and
general corporate requirements;
o limiting our flexibility in planning for, or reacting to,
changes in our business and the industry; and
o disadvantaging us compared to competitors with less
indebtedness.
Our ability to meet our debt service obligations on the Exchange Notes and
our other indebtedness will depend on our future performance. In addition, our
bank revolving line of credit requires us to maintain specified financial ratio
tests. Our ability to maintain such ratio tests will also depend on our future
performance. Our future performance will be subject to general economic
conditions and to financial, business, regulatory and other factors affecting
our operations, many of which are beyond our control. If we were unable to
maintain the financial ratio tests under the bank revolving line of credit, the
lenders could terminate their commitments and declare all amounts borrowed,
together with accrued interest and fees, to be immediately due and payable. If
this happened, other indebtedness that contains cross-default or
cross-acceleration provisions, including the Exchange Notes, may also be
accelerated and become due and payable. If any of these events should occur, we
may not be able to pay such amounts and the Exchange Notes.
Subject to conditions in our bank credit facilities and the Indenture, we may
incur significant additional indebtedness. The Indenture does not limit the
manner in which we may use any such additional indebtedness. Accordingly, IGT is
permitted to use any such additional indebtedness for, among other things,
acquisitions, share repurchases or dividends.
<PAGE>
The notes are junior to all liabilities of our subsidiaries.
We are a holding company. Our subsidiaries conduct substantially all of our
consolidated operations and own substantially all of our consolidated assets.
Consequently, our cash flow and our ability to make payments on our
indebtedness, including the Exchange Notes, substantially depends upon our
subsidiaries' cash flow and payments of funds to us by our subsidiaries. Our
subsidiaries are not obligated to make funds available to us for payment on the
Exchange Notes or otherwise. Our subsidiaries' ability to make any payments will
depend on their earnings, the terms of their indebtedness, business and tax
considerations and legal restrictions. The Exchange Notes will effectively rank
junior to all existing and future liabilities, including trade payables, of our
subsidiaries that are not guarantors of the Exchange Notes. On the date the
Outstanding Notes are exchanged for the Exchange Notes, there will be no
subsidiaries that guarantee the Exchange Notes, and there may be none in the
future. The existing credit facilities of IGT currently would not permit any
subsidiary to guarantee the Exchange Notes. See "Description of Notes -- Certain
Covenants -- Future Subsidiary Guarantors." In the event of a bankruptcy,
liquidation or dissolution of a subsidiary that is not a guarantor of the
Exchange Notes, the creditors of such subsidiary will be paid first, after which
the subsidiary may not have sufficient assets remaining to make any payments to
us as a shareholder or otherwise so that we can meet our obligations under the
Exchange Notes. As of April 3, 1999, after giving effect to the offering of the
Outstanding Notes, the application of the proceeds thereof and the Exchange
Offers, the total balance sheet liabilities of IGT's subsidiaries were
approximately $643 million of which approximately $528 million were jackpot
liabilities offset on a dollar-for-dollar basis by U.S. Treasury securities and
cash.
The gaming industry is highly regulated and such regulations may have an impact
on IGT and the holders of the notes.
We are subject to extensive gaming regulations and changes in these
regulations or findings of non-compliance could adversely effect our operations.
The manufacture, sale and distribution of gaming devices and operation of
gaming systems are subject to extensive state laws, regulations of the Nevada
Gaming Commission (the "Nevada Commission") and Nevada State Gaming Control
Board (the "Nevada Control Board") and various other gaming authorities as well
as numerous county and municipal ordinances. These laws, regulations and
ordinances vary from jurisdiction to jurisdiction, but primarily concern the
responsibility, financial stability and character of gaming equipment
manufacturers, distributors and operators, as well as persons financially
interested or involved in gaming operations. Changes in such laws, regulations
and procedures could have an adverse effect on our operations. For example,
legislation recently passed by the Nevada State legislature and approved by the
Governor will, among other things, impose additional regulatory requirements on
IGT and require IGT to pay additional gaming taxes. Gaming manufacturers are
currently subject to significant state and local taxation. Increases in
applicable taxes in any jurisdiction in which we operate could have an adverse
effect on us. See "Summary -- Recent Developments -- Legislation."
We and our licensed gaming subsidiaries are required to submit detailed
financial and operating reports to the various gaming authorities. If it were
determined that gaming laws were violated by a licensee, the gaming licenses it
holds could be limited, conditioned, suspended or revoked. In addition to the
licensee, IGT and the persons involved could be subject to substantial fines for
each separate violation of the gaming laws at the discretion of each gaming
authority. The limitation, conditioning, suspension or revocation of any gaming
license could materially and adversely affect our operations and future
performance.
We may require you to dispose of your Exchange Notes or redeem your Exchange
Notes if required by applicable gaming regulations.
Certain gaming authorities have the power to investigate any debt security
holder of IGT. These gaming authorities may, in their discretion, require the
holder of any debt security of IGT to file applications, be investigated and be
found suitable to own the debt security of IGT. Any person who fails or refuses
to apply for a finding of suitability or a license within 30 days after being
ordered to do so by such gaming authorities may be found unsuitable. Under
certain circumstances, we have the right, at our option, to cause a holder to
dispose of its Exchange Notes or to redeem its Exchange Notes in order to comply
with gaming laws to which we are subject. See "Regulation and Licensing" and
<PAGE>
"Description of Exchange Notes -- Mandatory Disposition Pursuant to Gaming
Laws."
Gaming authority approval is required for filing an Exchange Offer or shelf
registration statement with respect to the Exchange Notes.
The filing of this registration statement with respect to the Exchange Notes
constitutes a public offering of securities of IGT that requires the prior
approval of the Nevada Commission and the Mississippi Gaming Commission. See
"Exchange Offer; Registration Rights" and "Regulation and Licensing." On July
24, 1997 and September 15, 1998, the Nevada Commission and the Mississippi
Gaming Commission, respectively, granted IGT prior approval to make public
offerings of securities for a period of two years subject to some conditions (a
"Shelf Approval"). Each Shelf Approval may be rescinded for good cause without
prior notice upon the issuance of any interlocutory stop order by the chairman
of the Nevada Control Board or the Executive Director of the Mississippi Gaming
Commission, as applicable. In addition, IGT's Shelf Approval in Nevada expires
on July 29, 1999. IGT has filed an application with the Nevada Control Board and
Nevada Commission for a new Shelf Approval which will be considered in July
1999. If this registration statement of which this prospectus is a part is not
declared effective and the Exchange Offers are not commenced by July 29, 1999,
IGT will be precluded from seeking effectiveness of the registration statement
registering the Exchange Notes until a new Shelf Approval is granted by the
Nevada Commission or the Nevada Commission approves the registration statement
registering the Exchange Notes. If a new Shelf Approval is not granted by the
Nevada Commission, or if the Nevada or Mississippi Shelf Approvals were
rescinded, then the registration statement of which this prospectus is a part
will require the separate prior approval of the Nevada Commission or Mississippi
Gaming Commission, as applicable. There can be no assurance that a new Shelf
Approval will be approved by the Nevada Commission or if separate prior
approvals were required by the Nevada Commission or the Mississippi Gaming
Commission that such approvals would be granted in a timely fashion, or at all.
The filing of the registration statement with respect to the Exchange Notes
constitutes a public offering of securities which may require an approval in the
province of Mpumalanga, South Africa. There can be no assurance that such
approval would be granted in a timely fashion, or at all.
There will be no prohibition in the Exchange Notes on encumbering the capital
stock of IGT's licensed operating subsidiary and IGT's licensed operating
subsidiary will not be subject to the future subsidiary guarantee covenant until
we obtain regulatory approval for such covenants or consummate the Exchange
Offers for the Outstanding Notes.
Under Nevada gaming laws, we are prohibited from agreeing not to encumber the
capital stock of, or providing a subsidiary guarantee from, our subsidiary that
holds our domestic gaming licenses unless (1) the applicable covenant is made in
connection with a registered public offering that is being made pursuant to a
Shelf Approval that includes a prior approval of such covenant or (2) we have
obtained the prior approval of the Nevada Control Board and Nevada Commission of
such covenant. Therefore, the lien covenant included in the Indenture will not
prohibit IGT from encumbering the capital stock of its licensed operating
subsidiary and the future subsidiary guarantor covenant will not be applicable
to the licensed operating subsidiary until, in each case, the earlier of such
time as (1) prior approval of the applicable covenant is received in Nevada or
(2) a registered public offering of the Exchange Notes is made pursuant to a
Nevada Shelf Approval that includes a prior approval of such covenant. In the
event IGT grants a lien on the capital stock of its licensed operating
subsidiary prior to such time, IGT will be required to make an offer to purchase
the notes. See "Description of Exchange Notes -- Limitation on Liens" and "--
Repurchase at the Option of Holders Upon Granting of Lien." In addition, until
the approval is obtained with respect to granting a guarantee, the licensed
subsidiary will not be permitted to incur indebtedness or take any other action
that would otherwise require it to guarantee the Exchange Notes. We have filed
applications with the Nevada Control Board and Nevada Commission for approvals
of the applicability of such covenants to our licensed operating subsidiary. Our
applications, however, will not be considered until July 1999 at the earliest.
Risks Associated With the Gaming Industry
A reduction in the growth rate of new and existing markets for our products
or delays of scheduled openings of newly constructed or planned casinos could
have an adverse impact on our operations.
<PAGE>
Demand for our products is driven principally by the establishment of new
gaming jurisdictions and the addition of new casinos or expansion of existing
casinos within existing gaming markets. The establishment or expansion of gaming
in any jurisdiction typically requires a public referendum or other legislative
action. As a result, gaming continues to be the subject of public debate, with
numerous active organizations that oppose gaming and may attempt to cause gaming
operations to be restricted or prohibited in any jurisdiction. In addition, the
rate of growth in the North American marketplace has diminished since the
substantial growth experienced in the early 1990s. A continued reduction in
growth or in the number of gaming jurisdictions or delays in the opening of new
or expanded casinos could have an adverse impact on demand for our products and,
consequently, our operations.
A decline in the popularity of our gaming products with players, a lack of
success in developing new products or an increase in the popularity of existing
or new games of our competitors could have an adverse impact on our operations.
The popularity of any of our gaming products may decline over time as
consumer preferences change or as new, competing games are introduced by our
competitors. The markets for our products are intensely competitive, and many of
our competitors have an established presence in our market, have substantial
resources and specialize in the development and marketing of their products. If
we fail to develop games that achieve market acceptance or if our existing games
become obsolete due to the introduction of popular games by our competitors, the
effects on our operations could be material and adverse. In addition, the
introduction of new and innovative products by our competitors that are
successful in meeting consumer preferences could have a material and adverse
effect on us.
We place our wide-area progressive systems in casinos at no cost to the
casinos under short-term arrangements, making these games susceptible to
replacement due to pressure from competitors, changes in economic conditions,
obsolescence and declining popularity. We intend to maintain and expand the
number of installed wide-area progressive systems through the enhancement of
existing games, introduction of new games and customer service, but we cannot
assure you that these efforts will be successful.
The failure to receive patents on new technology or the infringement of
existing patents could have a material adverse impact on us.
We have obtained patents and copyrights with respect to various aspects of
our games and other products, including progressive systems and player tracking
systems. These patents include new game designs, bonus and secondary game
features, gaming device components, gaming systems and a variety of other
aspects of video and electronic slot machines and associated equipment. We
cannot provide any assurances that our patents will not be infringed or that
others will not develop technology that does not violate the patents.
We do not know what effect the National Gambling Impact Study Commission may
have on the gaming industry.
The National Gambling Impact Study Commission (the "NGIC") was created in
August 1996 to conduct a comprehensive legal and factual study of the social and
economic impacts of gambling on federal, state, local and Native American tribal
governments and on communities and social institutions. The NGIC is required to
issue a report containing its findings and conclusions, together with
recommendations for legislation and administrative actions, by June 20, 1999.
Any recommendations which may be made by the NGIC could result in the enactment
of new laws and/or the adoption of new regulations which could adversely impact
the gaming industry in general. On April 28, 1999, the NGIC voted 5-4 to
recommend "a pause" in the growth of legalized gambling and encourage state and
local governments to form their own gambling study commissions. We are unable at
this time to determine what additional recommendations, if any, the NGIC will
make, the ultimate disposition of any recommendations the NGIC may make or the
impact of the results of this report on us.
We derive a significant portion of our total revenues from our international
operations, and international operations present certain additional risks.
International jurisdictions accounted for approximately 23% of our total
revenue for fiscal 1998. IGT expects international revenues to continue to
represent a significant portion of total revenue. International product sales
are subject to inherent risks, including variation in local economies,
fluctuating exchange rates, greater difficulty in accounts receivable
<PAGE>
collection, trade barriers and burdens of complying with a variety of
international laws. There can be no assurance that one or more of these factors
will not have a material and adverse effect on our operations.
You cannot be sure that an active trading market will develop for the Exchange
Notes.
There is no established trading market for the Exchange Notes, and we cannot
assure you that a market for the Exchange Notes will develop in the future. If
such a market were to develop, the Exchange Notes could trade at prices that are
higher or lower than the initial offering prices depending on many factors,
including the number of holders of the Exchange Notes, the overall market for
similar securities, our financial performance and prospects, and prospects for
companies in our industry generally. The initial purchasers of the Outstanding
Notes have informed us that they currently intend to make a market in the
Exchange Notes. However, the initial purchasers have no obligation to do so and
may discontinue making a market at any time without notice. Therefore, we cannot
assure you as to the liquidity of any trading market for the notes and, if
issued, the notes to be exchanged for the notes. We do not intend to apply (and
are not obligated to apply) for listing of the Exchange Notes on any securities
exchange or any automated quotation system.
You must comply with the procedures for the Exchange Offer in order to receive
the Exchange Notes.
You are responsible for complying with all Exchange Offer procedures. You
will only receive Exchange Notes in exchange for your Outstanding Notes if,
prior to the Expiration Date, you deliver the following to the Exchange Agent:
o certificate for the Outstanding Notes or a book-entry confirmation of a
book-entry transfer of the Outstanding Notes into the Exchange Agent's
account at the Depository Trust Company ("DTC");
o the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed by you, together with any
required signature guarantees; and
o any other documents required by the Letter of Transmittal.
You should allow sufficient time to ensure that the Exchange Agent receives
all required documents before the Expiration Date. Neither IGT nor the Exchange
Agent has any duty to inform you of defects or irregularities with respect to
the tender of your Outstanding Notes for exchange. See "The Exchange Offers."
<PAGE>
THE EXCHANGE OFFERS
Purpose and Effect of the Exchange Offers
In connection with the sale of the Outstanding Notes, IGT entered into a
registration rights agreement with the initial purchasers of the Outstanding
Notes pursuant to which IGT agreed to file and to use its best efforts to cause
to become effective with the SEC a registration statement with respect to the
exchange of the Outstanding Notes for Exchange Notes with terms identical in all
material respects to the terms of the Outstanding Notes. A copy of the
registration rights agreement has been filed as an exhibit to the registration
statement of which this prospectus is a part. The Exchange Offers are being made
to satisfy the contractual obligations of IGT under the registration rights
agreement.
By tendering Outstanding Notes in exchange for Exchange Notes, each holder
represents to IGT that: (1) any Exchange Notes to be received by such holder are
being acquired in the ordinary course of such holder's business; (2) such holder
has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of Exchange Notes; (3)
such holder is not an "affiliate" of IGT (within the meaning of Rule 405 under
the Securities Act), or if such holder is an affiliate, that such holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable; (4) such holder has full power and
authority to tender, exchange, sell, assign and transfer the tendered
Outstanding Notes, (5) IGT will acquire good, marketable and unencumbered title
to the tendered Outstanding Notes, free and clear of all liens, restrictions,
charges and encumbrances; and (6) the Outstanding Notes tendered for exchange
are not subject to any adverse claims or proxies. Each tendering holder also
will warrant and agree that such holder will, upon request, execute and deliver
any additional documents deemed by IGT or the Exchange Agent to be necessary or
desirable to complete the exchange, sale, assignment, and transfer of the
Outstanding Notes tendered pursuant to the Exchange Offers. Each broker-dealer
that receives Exchange Notes for its own account in exchange for Outstanding
Notes pursuant to the Exchange Offers, where such Outstanding Notes were
acquired by such broker-dealer as a result of market-making or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
The Exchange Offers are not being made to, nor will IGT accept tenders for
exchange from, holders of Outstanding Notes in any jurisdiction in which the
Exchange Offers or the acceptance of the Exchange Notes would be in violation of
the securities or blue sky laws of that jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to an
Exchange Offer means any person in whose name the Outstanding Notes are
registered on the books of IGT or any other person who has obtained a properly
completed bond power from the registered holder, or any participant in DTC whose
name appears on a security position listing as a holder of Outstanding Notes
(which, for purposes of the Exchange Offers, include beneficial interests in the
Outstanding Notes held by direct or indirect participants in DTC and Outstanding
Notes held in definitive form).
Terms of the Exchange Offers
IGT hereby offers, upon the terms and subject to the conditions shown in this
prospectus and in the accompanying Letter of Transmittal, to exchange $1,000
principal amount of Senior Exchange Notes due 2004 for each $1,000 principal
amount of Outstanding Senior Notes due 2004 and $1,000 principal amount of
Senior Exchange Notes due 2009 for each $1,000 principal amount of Outstanding
Senior Notes due 2009, properly tendered before the Expiration Date and not
properly withdrawn according to the procedures described below. Holders may
tender their Outstanding Notes in whole or in part in integral multiples of
$1,000 principal amount.
The form and terms of the Exchange Notes are the same as the form and terms of
the Outstanding Notes except that (1) the Exchange Notes have been registered
under the Securities Act and therefore are not subject to the restrictions on
transfer applicable to the Outstanding Notes and (2) holders of the Exchange
Notes will not be entitled to some of the rights of holders of the Outstanding
Notes under the registration rights agreement. The Exchange Notes evidence the
same indebtedness as the Outstanding Notes (which they replace) and will be
issued pursuant to, and entitled to the benefits of, the Indenture.
<PAGE>
Neither Exchange Offer is conditioned upon the other Exchange Offer or on any
minimum principal amount of Outstanding Notes being tendered for exchange. IGT
reserves the right in its sole discretion to purchase or make offers for any
Outstanding Notes that remain outstanding after the Expiration Date in either
Exchange Offer or, as shown under "-Conditions to the Exchange Offers," to
terminate, either or both of the Exchange Offers and, to the extent permitted by
applicable law, purchase Outstanding Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offers. As of the date of this
prospectus, $400 million principal amount of Outstanding Senior Notes due 2009
and $600 million principal amount of Outstanding Senior Notes due 2009 are
outstanding.
Holders of Outstanding Notes do not have any appraisal or dissenters' rights
in connection with the Exchange Offers. Outstanding Notes which are not tendered
for, or are tendered but not accepted in connection with, the Exchange Offers
will remain outstanding. See "Risk Factors--You must comply with the procedures
of the Exchange Offer in order to receive Exchange Notes."
If any tendered Outstanding Notes are not accepted for exchange because of an
invalid tender, the occurrence of particular other events shown herein or
otherwise, certificates for any such unaccepted Outstanding Notes will be
returned, without expense, to the tendering holder thereof promptly after the
Expiration Date.
Holders who tender Outstanding Notes in connection with the Exchange Offers
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of the Outstanding Notes in connection with the Exchange Offers. IGT
will pay all charges and expenses, other than specified applicable taxes. See
"-Fees and Expenses."
IGT MAKES NO RECOMMENDATION TO THE HOLDERS OF THE OUTSTANDING NOTES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR
OUTSTANDING NOTES IN THE EXCHANGE OFFERS. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF THE OUTSTANDING NOTES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFERS,
AND, IF SO, THE AGGREGATE AMOUNT OF OUTSTANDING NOTES TO TENDER AFTER READING
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISERS, IF ANY, BASED ON THEIR FINANCIAL POSITION AND REQUIREMENTS.
Expiration Date; Extensions; Amendments
The "Expiration Date" for each Exchange Offer is 5:00 p.m., New York City
time, on , 1999 unless the Exchange Offer is extended by IGT. (If IGT does
extend an Exchange Offer, the "Expiration Date" will be the latest date and time
to which that Exchange Offer is extended). Because neither Exchange Offer is
conditioned on the other Exchange Offer, it is possible that one Exchange Offer
could terminate before the other. To the extent practicable, however, IGT will
seek to terminate both Exchange Offers at the same time.
IGT expressly reserves the right in its sole and absolute discretion, subject
to applicable law, at any time and from time to time, (1) to delay the
acceptance of the Outstanding Notes for exchange, (2) to terminate an Exchange
Offer (whether or not any Outstanding Notes have theretofore been accepted for
exchange) if IGT determines, in its sole and absolute discretion, that any of
the events or conditions referred to under "-Conditions to the Exchange Offers"
has occurred or exists or has not been satisfied with respect to such Exchange
Offer, (3) to extend the Expiration Date of an Exchange Offer and retain all
Outstanding Notes tendered pursuant to such Exchange Offer, subject, however, to
the right of holders of Outstanding Notes to withdraw their tendered Outstanding
Notes as described under "-Withdrawal Rights," and (4) to waive any condition or
otherwise amend the terms of an Exchange Offer in any respect. If Exchange Offer
is amended in a manner determined by IGT to constitute a material change, or if
IGT waives a material condition of such Exchange Offer, IGT will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered holders of the affected Outstanding Notes, and IGT
will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
<PAGE>
Any such delay in acceptance, termination, extension or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent (any
such oral notice to be promptly confirmed in writing) and by making a public
announcement, and such announcement in the case of an extension will be made no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Without limiting the manner in which IGT
may choose to make any public announcement, and subject to applicable laws, IGT
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
Acceptance for Exchange and Issuance of Exchange Notes
Upon the terms and subject to the conditions of each Exchange Offer, IGT will
exchange, and will issue to the Exchange Agent, Exchange Notes for Outstanding
Notes validly tendered and not withdrawn (pursuant to the withdrawal rights
described under "-Withdrawal Rights") promptly after the Expiration Date.
In all cases, delivery of Exchange Notes in exchange for Outstanding Notes
tendered and accepted for exchange pursuant to each Exchange Offer will be made
only after timely receipt by the Exchange Agent of (1) Outstanding Notes or a
book-entry confirmation of a book-entry transfer of Outstanding Notes into the
appropriate Exchange Agent's account at DTC, (2) the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (3) any other documents required by the Letter of
Transmittal. Accordingly, the delivery of Exchange Notes might not be made to
all tendering holders at the same time, and will depend upon when Outstanding
Notes, book-entry confirmations with respect to Outstanding Notes and other
required documents are received by the relevant Exchange Agent.
The term "book-entry confirmation" means a timely confirmation of a book-entry
transfer of Outstanding Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of each Exchange Offer, IGT will be deemed
to have accepted for exchange, and thereby exchanged, Outstanding Notes validly
tendered and not withdrawn as, if and when IGT gives oral or written notice to
the Exchange Agent (any such oral notice to be promptly confirmed in writing) of
IGT's acceptance of such Outstanding Notes for exchange pursuant to each
Exchange Offer. IGT's acceptance for exchange of Outstanding Notes tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and IGT upon the terms and subject to the
conditions of the Exchange Offers. The Exchange Agent will act as agent for IGT
for the purpose of receiving tenders of Outstanding Notes, Letters of
Transmittal and related documents, and as agent for tendering holders for the
purpose of receiving Outstanding Notes, Letters of Transmittal and related
documents and transmitting Exchange Notes to holders who validly tendered
Outstanding Notes. Such exchange will be made promptly after the Expiration Date
of each Exchange Offer. If for any reason the acceptance for exchange or the
exchange of any Outstanding Notes tendered pursuant to an Exchange Offer is
delayed (whether before or after IGT's acceptance for exchange of Outstanding
Notes), or IGT extends an Exchange Offer or is unable to accept for exchange or
exchange Outstanding Notes tendered pursuant to an Exchange Offer, then, without
prejudice to IGT's rights set forth herein, each Exchange Agent may,
nevertheless, on behalf of IGT and subject to Rule 14e-1(c) under the Exchange
Act, retain tendered Outstanding Notes and such Outstanding Notes may not be
withdrawn except to the extent tendering holders are entitled to withdrawal
rights as described under "-Withdrawal Rights."
Procedures for Tendering Outstanding Notes
Valid Tender
Except as set forth below, in order for Outstanding Notes to be validly
tendered pursuant to an Exchange Offer, either (1) (a) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, must be received by the
Exchange Agent at the address set forth under "-Exchange Agent" prior to the
Expiration Date and (b) tendered Outstanding Notes must be received by the
Exchange Agent, or such Outstanding Notes must be tendered pursuant to the
procedures for book-entry transfer set forth below and a book-entry confirmation
must be received by the Exchange Agent, in each case prior to the Expiration
Date, or (2) the guaranteed delivery procedures set forth below must be complied
with.
<PAGE>
If less than all of the Outstanding Notes are tendered, a tendering holder
should fill in the amount of Outstanding Notes being tendered in the appropriate
box on the Letter of Transmittal. The entire amount of Outstanding Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person
should so indicate when signing. Unless waived by IGT, evidence satisfactory to
IGT of such person's authority to so act must also be submitted.
Any beneficial owner of Outstanding Notes that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offers.
The method of delivery of Outstanding Notes, the Letter Of Transmittal and all
other required documents is at the option and sole risk of the tendering holder.
Delivery will be deemed made only when actually received by the Exchange Agent.
Instead of delivery by mail, it is recommended that holders use an overnight or
hand delivery service. In all cases, sufficient time should be allowed to assure
timely delivery and proper insurance should be obtained. No Letter of
Transmittal or Outstanding Notes should be sent to IGT. Holders may request
their respective brokers, dealers, commercial banks, trust companies or nominees
to effect these transactions for them.
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with respect to
the applicable Outstanding Notes at DTC for purposes of the applicable Exchange
Offer within two business days after the date of this prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Outstanding Notes by causing DTC to
transfer such Outstanding Notes into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Outstanding Notes may be effected through book-entry transfer into the Exchange
Agent's account at DTC, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, any required signature guarantees and any
other required documents, must in any case be delivered to and received by the
Exchange Agent at its address set forth under "-Exchange Agent" prior to the
Expiration Date, or the guaranteed delivery procedure set forth below must be
complied with.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE
AGENT.
Signature Guarantees
Certificates for Outstanding Notes need not be endorsed and signature
guarantees on a Letter of Transmittal or a notice of withdrawal, as the case may
be, are unnecessary unless (a) a certificate for Outstanding Notes is registered
in a name other than that of the person surrendering the certificate or (b) a
registered holder completes the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" in the Letter of Transmittal. In the case of (a)
or (b) above, such certificates for Outstanding Notes must be duly endorsed or
accompanied by a properly executed bond power, with the endorsement or signature
on the bond power and on the Letter of Transmittal or the notice of withdrawal,
as the case may be, guaranteed by a firm or other entity identified in Rule
17Ad-15 under the Exchange Act as an "eligible guarantor institution," including
(as such terms are defined therein) (1) a bank, (2) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer, (3) a
credit union, (4) a national securities exchange, registered securities
association or clearing agency, or (5) a savings association that is a
participant in a Securities Transfer Association (each an "Eligible
Institution"), unless surrendered on behalf of such Eligible Institution. See
Instruction 1 to the Letter of Transmittal.
<PAGE>
Guaranteed Delivery
If a holder desires to tender Outstanding Notes pursuant to an Exchange Offer
and the certificates for such Outstanding Notes are not immediately available or
time will not permit all required documents to reach the Exchange Agent before
the Expiration Date, or the procedures for book-entry transfer cannot be
completed on a timely basis, such Outstanding Notes may nevertheless be
tendered, provided that all of the following guaranteed delivery procedures are
complied with
(1) such tenders are made by or through an Eligible
Institution;
(2) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
setting forth the name and address of the holder of Outstanding Notes and the
amount of Outstanding Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Outstanding Notes, in proper form for
transfer, or a book-entry confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent. The Notice of Guaranteed Delivery
may be delivered by hand, or transmitted by facsimile or mail to the Exchange
Agent and must include a guarantee by an Eligible Institution in the form set
forth in the Notice of Guaranteed Delivery; and
(3) the certificates (or book-entry confirmation) representing all tendered
Outstanding Notes, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal, with any required signature
guarantees and any other documents required by the Letter of Transmittal, are
received by the relevant Exchange Agent within three New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed Delivery.
Determination of Validity
All questions as to the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered Outstanding Notes
will be determined by IGT, in its sole discretion, which determination shall be
final and binding on all parties. IGT reserves the absolute right, in its sole
and absolute discretion, to reject any and all tenders it determines not to be
in proper form or the acceptance for exchange of which may, in the view of
counsel to IGT, be unlawful. IGT also reserves the absolute right, subject to
applicable law, to waive any of the conditions of either Exchange Offer as set
forth under "--Conditions to the Exchange Offers" or any defect or irregularity
in any tender of Outstanding Notes of any particular holder whether or not
similar defects or irregularities are waived in the case of other holders.
IGT's interpretation of the terms and conditions of the Exchange Offers
(including the relevant Letter of Transmittal and the instructions thereto) will
be final and binding on all parties. No tender of Outstanding Notes will be
deemed to have been validly made until all defects or irregularities with
respect to such tender have been cured or waived. None of IGT, any affiliates of
IGT, the Exchange Agent or any other person shall be under any duty to give any
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Resales of Exchange Notes
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to IGT, IGT believes that holders of
Outstanding Notes who exchange their Outstanding Notes for Exchange Notes may
offer for resale, resell and otherwise transfer such Exchange Notes without
compliance with the registration and prospectus delivery provisions of the
Securities Act. This would not apply, however, to any holder that is a
broker-dealer that acquired Outstanding Notes as a result of market-making
activities or other trading activities or directly from IGT for resale under an
available exemption under the Securities Act. Also, resale would only be
permitted for Exchange Notes that (1) are acquired in the ordinary course of a
holder's business, (2) where such holder has no arrangement or understanding
with any person to participate in the distribution of such Exchange Notes and
<PAGE>
(3) such holder is not an "affiliate" of IGT. The staff of the SEC has not
considered the Exchange Offers in the context of a no-action letter, and there
can be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offers. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Outstanding Notes under the Exchange
Offers, where such Outstanding Notes were acquired by such broker-dealer as a
result of market-making or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "Plan of Distribution."
Withdrawal Rights
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to the Expiration Date of an Exchange Offer. In
order for a withdrawal to be effective, such withdrawal must be in writing and
timely received by the Exchange Agent at its address set forth under "--Exchange
Agent" prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Outstanding Notes to be withdrawn, the
principal amount of Outstanding Notes to be withdrawn, and (if certificates for
such Outstanding Notes have been tendered) the name of the registered holder of
the Outstanding Notes as set forth on the Outstanding Notes, if different from
that of the person who tendered such Outstanding Notes. If certificates for
Outstanding Notes have been delivered or otherwise identified to the Exchange
Agent, the notice of withdrawal must specify the serial numbers on the
particular certificates for the Outstanding Notes to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Outstanding Notes tendered for the account of
an Eligible Institution. If Outstanding Notes have been tendered pursuant to the
procedures for book-entry transfer set forth in "--Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number of
the account at DTC to be credited with the withdrawal of Outstanding Notes and
must otherwise comply with the procedures of DTC. Withdrawals of tenders of
Outstanding Notes may not be rescinded. Outstanding Notes properly withdrawn
will not be deemed validly tendered for purposes of an Exchange Offer, but may
be retendered at any subsequent time prior to the Expiration Date of such
Exchange Offer by following any of the procedures described above under
"--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by IGT, in its sole
discretion, which determination shall be final and binding on all parties.
Neither IGT, any affiliates of IGT, the Exchange Agent or any other person shall
be under any duty to give any notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Any Outstanding Notes which have been tendered but which are
withdrawn will be returned to the holder promptly after withdrawal.
Interest on the Exchange Notes
Interest on the Senior Exchange Notes due 2004 will be payable every six
months on March 15 and November 15 of each year at a rate of 7.875% per annum,
commencing November 15, 1999. The Senior Exchange Notes due 2004 will mature on
May 15, 2004. Interest on the Senior Exchange Notes due 2009 will be payable
every six months on March 15 and November 15 of each year at a rate of 8.375%
per annum, commencing November 15, 1999. The Senior Exchange Notes due 2009 will
mature on May 15, 2009.
Conditions to the Exchange Offers
If any of the following conditions has occurred or exists or has not been
satisfied prior to the Expiration Date of an Exchange Offer, IGT will not be
required to accept for exchange any Outstanding Notes and will not be required
to issue Exchange Notes in exchange for any Outstanding Notes. In addition, IGT
may, at any time and from time to time, terminate or amend an Exchange Offer
(whether or not any Outstanding Notes have theretofore been accepted for
exchange) or may waive any conditions to or amend an Exchange Offer.
o A change in the current interpretation by the staff of the SEC which
permits resale of Exchange Notes as described about under "-Resales of
Exchange Notes."
<PAGE>
o The institution or threat of an action or proceeding in any court or by or
before any governmental agency or body with respect to the Exchange Offers
which, in IGT's judgment, would reasonably be expected to impair the
ability of IGT to proceed with the Exchange Offers.
o The adoption or enactment of any law, statute, rule or regulation which, in
IGT's judgment, would reasonably be expected to impair the ability of IGT
to proceed with the Exchange Offers.
o The issuance of a stop order by the SEC, any state securities authority or
any gaming authority suspending the effectiveness of the registration
statement, or proceedings for that purpose.
o Failure to obtain any governmental approval, which IGT
considers necessary for the consummation of the Exchange
Offers as contemplated hereby.
o Any change or development involving a prospective change in the business or
financial affairs of IGT which IGT thinks might materially impair its
ability to proceed with the Exchange Offers.
If IGT determines in its sole and absolute discretion that any of the
foregoing events or conditions has occurred or exists or has not been satisfied
at any time prior to an Expiration Date, IGT may, subject to applicable law,
terminate the applicable Exchange Offer (whether or not any Outstanding Notes
have theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of an Exchange Offer in any respect. If such waiver or
amendment constitutes a material change to an Exchange Offer, IGT will promptly
disclose such waiver or amendment by means of a prospectus supplement that will
be distributed to the registered holders of the applicable Outstanding Notes. In
this case, IGT will extend the applicable Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act.
Exchange Agent
The Bank of New York has been appointed as the Exchange Agent. Delivery of the
Letters of Transmittal and any other required documents, questions, requests for
assistance, and requests for additional copies of this prospectus or of the
Letter of Transmittal should be directed to the Exchange Agent addressed as
follows:
By Facsimile (for Eligible Institutions Only):
(212) 815-6339
Confirm by telephone: (212) 815-3738
By Hand or Overnight Courier:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street (7 East)
New York, New York 10286
Attention: Diane Amorso
DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBER
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Fees and Expenses
The expenses of soliciting tenders will be borne by IGT. The principal
solicitation is being made by mail. Additional solicitation may be made
personally or by telephone or other means by officers, directors or employees of
IGT.
IGT has not retained any dealer-manager or similar agent in connection with
the Exchange Offers and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offers. IGT has agreed to pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for reasonable out-of-pocket expenses in connection therewith. IGT will also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
prospectus and related documents to the beneficial owners of Outstanding Notes,
and in handling or tendering for their customers.
Holders who tender their Outstanding Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that if Exchange Notes
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of the Outstanding Notes tendered, or if a transfer
tax is imposed for any reason other than the exchange of Outstanding Notes in
connection with the Exchange Offers, then the amount of any such transfer tax
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such transfer
tax or exemption therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer tax will be billed directly to such tendering holder.
<PAGE>
USE OF PROCEEDS
The Exchange Offers are intended to satisfy certain obligations of IGT under
the registration rights agreement. IGT will not receive any proceeds from the
issuance of the Exchange Notes or the closing of the Exchange Offers.
In consideration for issuing the Exchange Notes as contemplated in this
prospectus, IGT will receive, in exchange, an equal number of Outstanding Notes
in like principal amount. The form and terms of the Exchange Notes are identical
in all material respects to the form and terms of the Outstanding Notes, except
as otherwise described in the section entitled "The Exchange Offers--Terms of
the Exchange Offers." The Outstanding Notes surrendered in exchange for the
Exchange Notes will be retired and canceled and cannot be reissued. A portion of
the proceeds from the offering of the Outstanding Notes has been or will be used
(1) to redeem our 7.84% Senior Notes due 2004, (2) to repay certain outstanding
borrowings under a bank facility available to IGT-Australia, (3) to repay all
outstanding borrowings under the bank revolving line of credit of IGT, (4) to
finance the Sodak acquisition, (5) to repurchase approximately $75 million of
our common stock in settlement of a forward equity purchase agreement and (6) to
pay fees and expenses in connection with the foregoing. The remaining proceeds,
together with the now undrawn $250 million credit facility, will be used for
working capital, repurchases of IGT's common stock, potential acquisitions and
general corporate purposes.
<PAGE>
CAPITALIZATION
The following table summarizes our cash position, current debt and
capitalization as of April 3, 1999 (1) on a historical basis and (2) as adjusted
to give effect to the offering of the Outstanding Notes and the application of
the proceeds of the offering of the Outstanding Notes as described in "Use of
Proceeds."
<TABLE>
<CAPTION>
As of April 3, 1999
Actual As Adjusted
(in thousands)
<S> <C> <C>
Cash and cash equivalents.......... $193,160 $ 439,564(1)
======== ========
Current portion of long-term debt.. $ 42,536 $ 5
======== ========
Long-term debt:
$250 million revolving credit $246,000 $ --
facility...........................
IGT-Australia debt (excluding 60,585 --
current portion)...................
7.84% Senior Notes due 2004 71,400 --
(excluding current portion)........
7.875% Senior Notes due 2004 and
8.375% Senior -- 990,056
Notes due 2009 offered hereby.
Total long-term debt........ 377,985 990,056
Stockholders' equity:
Common stock, $.000625 par value,
320,000,000 shares authorized; 95 95
152,775,332 shares issued and
outstanding........................
Additional paid in capital....... 260,277 260,277
Retained earnings................ 892,623 889,375(2)
Treasury stock; 52,154,165 shares (676,588) (752,081)
and 57,054,165 shares, at cost.....
Accumulated other comprehensive (7,256) (7,256)
------- ------
income.............................
Total stockholders' equity.. 469,151 390,410
Total capitalization............... $847,136 $1,380,466
======== ==========
<FN>
- ----------------
(1)Excludes approximately $228 million to be used as
consideration for the Sodak acquisition. See "Use of Proceeds."
(2)Reflects the pre-tax payment of approximately $4.6 million for premiums in
connection with the prepayment of the 7.84% Senior Notes due 2004.
</FN>
</TABLE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial data of IGT as
of and for each of the years in the five-year period ended September 30, 1998
and as of and for the six-month periods ended April 3, 1999 and March 31, 1998.
The statement of income and balance sheet data as of and for each of the years
in the five-year period ended September 30, 1998 are derived from IGT's audited
consolidated financial statements and related notes thereto. The audited
consolidated financial statements of IGT as of September 30, 1998 and 1997 and
for the years ended September 30, 1998, 1997 and 1996 and the report of Deloitte
& Touche LLP thereon are incorporated by reference in this prospectus. The
statement of income and balance sheet data as of and for the six-month periods
ended April 3, 1999 and March 31, 1998 are derived from the unaudited
consolidated financial statements of IGT and, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results for such periods. The results
for such periods should not be considered indicative of results for a full
fiscal year. The selected consolidated financial data is not necessarily
indicative of IGT's future results of operations or financial condition, and
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," contained in IGT's Report on
Form 10-K for the year ended September 30, 1998 and IGT's consolidated financial
statements and accompanying notes, which are incorporated by reference in this
prospectus.
<TABLE>
<CAPTION>
Six months ended Fiscal years ended September 30,
April 3 March 31,
1999 1998 1998 1997 1996 1995 1994
---------------------- ------- ------- ------- ------ ------
(dollars in thousands, except ratios and per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Income
Statement Data:
Revenues
Product sales......... $276,220 $ 187,016 $ 477,024 $461,150 $481,652 $416,424 $514,121
Gaming operations..... 166,357 160,087 347,099 282,820 251,800 204,362 160,340
------- ------- ------- ------- ------- ------- -------
Total revenue..... 442,577 347,103 824,123 743,970 733,452 620,786 674,461
------- ------- ------- ------- ------- ------- -------
Costs and Expenses
Product sales......... 175,296 107,766 279,337 256,480 265,550 233,367 271,374
Gaming operations..... 69,739 74,135 158,528 145,245 139,706 110,779 81,714
Selling, general and 61,713 43,733 105,945 98,380 108,469 88,551 83,871
administrative..........
Depreciation and 12,373 6,806 18,635 11,846 12,570 14,380 9,052
amortization............
Research and 21,112 15,482 38,066 31,074 25,701 28,491 23,345
development.............
Provision for bad debt 3,521 3,164 4,735 9,508 11,623 5,877 7,199
----- ----- ----- ----- ------ ----- -----
Total costs and 343,754 251,086 605,246 552,533 563,619 481,445 476,555
expenses......... ------- ------- ------- ------- ------- ------- -------
Income from operations.. 98,823 96,017 218,877 191,437 169,833 139,341 197,906
Other income, net....... 3,842 4,233 15,655 21,188 14,570 5,423 16,854
Income before income $102,665 $ 100,250 $ 234,532 $212,625 $ 184,403 $144,764 $214,760
taxes...................
Net income.............. $ 68,272 $ 65,163 $ 152,446 $137,247 $ 118,017 $ 92,648 $140,447
======== ========= ========= ======== ========= ======== ========
Other Financial Data:
EBITDA(1)............. $122,145 $ 113,440 $ 260,345 $226,461 $ 200,335 $167,237 $217,980
Net cash provided by $100,716 $ 69,721 $ 107,126 $118,082 $ 55,261 $153,356 $ (543)
operating activities....
Net cash provided by
(used in) investing $ 4,782 $(221,231) $(240,061) $(56,572)$(159,800) $(56,929) $(31,995)
activities..........
Net cash provided by
(used in) financing $(84,054) $ 193,209 $ 164,047 $(79,202 $ 32,376 $ 2,879 $ 88,929
activities..........
Ratio of EBITDA to 10.5x 20.4x 16.8x 23.4x 19.3x 18.2x 64.0x
interest expense(1)(2)..
Ratio of total -- -- 1.2x 0.6x 0.5x 0.6x 0.5x
long-term debt to
EBITDA(1)...............
Ratio of earnings to 9.4x 14.1x 13.8x 19.3x 15.5x 13.5x 41.7x
fixed charges (3)....
Pro forma ratio of
earnings to fixed 2.8x -- 2.8x -- -- -- --
charges(4)..........
Diluted earnings per $ 0.64 $ 0.56 $ 1.33 $ 1.13 $ 0.93 $ 0.71 $ 1.05
share................
Cash dividends declared $ 0.03 $ 0.06 $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
per common share
</TABLE>
<TABLE>
<CAPTION>
As of
April 3, As of September 30,
1999 1998 1997 1996 1995 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Selected Balance Sheet Data:
Working capital................. $ 450,421 $ 470,003 $ 406,958 $ 488,150 $508,917 $480,698
Total assets.................... 1,532,941 1,543,628 1,215,052 1,154,187 971,698 868,008
Long-term notes payable and
capital lease obligations, 377,985 322,510 140,713 107,155 107,543 111,468
net of current maturities....
Stockholders' equity............ 469,151 541,276 519,847 623,200 554,090 520,868
- ------------
<FN>
(1)EBITDA consists of income from operations excluding depreciation and
amortization as reflected on IGT's Consolidated Statements of Cash Flows.
EBITDA is a measure commonly used by the financial community but is not
prepared in accordance with United States generally accepted accounting
principles. While many in the financial community consider EBITDA to be an
important measure of comparative operating performance, it should be
considered in addition to, but not as a substitute for, income from
operations, net income, cash flows provided by operating activities and other
measures of financial performance prepared in accordance with generally
accepted accounting principles that are included or incorporated by reference
in this prospectus. EBITDA is defined differently for purposes of the
Indenture and may not be comparable to similarly titled measures reported by
other companies. See "Description of Notes."
(2)Interest expense includes capitalized interest and excludes interest expense
related to jackpot liabilities.
(3)For the purpose of computing this ratio, earnings represent net income
before taxes on income and fixed charges (such fixed charges have been
adjusted to exclude capitalized interest), and equity in undistributed
earnings of 50% owned equity investments. Fixed charges represent interest
expense, excluding the portion related to jackpot liabilities and including
capitalized interest, one-third of total rental expense and amortization of
loan expense related to long-term debt.
(4)For the purpose of computing the pro forma ratio of earnings to fixed
charges, the actual ratio of earnings to fixed charges computed in accordance
with footnote 3 above has been adjusted to reflect the pro forma effect, as
of October 1, 1997 for fiscal 1998, and as of October 1, 1998 for the
six-month period ended April 3, 1999, on fixed charges resulting from the
issuance of the notes and the application of the proceeds thereof. The
foregoing is not pro forma for the Sodak acquisition. See "Use of Proceeds."
</FN>
</TABLE>
<PAGE>
BUSINESS
We design, manufacture and market computerized casino gaming products and
systems for both domestic and international markets. In domestic markets, IGT
targets the traditional casino gaming market and the government-sponsored video
machine market. In international markets, IGT targets the amusement with prize,
casino-style, gaming-hall and government-sponsored video machine markets. We
operate principally in two lines of business: (1) the development,
manufacturing, marketing and distribution of gaming products, what we refer to
as "Gaming Products Sales" and (2) the development, marketing and operation of
wide-area progressive systems and other revenue sharing machines, what we refer
to as "Gaming Operations."
Description of Gaming Product Sales
Over the past decade, advancements in gaming machine technology, the advent
of large, expensive theme-based casinos and growth in the number of
jurisdictions with legalized gaming have attracted a greater number of North
American players to slot and video machines. IGT estimates that slot machine
revenue accounts for nearly 75% of total casino revenues. IGT was the first to
develop computerized video gaming machines under the Players Edge Plus
trademark, and today sells a variety of different video and spinning reel games.
Casino operators seek out machines with enhanced entertainment value such as a
secondary game or bonusing features, superior graphics and audio and
recognizable game themes. In response to this trend, IGT's newest product lines,
the Game King, iGame Plus, the Vision series and the S-Plus Limited, employ
advanced technology to incorporate enhanced entertainment and communication
features while retaining many familiar and popular features of older games. As
these new games are installed, the disparity between the older and newer
machines on the casino floor widens, and the replacement cycle is stimulated.
IGT's innovations in slot and video technology have increased the earning
potential of our gaming machines by improving the ease and speed of play, using
local game preferences, enhancing entertainment via sound, bonus features and
overall aesthetics and decreasing down-time through improved reliability and
added service features. All of IGT's new gaming machines offer a wide variety of
games, innovative designs, sophisticated security features, self-diagnostic
capabilities and various accounting and data retention functions. In addition,
IGT's engineering and game design staff continually provide technological
improvements and ongoing game development, while IGT's graphic design and
silkscreen departments customize the visual aspects of the product for each
customer.
IGT offers the Game King video product platform in domestic and Australian
markets. The Game King product line offers interactive game play features and
graphics in a highly secure and reliable multi-game package. Game King offers
single game video slots and poker including the popular Triple Play Poker game.
IGT further expanded its game library with the introduction of the iGame series
platform at the 1998 World Gaming Congress. This platform supports multi-line,
multi-coin video slots, poker and keno with bonusing features and digital sound.
Gaming machines for the casino markets in continental Europe, South Africa
and South America are similar to the spinning reel and video games in the North
American market except that in some jurisdictions the method of payout differs.
Gaming machines in Australia, Japan and the United Kingdom markets, however, are
manufactured locally and differ substantially from domestic machines. Gaming
machines manufactured and sold in Australia use video and tokenized play
exclusively and include enhanced features such as free games, second screen
animations and double up and bonusing features. The Australian gaming machines
are typically multi-reel, multi-line games with low denominations. In the United
Kingdom, IGT manufactures and sells amusement with prize machines. An amusement
with prize machine is a game of chance with low stake wagering for amusement
with low value cash prizes, typically under $25. In the Japanese market, IGT
manufactures and sells pachisuro machines. A pachisuro machine is a three reel
slot machine played with tokens and is considered a skill game which allows the
player to control the stopping of the reels.
In fiscal 1998, IGT began installing the IGT Gaming System ("IGS"), which
supports casinos' control and information needs. The IGS is a 14 module
integrated casino system which includes player tracking, pit cage and credit and
slot management, and offers specialized modules, including bus schedules and
events management.
<PAGE>
The following table sets forth revenues derived from gaming product sales:
<TABLE>
<CAPTION>
Six months ended Fiscal years ended September 30,
April 3, March 31,
1999 1998 1998 1997 1996
------- -------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Gaming products
Video products.... $ 84,292 $ 66,443 $170,622 $181,266 $144,699
Spinning reel slot 83,351 78,863 165,403 183,094 254,012
Amusement with prize 28,383 -- 22,019 -- --
Pachisuro......... 32,097 6,896 17,466 20,569 16,732
Video gaming 102 65 7,660 11,613 2,185
terminals........
Other gaming 47,995 34,749 93,854 64,608 64,024
------ ------ ------ ------ ------
products(1).........
Total gaming product $276,220 $187,016 $477,024 $461,150 $481,652
sales............ ======== ======== ======== ======== ========
- ------------
<FN>
(1)Other gaming products includes revenues from casino management systems,
parts, equipment and service.
</FN>
</TABLE>
Demand for Gaming Products
Demand for IGT's gaming products comes principally from four sources: the
establishment of new gaming jurisdictions; expansions of existing casinos;
additions of new casinos within existing gaming markets; and the replacement of
older machines. The replacement cycle is driven primarily by competition in the
casino industry to provide the customer with more entertaining and sophisticated
games. Technological advances, new designs, improvements in visual
characteristics, the development of new games, general wear and tear and the
evolving preferences of casino patrons also drive replacement. The construction
of new casino properties also has an impact on the replacement machine market
since, historically, the addition of new properties has encouraged existing
casinos to upgrade to new slot products in order to remain competitive. However,
demand for replacement products is dependent, in part, upon the willingness of
casinos to incur the costs associated with replacing existing gaming machines
with new machines.
North American Markets
In the last decade, the increased legalization of gaming in new
jurisdictions, expansion in existing gaming markets and growing popularity of
gaming as a leisure activity has influenced demand in North America and
presented growth opportunities for IGT. The introduction of riverboat gaming in
the Midwest U.S., the expansion of Native American casino gaming and the growth
in the Nevada, Canadian and government-sponsored gaming markets have all
expanded the market for gaming machines. While IGT anticipates future growth in
the gaming industry, the rate of growth in the North American marketplace has
diminished since the substantial growth experienced in the early 1990's.
The total installed base and IGT's share in segments of the North American
gaming market as of September 30, 1998 are estimated by IGT as follows:
<TABLE>
<CAPTION>
IGT %
of Machine Sales
Installed Base Installed by IGT
Total IGT Base 1998 1997
<S> <C> <C> <C> <C> <C>
Casino games
Nevada............. 197,100 154,900 79% 14,100 21,400
Midwest (riverboat) 94,400 79,500 84% 6,400 10,400
Native American.... 80,800 58,300 72% 5,900 7,000
Atlantic City...... 36,000 22,000 61% 2,700 4,800
Canada............. 17,600 10,600 60% 3,500 3,800
Colorado........... 13,600 12,400 91% 2,400 700
Other.............. 26,600 14,000 68% 2,800 3,800
------- ------- ----- -----
Total........... 466,100 351,700 76% 37,800 51,900
------- ------- ------ ------
Government sponsored 124,000 26,900 21% -- 2,100
and racetracks..... ------- ------ ------ ------
Total................ 590,100 378,600 64% 37,800 54,000
======= ======= ====== ======
</TABLE>
Machine sales in North America by IGT decreased in 1998 as compared to 1997
as a result of slower growth in the North American market due to fewer new
casino openings and expansions. Machine sales by IGT in international markets,
<PAGE>
however, increased by 55% in fiscal 1998 to 39,200 machines as compared to
25,300 machines in fiscal 1997. This increase was due primarily to acquisitions
of other manufacturers, together with increased sales in South Africa and Latin
America. See "International Markets."
Nevada
Throughout the 1990's, the addition of new casinos with enhanced
entertainment and leisure activities, including upscale retail and dining
establishments and elaborate shows, has increased demand for our machines in the
Nevada market. The expansion or refurbishment of existing operations and
replacement of older gaming machines has also increased demand for our machines
in the Nevada market.
In 1998, IGT provided gaming machines to two new Las Vegas casinos, the
Bellagio and The Reserve Hotel and Casino, and to several other Nevada
properties which underwent smaller-scale expansions. In addition, four major new
casinos have opened or are scheduled to open in Las Vegas during 1999: Mandalay
Bay, Paris Resort, The Resort at Summerlin and The Venetian. These new
properties are expected to add approximately 8,700 units to the Nevada installed
base. IGT has already shipped products to Mandalay Bay and The Venetian and has
commitments for product purchases from The Resort at Summerlin.
There are several new properties in the Las Vegas market in the early
planning stages of expansion or development for completion in 2000 and beyond,
including The Aladdin, Circus Project Z, Sahara Strip, Russell South,
Sands(2)/Venetian and the Suncoast. The expansion or completion of these
properties may be influenced by the level of success of the recently opened
properties in Las Vegas. IGT does not have any commitments for gaming product
purchases from these properties.
Midwest Gaming
Riverboat-style gaming began in Iowa in 1991 and currently is operating in
Illinois, Indiana, Iowa, Louisiana, Mississippi and Missouri. A new dockside
casino opened in Mississippi in early 1999 and several riverboat casinos are
expected to open in various states by 2001. In addition, temporary casinos are
expected to open in Detroit, Michigan in late 1999, with a permanent facility
completed by or after 2002. These new properties are expected to add
approximately 22,000 machines to the installed base in the Midwest. IGT has made
sales of 1,200 machines and has received commitments to purchase an additional
1,400 machines, but otherwise does not have commitments for gaming product
purchases from these properties.
Atlantic City
The Atlantic City market consists of 12 large casinos which are concentrated
in the mature boardwalk area and the marina district. During fiscal 1998, no new
casinos opened in Atlantic City, and Caesars was the only casino to initiate an
expansion. However, a joint venture of Boyd Gaming and Mirage Resorts began
construction of The Borgata, a new casino in the marina district, which is
estimated to be completed by 2002. In addition, Ocean One (a new casino to be
built by Starwood) is planned for the boardwalk area and Le Jardin (a new casino
to be built by Mirage Resorts) has been planned for the marina district, with
estimated completion dates in 2002 and 2003, respectively. IGT does not have
commitments for gaming product purchases for these casinos. As in Nevada,
expansion in this market may contribute to demand for replacement machines in
the existing casinos.
Native American Gaming
IGT, through its distributor Sodak, has sold machines to authorized Native
American casinos in 15 states since 1990. See "Summary -- Recent Developments --
Acquisition of Sodak Gaming, Inc." Casino-style gaming continued to expand on
Native American lands during fiscal 1998. Native American gaming is regulated
under the Indian Gaming Regulatory Act of 1988 which requires the Native
American tribe and the state government in which the Native American lands are
located to enter into a compact governing the terms of the proposed gaming
before gaming devices are permitted. IGT and Sodak place machines only with
Native American tribes who have negotiated compacts with their respective states
and have received approval by the U.S. Department of the Interior and only after
any related litigation has been resolved. Gaming compacts have been approved or
<PAGE>
are under consideration or there is ongoing litigation between Native American
tribes and the state governments in Washington, California, Florida and New
York. The favorable resolution and approval of compacts in any of these states
would provide additional market opportunities for IGT's products.
The Mohegan Sun casino in northeastern Connecticut has announced an expansion
of its existing facility, expected to be completed in 2001, which will add
approximately 2,000 machines. Demand in Native American jurisdictions may also
be influenced by a need for replacement gaming equipment. Native American gaming
expanded rapidly in 1992 and 1993, suggesting that a greater proportion of the
installed machine base is entering the replacement cycle, based on overall
gaming industry trends. The replacement of older machines has already begun in a
number of Native American casinos.
Canada
IGT's video gaming terminals are currently operational for government
sponsored gaming in the Canadian provinces of Alberta, Manitoba, New Brunswick,
Newfoundland, Nova Scotia, Ontario, Prince Edward Island, Quebec and
Saskatchewan. IGT has also supplied a management system to Manitoba. In addition
to government-sponsored video gaming, the following Canadian provincial
governments have approved and are operating casino-style gaming: Alberta,
British Columbia, Manitoba, Nova Scotia, Ontario, Quebec, Saskatchewan and
Yukon. The Windsor Casino, the first full service hotel and casino in Canada,
opened in Ontario in 1998. IGT sold approximately 2,000 machines to the Windsor
Casino in 1998. The OLC issued a request for proposal in June 1998 for up to
13,200 mechanical spinning reel slot machines to be placed in up to 18 horse
racing tracks and four new charity casinos. IGT shipped 3,000 machines to
Ontario in early 1999. British Columbia Lottery Corporation has installed
spinning reel slot machines in 17 government casinos and is approved for ten
destination resorts in casinos throughout the province.
International Markets
IGT has sold to international markets since 1986. Traditionally, gaming in
international markets has consisted of casino-style gaming, private clubs and,
in some countries, smaller-scale gaming halls. IGT responds to the specific
requirements of a number of international jurisdictions by maintaining a local
presence and providing products appropriate for each market. IGT's machine sales
in its international markets are estimated as follows:
<TABLE>
<CAPTION>
Machine Sales
by IGT
1998 1997
<S> <C> <C>
Jurisdiction
Australia and New 6,200 7,700
Zealand..............
United Kingdom..... 13,100(1) --
Europe, Middle East 3,000 2,800
and North Africa.....
South Africa....... 1,600 1,100
Japan.............. 9,500 9,500
Latin America...... 4,300 3,300
Other.............. 1,500 900
----- ---
Total........... 39,200 25,300
====== ======
- ------------
<FN>
(1) Includes 3,500 machines exported to Europe.
</FN>
</TABLE>
Australia and New Zealand
Australia is the largest and most established market for gaming products
outside of North America, with an installed base of 156,700 machines in both the
casino market and the pub and club market. Although Australia is predominately a
replacement market, several Australian jurisdictions have implemented or are
considering the legalization or expansion of gaming operations within their
borders. The state of New South Wales, the largest and most mature market for
gaming machines in Australia, adopted legislation in 1998 permitting an
additional 15 machines in each of the estimated 1,800 pubs and 1,500
not-for-profit clubs which currently have machines.
<PAGE>
IGT established manufacturing, sales, marketing and distribution operations
in Sydney in 1985 and began selling gaming machines in Australia in 1986. In
order to access new technologies, a specialized game design staff and greater
market share, in March 1998, IGT acquired the assets of Olympic Amusements Pty.
Limited, a manufacturer and supplier of electronic gaming machines, gaming
systems and other gaming equipment and services to the Australian gaming market.
The installed base of IGT and Olympic Amusements' machines in Australia and New
Zealand is in excess of 58,000 units. IGT plans, over time, to integrate the
design, manufacturing, service and distribution functions of the two
organizations into one primary site in an effort to achieve a number of
economies of scale. In fiscal 1998, IGT had sales of approximately 6,000
machines, including 2,000 Olympic Amusements machines, compared to approximately
7,700 units in fiscal 1997.
United Kingdom, Europe, Middle East and North Africa
Amusement With Prize Machines. IGT-UK sells directly in its largest market,
the United Kingdom. The installed base of gaming machines in the U.K., which is
not expected to grow in the near term, exceeds 200,000 throughout a variety of
outlets including pubs, clubs, bingo halls, casinos, licensed betting offices
and arcades. Of this number, approximately 55,000 are required by law to be
replaced each year. Since our acquisition of Barcrest Limited, a Manchester,
England-based manufacturer and supplier of gaming related amusement devices, in
March 1998, IGT sold 13,100 machines in fiscal 1998 to this market. Barcrest
launches new amusement with prize machines, which are typically priced lower
than IGT's domestic S-Plus slot, in the U.K. every four to six weeks.
IGT-UK also sells amusement with prize products through distributors to
Germany, the Netherlands, Spain and other smaller European markets. The total
European market size for amusement with prize products is 650,000 machines with
an annual replacement market of approximately 170,000 machines. U.K.
manufacturers exported approximately 10,000 machines to Europe during the year,
of which IGT exported 3,500. Export opportunities arise as various governments
recognize the benefits of amusement with prize products. To capitalize upon
these opportunities, IGT-UK has research and development centers in Holland and
Spain that design machines for various European markets. Each model must comply
with the individual country's legislation and machine sales may vary due to
fluctuations in the various currencies in the European markets.
Casino-Style Gaming Machines. In Europe, amusement with prize machines
compete with casino-style gaming machines. IGT estimates that the market base of
legally installed casino style gaming machines throughout Europe, the Middle
East and North Africa is in excess of 80,000, of which IGT estimates it
manufactured 18,700. The European, Middle Eastern and North African markets are
serviced by IGT's sales and distribution center located in the Netherlands. IGT
has had a direct sales presence in Europe since 1992, where gaming is prevalent
in casinos and non-casino environments such as pubs, bars and arcades.
Increasing customer awareness of product availability combined with service and
training assistance has contributed to improvements in IGT's share of this
market.
In fiscal 1998, IGT sold approximately 3,000 machines in this market,
compared to 2,800 machines in fiscal 1997. The majority of these machines were
sold to casino operations in France, Greece, Latvia, Poland, Portugal and The
Netherlands. IGT also made additional sales of video gaming terminals for a
linked system in Sweden. IGT does not anticipate substantial growth in the
European installed base in the near future and therefore, is dependent upon
replacement sales.
South Africa
Casino gaming in South Africa is governed under the National Gambling Act.
The National Gambling Act has allocated among each of the nine provinces in
South Africa licenses for a total of 40 casinos. Four provinces have begun
accepting applications or awarding new casino licenses, while the remaining
provinces have enacted gaming legislation and established gaming boards to award
new licenses. The thirteen casinos which were operating in South Africa prior to
the passage of the National Gambling Act were permitted to continue operating,
although it is anticipated that eight of these casinos will be required to close
in the near future. Eight temporary casinos have opened pursuant to licenses
granted under the National Gambling Act, three of which are anticipated to move
into their permanent facilities by the end of 1999. In addition, five additional
casinos are expected to begin operating by the end of 1999.
<PAGE>
South Africa is also in the final stages of legalizing a limited payout
market. The limited payout market permits smaller venues with a maximum of five
machines, with each machine limited to a maximum payout of approximately $100.
When fully established, the limited payout market will total an estimated 26,400
machines. The first limited payout machines are expected to begin operating in
the province of Mpumalanga by the end of 1999.
IGT's sales and service office in Midrand, Gauteng, South Africa serves this
market. By the end of fiscal 1998, IGT became licensed as a
supplier/manufacturer in four of the nine provinces and has applications pending
in two provinces. The remaining provinces have not begun the licensing process.
During fiscal 1998, IGT sold approximately 1,600 casino gaming machines in
South Africa, compared to 1,100 units in fiscal 1997. The majority of these were
sold in the province of Gauteng, the second province to award licenses based on
the new legislation. IGT is pursuing additional sales of gaming machines to new
casinos expected to open under the South African gaming legislation.
Japan
The Japanese market consists of approximately 850,000 pachisuro machines in
more than 17,000 gaming halls. Since new games in Japan have a sales life of
four to five months, the Japan market is driven by replacements which are
estimated at approximately 400,000 machines annually. Success in this market is
dependent on the ability to regularly introduce new games and the popularity of
each new game introduced.
IGT opened an office in Tokyo in 1992 and established a regional distribution
network to market IGT's pachisuro machines. IGT-Japan is a full member in
Nichidenkyo, an association of pachisuro manufacturers, which allows IGT-Japan
to manufacture products in Japan. IGT-Japan also utilizes an in-house sales team
to market products directly to customers in Tokyo.
IGT sold approximately 9,500 units in both fiscal 1998 and 1997. IGT released
its newest machine, Popper King, at the beginning of the first quarter of fiscal
1999 and has received orders for approximately 9,500 units. In an effort to
continually improve and enhance its products, IGT has submitted another new game
to the Japanese gaming authorities for approval and continues to make
enhancements on upcoming models. Barcrest KK, a Japanese subsidiary of IGT-UK,
contributed 1,000 units during the year, which were imported from IGT-UK.
Barcrest KK has applied for full membership in Nichidenkyo.
Latin America
IGT sells casino-style gaming equipment to many legalized gaming
jurisdictions in Latin America. To serve these markets, IGT has established
offices in Buenos Aires, Argentina; Sao Paulo, Brazil; and Lima, Peru to market
its products in the Latin American region. During fiscal 1998, IGT sold
approximately 4,300 machines in the Latin American market as compared to
approximately 3,300 machines in fiscal 1997. The increase was driven by sales to
Argentina and Brazil.
Gaming Operations
IGT's revenues and net income have been significantly enhanced through the
growth in wide-area progressive systems, primarily in the North American
markets. As of September 30, 1998, MegaJackpots were operating in 11 domestic
jurisdictions under the following 21 names: Dollars Deluxe, Elvis, Fabulous
Fifties, Five Deck Frenzy, High Rollers, Jeopardy!, Megabucks, Megapoker,
Nickelmania, Nickels, Nickels Deluxe, Pinball Mania, Pokermania, Quartermania,
Quarters Deluxe, Slotopoly, Super Megabucks, Supernickel Mania, Totem Pole,
Wheel of Fortune and Wheel of Gold. Typically, IGT maintains the ownership of
machines which comprise the systems and operates the systems for the casinos.
IGT collects a percentage of the money played on the machines to fund the
jackpots and cover its expenses for operating the systems.
<PAGE>
The following table presents MegaJackpots information by jurisdiction at
September 30, 1998.
<TABLE>
<CAPTION>
Number Number
of of
Systems Machines
<S> <C> <C>
Jurisdiction
Nevada....... 15 6,200
New Jersey... 16 2,600
Riverboat 36 2,100
markets........
Native American 15 1,800
Other domestic 7 700
International 3 500
--- ---
Total..... 92 13,900
=== ======
</TABLE>
IGT strives to continually provide innovation and enhanced player appeal to
its MegaJackpots line. This has been accomplished through the introduction of
games with multiple features and second event bonusing incorporating popular
themes including Jeopardy! and Wheel of Fortune. IGT's newest systems are also
utilizing the Vision series platform. Slotopoly, introduced in September 1998 on
the Vision platform, is the first system to provide an "Instant Winner" jackpot.
Instant Winner systems provide smaller more frequent jackpots which are paid out
immediately. All previous systems focused on large value jackpots paid out over
20 to 31 years. In early 1999, IGT introduced the first of two new Instant
Winner systems when it introduced the Elvis game, featuring Elvis songs, video
footage and trivia through use of the Vision series LCD and bonusing
capabilities. The second system, Party Time, is a collection of four games
incorporating a top box and bonusing features designed by Barcrest. IGT plans to
introduce Party Time in 1999.
IGT operates some of its MegaJackpots systems under joint marketing alliances
with Anchor and Shuffle Master Gaming. One system offered through the joint
venture with Anchor, the Wheel of Fortune, has grown from approximately 240
machines in Nevada and New Jersey in December 1996 to approximately 5,300
machines in 9 jurisdictions as of September 30, 1998. Other developments with
the Anchor joint venture include Pinball Mania, Totem Pole and Wheel of Gold.
There are approximately 600 of these machines operating in five jurisdictions.
IGT also supplies some of its MegaJackpots games as "stand alone" games that are
not linked to a progressive system in jurisdictions where progressive systems
are currently awaiting approval. Approximately 540 stand alone games are
operated in Colorado, Connecticut and Indiana, and each is leased on a per
machine per day basis.
IGT recognizes that all games, including MegaJackpot systems games, have a
finite life cycle. As a result, IGT systematically replaces older systems
experiencing declining play levels with new systems incorporating enhanced
entertainment value and improved player appeal. This serves to increase for both
IGT and the casino operators the revenue generated by the system overall as well
as on a per unit basis. During fiscal 1998, IGT removed five MegaJackpot systems
in three jurisdictions.
The operation of linked progressive systems varies among jurisdictions as a
result of different gaming regulations. In all jurisdictions, the casinos pay a
percentage of the handle to IGT to fund the progressive jackpot. Funding of the
progressive jackpot differs by jurisdiction but is generally administered by
IGT. Jackpots are currently paid in equal installments over a 20 to 31 year
period. Instant Winner jackpots will be paid out at the time they are won. In
October 1998, federal legislation was passed which permits the jackpot winners
to elect to receive a lump sum payment of the discounted value of progressive
jackpots in lieu of annual installments. Before IGT can offer such payments to
winners, regulatory agencies in each jurisdiction must also approve such
payments. All approvals have been obtained except in New Jersey, where approval
was not sought. In those jurisdictions which have approved lump sum payments,
IGT currently offers new jackpot winners and jackpot winners who won after
October 21, 1998, the option to receive a lump sum payment. After July 1, 1999,
jackpot winners who won before October 21, 1998, will also be able to elect to
receive a lump sum payment. Upon the winner's election to receive a lump sum
payment, investments currently held by IGT to fund jackpot liabilities will be
sold to make the lump sum payments to jackpot winners.
<PAGE>
Marketing and Sales
Product Development
The most significant factor influencing the purchase of all types of gaming
machines is player appeal followed by a mix of elements including service,
price, reliability, technical capability and the financial condition and
reputation of the manufacturer. Player appeal is the combination of machine
design, hardware, software and play features that ultimately improves the
earning power of gaming machines and the operator's return on investment.
To increase the player appeal of its machines, IGT has made significant
investments in research and development of products tailored toward the specific
demands of its customers (casino operators) as well as the users of its products
(players). In this context, IGT has for a number of years developed annually
more than 25 different game themes which are tested to measure player appeal.
IGT uses Megatest, an on-line computerized testing and monitoring system, to
evaluate and forecast acceptance of new products. Megatest uses a central
computer to monitor the performance of games placed in a representative sample
of casinos throughout the state of Nevada. The Megatest program allows IGT to
test more games with greater accuracy and in a shorter time frame and results in
the release of higher-performing games.
In international markets, IGT's strategy is to respond to developing markets
with local presence, customized games, new product introductions and local
production where feasible.
Customer Service
IGT considers its customer service department an important aspect of the
overall marketing strategy and a key differentiating factor when operators
purchase equipment. IGT typically provides a 90-day service and parts warranty
for its gaming machines. IGT currently employs more than 400 trained sales and
service personnel for customer assistance and maintains service offices
domestically in 11 jurisdictions and internationally in Argentina, Australia,
Brazil, England, Japan, New Zealand, Peru, South Africa and The Netherlands.
IGT also provides customer education in the form of installation training at
IGT locations, on-site training and videotape instruction. Other customer
services include a 24-hour customer service hotline, a quarterly technical
newsletter, customer notifications, a Slot Line newsletter for slot floor
managers and program summary reports designed to answer specific software
systems questions. The Technical Assistance Center is a fully staffed facility
to provide 24-hour telephone support to all types of casino system customers.
The Technical Assistance Center has access to a range of field support
engineering resources to resolve technical issues.
IGT also provides information to customers through a password protected
Intranet website. Customers can access this product information network 24 hours
a day, seven days a week. The system lets users view and download a variety of
information related to IGT products and services. This system gives customers
information on demand and provides a direct link for two-way communication
between the customer and IGT.
Sales and Distribution
IGT's products and services are sold to gaming operators and government
entities which conduct gaming operations. During fiscal 1998, IGT's ten largest
customers accounted for 25% of its gaming product sales. IGT markets gaming
products and proprietary systems through its internal sales staff, agents and
distributors. IGT employs more than 400 sales and service personnel in several
United States office locations, as well as Australia, Canada, Europe, Latin
America, New Zealand, South Africa and the United Kingdom.
IGT uses distributors for sales to specific markets including Louisiana, New
Jersey, New Zealand, Native American reservations, a Canadian maritime province,
the Caribbean, France and Japan. Sodak was our exclusive distributor to Native
American casinos prior to our announced acquisition of Sodak. IGT's agreements
with distributors do not specify minimum purchases but generally provide that
IGT may terminate the distribution agreement if certain performance standards
are not met.
<PAGE>
REGULATION AND LICENSING
The manufacture, sale and distribution of gaming devices are subject to
extensive state laws, regulations of the Nevada Commission and Nevada Control
Board and various other gaming authorities as well as numerous county and
municipal ordinances. These laws, regulations and ordinances vary from
jurisdiction to jurisdiction, but primarily concern the responsibility,
financial stability and character of gaming equipment manufacturers,
distributors and operators, as well as persons financially interested or
involved in gaming operations. Certain gaming authorities have the power under
these laws to investigate any debt security holder of IGT. Gaming authorities
may, in their discretion, require the holder of any debt security of IGT to file
applications, be investigated and be found suitable to own the debt security of
IGT. Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by such gaming authorities
may be found unsuitable. Under certain circumstances, IGT has the right, at its
option, to cause a holder of Exchange Notes to dispose of its Exchange Notes or
to redeem its Exchange Notes in order to comply with gaming laws to which IGT is
subject. See "Description of Exchange Notes -- Mandatory Disposition Pursuant to
Gaming Laws." If a gaming authority determines that a person is unsuitable to
own such security, then pursuant to gaming laws and regulations, IGT can be
sanctioned, which could include the loss of its gaming approvals, if, without
prior approval, it: (1) pays to the unsuitable person any dividend, interest, or
any distribution whatsoever; (2) recognizes any voting right by such unsuitable
person in connection with such securities; (3) pays the unsuitable person
remuneration in any form; or (4) makes any payment to the unsuitable person by
way of principal, redemption, conversion, exchange, liquidation or similar
transaction.
If any Exchange Notes are held in trust by an agent or by a nominee, the
record holder of any Exchange Notes may be required to disclose the identity of
the beneficial owner of any Exchange Notes to gaming authorities. A failure to
make such disclosure may be grounds for finding the record holder unsuitable.
IGT is also required to render maximum assistance in determining the identity of
the beneficial owner.
In addition, IGT may not make a public offering of any securities without the
prior approval of various gaming authorities if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities, or to retire or extend obligations incurred for such purposes. Such
approval, if given, does not constitute a finding, recommendation or approval by
the gaming authorities as to the accuracy or adequacy of the prospectus or the
investment merits of the securities. Any representation to the contrary is
unlawful.
The filing of the registration statement with respect to the Exchange Notes
constitutes a public offering of securities of IGT that will require the prior
approval of the Nevada Commission and the Mississippi Gaming Commission. On July
24, 1997 and September 15, 1998, the Nevada Commission and the Mississippi
Gaming Commission, respectively, granted IGT prior approval to make public
offerings of securities for a period of two years subject to some conditions (a
"Shelf Approval"). Each Shelf Approval may be rescinded for good cause without
prior notice upon the issuance of any interlocutory stop order by the chairman
of the Nevada Control Board or the Executive Director of the Mississippi Gaming
Commission, as applicable. The Shelf Approvals do not constitute a finding,
recommendation or approval by the Nevada Commission, the Nevada Control Board or
the Mississippi Gaming Commission as to the accuracy or adequacy of the
prospectus or the investment merits of the notes. Any representation to the
contrary is unlawful.
IGT's Shelf Approval in Nevada will expire on July 29, 1999, and IGT has
filed an application with the Nevada Control Board and Nevada Commission for a
new Shelf Approval which will be considered in July 1999. If this registration
statement is declared effective by the SEC and the Exchange Offers commenced
prior to July 29, 1999, no additional approvals of gaming regulators will be
required in connection with the Exchange Offers. If the registration statement
registering the Exchange Notes is not declared effective and the Exchange Offers
are not commenced by July 29, 1999, IGT will be precluded from seeking
effectiveness of such registration statement until a new Shelf Approval is
granted by the Nevada Commission or the Nevada Commission approves such
registration statement. There can be no assurance that a new Shelf Approval or
the approval of the applicable registration statement will be granted in a
timely fashion, or at all. The filing of the registration statement of which
this prospectus is part or a shelf registration statement constitutes a public
<PAGE>
offering of securities which may require an approval in the province of
Mpumalanga, South Africa. There can be no assurance that such approval would be
granted in a timely fashion, or at all. In the event that any required approval
is delayed or withheld, IGT may be required to pay Special Interest (as defined)
and trading in the Outstanding Notes would continue to be subject to the
limitations described in "Exchange Offers; Registration Rights."
For a more complete description of the various gaming regulatory requirements
applicable to IGT, see "Business-Government Regulation" in IGT's Annual Report
on Form 10-K for the fiscal year ended September 30, 1998.
<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions." In this description, the words "Company"
and "we" refer only to International Game Technology and not to any of its
Subsidiaries.
The Company will issue the Exchange Notes under the Indenture for the
Outstanding Notes dated as of May 19, 1999 (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee").
We urge you to read the Indenture because it, and not this description,
defines your rights as a holder of the Exchange Notes. A copy of the Indenture
is available upon request to the Company at the address set forth under "Where
You Can Find More Information."
General
The Exchange Notes will be limited to $1.0 billion aggregate principal
amount, consisting of $400 million principal amount of Senior Exchange Notes due
2004 and $600 million principal amount of Senior Exchange Notes due 2009.
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months. The Company will issue Exchange Notes only in fully registered
form without coupons, in denominations of $1,000 and integral multiples of
$1,000.
The Senior Exchange Notes Due 2004. Each Senior Exchange Note due 2004 will
bear interest from May 19, 1999, at 7.875% per annum, payable semiannually on
May 15 and November 15 of each year, commencing November 15, 1999, to the Person
in whose name the Senior Exchange Note due 2004 is registered, subject to
certain exceptions as provided in the Indenture, at the close of business on May
1 or November 1 (each a "Record Date"), as the case may be, immediately
preceding such May 15 or November 15. The Senior Exchange Notes due 2004 will
mature on May 15, 2004 and are not subject to any sinking fund provision.
The Senior Exchange Notes Due 2009. Each Senior Exchange Note due 2009 will
bear interest from May 19, 1999, at 8.375% per annum, payable semiannually on
May 15 and November 15 of each year, commencing November 15, 1999, to the Person
in whose name the Senior Exchange Note due 2009 is registered, subject to
certain exceptions as provided in the Indenture, at the close of business on the
Record Date immediately preceding such May 15 or November 15. The Senior
Exchange Notes due 2009 will mature on May 15, 2009 and are not subject to any
sinking fund provision.
The interest rate on the Outstanding Notes will increase if:
(1) the Company does not file either:
(A) a registration statement to allow for the Exchange
Offers or
(B) a resale shelf registration statement for the Outstanding Notes;
(2) the registration statement referred to above is not
declared effective on a timely basis; or
(3) certain other conditions are not satisfied.
You should refer to the description under the heading "Exchange Offers;
Registration Rights" for a more detailed description of the circumstances under
which the interest rate will increase.
Ranking
The Exchange Notes will be senior unsecured obligations of the Company, will
rank pari passu in right of payment with any existing and future senior debt of
the Company and will be senior in right of payment to all future subordinated
<PAGE>
debt of the Company. As of April 3, 1999, after giving effect to the offering of
the Outstanding Notes, the application of the proceeds thereof and the Exchange
Offers, the Company would have had, on a consolidated basis, approximately $1.0
billion of senior debt outstanding.
Except as described under the covenant "Future Subsidiary Guarantors," all
existing and future debt and other liabilities, including the claims of trade
creditors and claims of preferred stockholders, if any, of the Company's
Subsidiaries, will be effectively senior to the Exchange Notes. As of April 3,
1999, after giving effect to the offering of the Outstanding Notes and
application of the proceeds thereof, the total balance sheet liabilities of the
Company's Subsidiaries were approximately $643 million, of which approximately
$528 million were jackpot liabilities offset on a dollar-for-dollar basis by
U.S. Treasury securities and cash. The Exchange Notes also will be effectively
subordinated to any secured debt of the Company to the extent of the value of
the assets securing such debt.
Subsidiary Guarantees
The Exchange Notes will not be guaranteed when issued.
Under the circumstances described below under "Certain Covenants -- Future
Subsidiary Guarantors," one or more Subsidiary Guarantors will jointly and
severally Guarantee the Company's payment obligations under the Exchange Notes.
The Subsidiary Guarantee of each Subsidiary Guarantor will be an unsecured
senior obligation of such Subsidiary Guarantor.
Certain consolidations, mergers and dispositions of Property
may result in the addition of additional Subsidiary Guarantors or
the release of Subsidiary Guarantors. See "Future Subsidiary
Guarantors."
Each of the Company and any Subsidiary Guarantor will agree to contribute to
any Subsidiary Guarantor which makes payments pursuant to its Subsidiary
Guarantee, as applicable, an amount equal to the Company's or such Subsidiary
Guarantor's proportionate share of such payment, based on the net worth of the
Company or such Subsidiary Guarantor relative to the aggregate net worth of the
Company and the Subsidiary Guarantors.
Optional Redemption
We may redeem all or a portion of the Exchange Notes of either series at any
time as set forth below. We will mail notice to registered holders of the
Exchange Notes of the applicable series of our intent to redeem on not less than
30 or more than 60 days' notice. We may redeem such Exchange Notes at a
redemption price equal to the greater of:
o 100% of the principal amount plus accrued interest to the
redemption date; or
o the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of the interest accrued to the date of
redemption) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 37.5 basis points in the case of the Senior Exchange
Notes due 2004 and 50.0 basis points in the case of the Senior Exchange
Notes due 2009, in each case plus accrued interest on the principal
amount being redeemed to the redemption date.
"Treasury Rate" means, with respect to any redemption date, (a) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (b) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
<PAGE>
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of the notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of five Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (b) if the Independent Investment Banker obtains fewer than five
such Reference Treasury Dealer Quotations, the average of all such Quotations.
"Independent Investment Banker" means Salomon Smith Barney Inc.
or one of the other Reference Treasury Dealers identified in
clause (a) of the definition thereof appointed by the Company.
"Reference Treasury Dealer" means (a) each of Salomon Smith Barney Inc., BNY
Capital Markets, Inc., Goldman, Sachs & Co., Lehman Brothers Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated and their respective successors,
provided that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), we
will substitute therefor another Primary Treasury Dealer and (b) any other
Primary Treasury Dealer selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker by such Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption
date.
Mandatory Disposition Pursuant to Gaming Laws
Each holder, by accepting an Exchange Note in exchange for their Outstanding
Notes, shall be deemed to have agreed that if the gaming authority of any
jurisdiction in which the Company or any of its Subsidiaries does business
requires that a Person who is a holder or the beneficial owner of Exchange Notes
be licensed, qualified or found suitable under applicable gaming laws, such
holder or beneficial owner, as the case may be, shall apply for a license,
qualification or a finding of suitability within the required time period. If
such Person fails to apply or become licensed or qualified or is found
unsuitable, the Company shall have the right, at its option:
o to require such Person to dispose of its Exchange Notes or beneficial
interest therein within 30 days of receipt of notice of the Company's
election or such earlier date as may be requested or prescribed by such
gaming authority, or
o to redeem such Exchange Notes at a redemption price equal
to:
(1) the lesser of
(a) such Person's cost and
(b) 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the earlier of the redemption date or the date of the
finding of unsuitability, which may be less than 30 days following the
notice of redemption if so required or prescribed by the applicable gaming
authority or
(2) such other amount as may be required by applicable law or by order of
any applicable gaming authority.
<PAGE>
The Company shall notify the Trustee in writing of any such redemption as
soon as practicable. The Company shall not be responsible for any costs or
expenses any such holder may incur in connection with its application for a
license, qualification or a finding of suitability.
Repurchase at the Option of Holders Upon a Change of Control
Triggering Event
Upon the occurrence of a Change of Control Triggering Event, each holder of
Exchange Notes shall have the right to require the Company to repurchase all or
any part of such holder's Exchange Notes pursuant to the offer described below
(the "Change of Control Offer") at a purchase price (the "Change of Control
Purchase Price") equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the purchase date (subject to the right of holders
of record on the relevant record date to receive interest due on the relevant
interest payment date).
Within 30 days following any Change of Control Triggering Event, the Company
shall:
(a) cause a notice of the Change of Control Offer to be sent at least once
to the Dow Jones News Service or a similar business news service in the United
States and
(b) send, by first-class mail, with a copy to the Trustee, to each holder
of Exchange Notes, at such holder's address appearing in the security
register, a notice stating:
o that a Change of Control Triggering Event has occurred and a Change of
Control Offer is being made pursuant to the covenant entitled
"Repurchase at the Option of Holders Upon a Change of Control Triggering
Event" and that all Exchange Notes timely tendered will be accepted for
payment;
o the Change of Control Purchase Price and the purchase date, which shall
be, subject to any contrary requirements of applicable law, a Business
Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed;
o the circumstances and relevant facts regarding the Change
of Control Triggering Event;
o the procedures that holders of Exchange Notes must follow in order to
tender their notes (or portions thereof) for payment, and the procedures
that holders of Exchange Notes must follow in order to withdraw an
election to tender Exchange Notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of notes pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of the covenant described hereunder, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the covenant described hereunder
by virtue of such compliance.
The Change of Control repurchase feature is a result of negotiations between
the Company and the initial purchasers of the Outstanding Notes. Management has
no present intention to engage in a transaction involving a Change of Control,
although it is possible that the Company would decide to do so in the future.
Subject to certain covenants described below, the Company could, in the future,
enter into certain transactions, including acquisitions, refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of debt outstanding at such time
or otherwise affect the Company's capital structure or credit ratings.
The definition of Change of Control includes a phrase relating to the sale,
transfer, assignment, lease, conveyance or other disposition of "all or
substantially all" the Company's assets. Although there is a developing body of
case law interpreting the phrase "substantially all", there is no precise
established definition of the phrase under applicable law. Accordingly, if the
Company disposes of less than all its assets by any of the means described
above, the ability of a holder of Exchange Notes to require the Company to
<PAGE>
repurchase its Exchange Notes may be uncertain. In such a case, holders of the
Exchange Notes may not be able to resolve this uncertainty without resorting to
legal action.
The Existing Credit Facilities provide that the occurrence of certain of the
events that would constitute a Change of Control would constitute a default
under such existing debt. Other future debt of the Company may contain
prohibitions of certain events which would constitute a Change of Control or
require such debt to be repurchased upon a Change of Control. Moreover, the
exercise by holders of Exchange Notes of their right to require the Company to
repurchase such Exchange Notes could cause a default under existing or future
debt of the Company, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to holders of Exchange Notes upon a repurchase may be
limited by the Company's then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
required repurchases. The Company's failure to purchase Exchange Notes in
connection with a Change of Control Offer would result in a default under the
Indenture. Such a default would, in turn, constitute a default under other
existing debt of the Company, and may constitute a default under future debt as
well. The Company's obligation to make an offer to repurchase the Exchange Notes
of a series as a result of a Change of Control Triggering Event may be waived or
modified at any time prior to the occurrence of such Change of Control
Triggering Event with the written consent of the holders of a majority in
principal amount of the Exchange Notes of such series. See "Modification and
Waiver".
The Company will not be required to make a Change of Control Offer upon a
Change of Control Triggering Event if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Company and purchases all of the notes validly tendered and not
withdrawn under such Change of Control Offer.
Repurchase at the Option of Holders Upon Granting of Lien
Until the earlier of (a) approval by the Nevada gaming authorities of an
agreement by the Company as contemplated by the covenant described under
"Limitation on Liens" not to grant a Lien on the Capital Stock of its Wholly
Owned Subsidiary that currently holds the Company's domestic gaming licenses
(the "License Subsidiary") or (b) a registered public offering of Exchange Notes
pursuant to a Shelf Approval that includes prior approval of such covenant (such
earlier date being referred to herein as the "Put Fall-Away Date"), if the
Company shall grant any Lien on the Capital Stock of the License Subsidiary (a
"Put Event"), each holder of Exchange Notes shall have the right to require the
Company to repurchase all or any part of such holder's Exchange Notes pursuant
to the offer described below (the "Put Event Offer") at a purchase price (the
"Put Event Purchase Price") equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the purchase date (subject to the right
of holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
Within 30 days following any Put Event, the Company shall:
(1) cause a notice of the Put Event Offer to be sent at least once to the
Dow Jones News Service or a similar business news service in the United States
and
(2) send, by first-class mail, with a copy to the Trustee, to each holder
of Exchange Notes, at such holder's address appearing in the security
register, a notice stating:
o that a Put Event has occurred and a Put Event Offer is being made
pursuant to the covenant entitled "Repurchase at the Option of Holders
Upon Granting of Lien" and that all Exchange Notes timely tendered will
be accepted for payment;
o the Put Event Purchase Price and the purchase date, which shall be,
subject to any contrary requirements of applicable law, a Business Day
no earlier than 30 days nor later than 60 days from the date such
notice is mailed;
o the circumstances and relevant facts regarding the Put
Event; and
<PAGE>
o the procedures that holders of Exchange Notes must follow in order to
tender their Exchange Notes (or portions thereof) for payment, and the
procedures that holders of Exchange Notes must follow in order to
withdraw an election to tender notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Exchange Notes pursuant to a Put Event
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of the covenant described hereunder, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the covenant described hereunder
by virtue of such compliance.
The exercise by holders of Exchange Notes of their right to require the
Company to repurchase such Exchange Notes could cause a default under existing
or future debt of the Company due to the financial effect of such repurchase on
the Company. In addition, the Company's ability to pay cash to holders of
Exchange Notes upon a repurchase may be limited by the Company's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases. The Company's failure
to purchase Exchange Notes in connection with a Put Event would result in a
default under the Indenture. Such a default would, in turn, constitute a default
under other existing debt of the Company, and may constitute a default under
future debt as well. The Company's obligation to make an offer to repurchase the
Exchange Notes of a series as a result of a Put Event may be waived or modified
at any time prior to the occurrence of such Put Event with the written consent
of the holders of a majority in principal amount of the Exchange Notes of such
series. See "Modification and Waiver".
The Company has no plans to effect any Put Event.
Certain Covenants
Covenant Suspension. During any period of time that:
(a) the Exchange Notes have Investment Grade Ratings from
both Rating Agencies and
(b) no Default or Event of Default has occurred and is
continuing under the Indenture,
the Company and the Subsidiaries will not be subject to the covenants described
under "-- Limitation on Indebtedness" and "-- Future Subsidiary Guarantors" (the
"Suspended Covenants") and any Subsidiary Guarantees existing at such time shall
be released. In the event that the Company and the Subsidiaries are not subject
to the Suspended Covenants for any period of time as a result of the preceding
sentence and, subsequently, one or both of the Rating Agencies withdraws its
ratings or downgrades the ratings assigned to the notes below the required
Investment Grade Ratings or a Default or Event of Default occurs and is
continuing, then the Company and the Subsidiaries will thereafter again be
subject to the Suspended Covenants.
Limitation on Indebtedness. The Company shall not, and shall not permit any
Subsidiary to, Incur, directly or indirectly, any Indebtedness unless, after
giving effect to the application of the proceeds thereof, no Default or Event of
Default would occur as a consequence of such Incurrence or be continuing
following such Incurrence and either:
(1) after giving effect to the Incurrence of such Indebtedness and the
application of the proceeds thereof, the Consolidated Interest Coverage Ratio
would be greater than 2.50 to 1.00, or
(2) such Indebtedness is Permitted Indebtedness.
The term "Permitted Indebtedness" is defined to include the following:
(a) Indebtedness of the Company evidenced by the notes
and of Subsidiary Guarantors evidenced by Subsidiary
Guarantees;
<PAGE>
(b) Indebtedness of the Company under Credit Facilities, provided that
the aggregate principal amount of all such Indebtedness under Credit
Facilities at any one time outstanding shall not exceed $250.0 million;
(c) Indebtedness in respect of Capital Lease Obligations and Purchase
Money Indebtedness, provided that:
(1) the aggregate principal amount of such Indebtedness does not
exceed the Fair Market Value (on the date of the Incurrence thereof) of
the Property acquired, constructed or leased, and
(2) the aggregate principal amount of all Indebtedness Incurred and
then outstanding pursuant to this clause (c) (together with all
Permitted Refinancing Indebtedness Incurred and then outstanding in
respect of Indebtedness previously Incurred pursuant to this clause
(c)) does not exceed $25.0 million;
(d) Indebtedness of the Company owing to and held by any Wholly Owned
Subsidiary and Indebtedness of a Subsidiary owing to and held by the
Company or any Wholly Owned Subsidiary; provided, however, that any
subsequent issue or transfer of Capital Stock or other event that results
in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned
Subsidiary or any subsequent transfer of any such Indebtedness (except to
the Company or a Wholly Owned Subsidiary) shall be deemed, in each case,
to constitute the Incurrence of such Indebtedness by the issuer thereof;
(e) Indebtedness of a Subsidiary Incurred and outstanding on or prior
to the date on which such Subsidiary was acquired by the Company or
otherwise became a Subsidiary (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of transactions
pursuant to which such Subsidiary became a Subsidiary of the Company or
was otherwise acquired by the Company), provided that at the time such
Subsidiary was acquired by the Company or otherwise became a Subsidiary
and after giving effect to the Incurrence of such Indebtedness, the
Company would have been able to Incur $1.00 of additional Indebtedness
pursuant to clause (1) of the first paragraph of this covenant;
(f) Indebtedness under Interest Rate Agreements entered into by the
Company or a Subsidiary for the purpose of limiting interest rate risk in
the ordinary course of the financial management of the Company or such
Subsidiary and not for speculative purposes, provided that the obligations
under such agreements are directly related to payment obligations on
Indebtedness otherwise permitted by the terms of this covenant, including
the Notes;
(g) Indebtedness under Currency Exchange Protection Agreements entered
into by the Company or a Subsidiary for the purpose of limiting currency
exchange rate risks directly related to transactions entered into by the
Company or such Subsidiary in the ordinary course of business and not for
speculative purposes;
(h) Indebtedness in connection with one or more standby letters of
credit, completion guarantees, performance or surety bonds and banker's
acceptances issued by the Company or a Subsidiary in the ordinary course
of business (including pursuant to contractual, lease, license, worker's
compensation or self-insurance obligations) and not in connection with the
borrowing of money or the obtaining of advances or credit;
(i) any Guarantee by the Company of Indebtedness or other obligations
of any of its Subsidiaries so long as the Incurrence of such Indebtedness
or other obligations of such Subsidiaries is permitted under the terms of
the Indenture;
(j) Indebtedness arising from agreements of the Company and its
Subsidiaries providing for indemnification, adjustment of purchase price
or similar obligations, in each case, incurred or assumed in connection
with the disposition of any assets, business or Subsidiary;
(k) Indebtedness outstanding on the Issue Date not
otherwise described in clauses (a) through (j) above;
<PAGE>
(l) Indebtedness in an aggregate principal amount
outstanding at any one time not to exceed $25.0 million; and
(m) Permitted Refinancing Indebtedness Incurred in respect of
Indebtedness Incurred pursuant to clause (1) of the first paragraph of
this covenant and clauses (a), (c), (e) and (k) above.
Notwithstanding anything to the contrary contained in this covenant,
(a) the Company shall not, and shall not permit any Subsidiary
Guarantor to, Incur any Indebtedness pursuant to this covenant if the
proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations unless such Indebtedness shall be subordinated to
the notes or the applicable Subsidiary Guaranty, as the case may be, to at
least the same extent as such Subordinated Obligations, and
(b) the Company shall not permit any Subsidiary that is not a
Subsidiary Guarantor to Incur any Indebtedness pursuant to this covenant
if the proceeds thereof are used, directly or indirectly, to Refinance any
Indebtedness of the Company or any Subsidiary Guarantor.
For purposes of determining compliance with this covenant, Indebtedness need
not be permitted solely by reference to one provision but may be permitted in
part by one such provision and in part by one or more other provisions of this
section permitting such Indebtedness and in the event that an item of
Indebtedness meets the criteria of more than one of the categories of Permitted
Indebtedness described in clauses (a) through (m) of the definition thereof, the
Company shall, in its sole discretion, classify such item of Indebtedness on the
date of its Incurrence in any manner that complies with this covenant.
Limitation on Liens. The Company will not, nor will it permit any Subsidiary
to, create, assume, incur or suffer to exist any Lien upon any Property or any
Indebtedness or shares of Capital Stock of any Subsidiaries, whether owned on
the Issue Date or thereafter acquired, without making effective provision
whereby the notes shall be secured equally and ratably with (or, at the option
of the Company, prior to) any and all other obligations and Indebtedness thereby
secured; provided, however, that the foregoing restriction shall not apply to:
(a) Liens for taxes, assessments or governmental charges or levies on the
Property of the Company or any Subsidiary if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested
in good faith and by appropriate proceedings, provided that any reserve or
other appropriate provision that shall be required in conformity with GAAP
shall have been made therefor;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law on the Property of the
Company or any Subsidiary arising in the ordinary course of business and
securing payment of obligations which are not yet delinquent or which are
being contested in good faith;
(c) Liens on the Property of the Company or any Subsidiary incurred in the
ordinary course of business to secure performance of obligations with respect
to statutory or regulatory requirements, performance or return-of-money bonds,
surety bonds or other obligations of a like nature, in each case which are not
incurred in connection with the payment of Indebtedness;
(d) Liens on Property at the time the Company or any Subsidiary acquired
such Property, including any acquisition by means of a merger or consolidation
with or into the Company or any Subsidiary; provided that such Lien was not
Incurred in connection with or in contemplation of such acquisition, and
provided, further that any such Lien may not extend to any other Property of
the Company or any Subsidiary except as otherwise provided herein;
(e) Liens on the Property of a Person at the time such Person becomes a
Subsidiary; provided, however, that any such Lien may not extend to any other
Property of the Company or any other Subsidiary which is not a direct
Subsidiary of such Person except as otherwise provided herein;
<PAGE>
(f) pledges or deposits by the Company or any Subsidiary under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which the Company or any Subsidiary is
party, or deposits to secure public or statutory obligations of the Company,
or deposits for the payment of rent, in each case incurred in the ordinary
course of business;
(g) Liens on Property to secure Indebtedness permitted to be incurred
pursuant to clause (c) of the definition of Permitted Indebtedness, provided
that such Lien may not extend to any Property of the Company or any Subsidiary
other than the Property acquired, constructed or leased with the proceeds of
such Indebtedness and any improvements or accessions to such Property;
(h) rights of way, zoning restrictions, minor defects or irregularities in
title, covenants and restrictions, licenses, easements, building restrictions
and such other encumbrances or charges against real Property;
(i) Liens arising out of judgments or decrees which involve uninsured
amounts not exceeding $15.0 million (or the foreign currency equivalent) and
which are being contested in good faith, provided that any reserve or other
appropriate provision that shall be required in conformity with GAAP shall
have been made therefor;
(j) Liens consisting of leases, subleases or licenses (including licenses
of patents, trademarks and other intellectual property) granted to third
parties in the ordinary course of business of the Company or any Subsidiary,
and interests or title of a lessor, sublessor or licensor under any lease or
license;
(k) Liens incurred pursuant to regulatory requirements to secure the
performance of obligations of the Company or any Subsidiary in connection with
liabilities to jackpot winners and potential jackpot winners;
(l) Liens existing on the Issue Date and not otherwise
described in clauses (a) through (k) above; or
(m) Liens on the Property of the Company or any Subsidiary to secure any
Refinancing, in whole or in part, of any Indebtedness secured by Liens
referred to in clause (d), (e), (g) or (l) above; provided, however, that any
such Lien shall be limited to all or part of the same Property that secured
the original Lien (together with improvements and accessions to such Property)
and the aggregate principal amount of Indebtedness that is secured by such
Lien shall not be increased to an amount greater than the sum of (i) the
outstanding principal amount, or, if greater, the committed amount, of the
Indebtedness secured by Liens described under clause (d), (e), (g) or (l)
above, as the case may be, at the time of such Refinancing and (ii) an amount
necessary to pay any premiums, fees and other expenses incurred by the Company
or any Subsidiary in connection with such Refinancing.
Notwithstanding the foregoing provisions of this covenant, the Company may,
and may permit any Subsidiary to, create, assume, incur or suffer to exist any
Lien upon any Property which is not excepted by clauses (a) through (m) above
without equally and ratably securing the notes, provided that the aggregate
amount of all Indebtedness then outstanding secured by such Lien and all other
Liens not specifically excepted pursuant to clauses (a) through (m) above does
not exceed 15% of Consolidated Net Tangible Assets at the end of the immediately
preceding fiscal year of the Company.
Further, notwithstanding the foregoing provisions, this covenant shall not
prohibit any Lien on the Capital Stock of the License Subsidiary prior to the
Put Fall-Away Date.
Limitation on Sale and Leaseback Transactions. The Company will not, and will
not permit any Subsidiary to, directly or indirectly, sell or transfer (other
than to the Company or a Subsidiary) any Property owned on the date of the
Indenture or thereafter acquired with the intention that the Company or any
Subsidiary shall take back a lease thereof (a "Sale and Leaseback Transaction")
unless the Company or such Subsidiary would be entitled to:
(a) Incur Indebtedness in an amount equal to the Attributable Debt with
respect to such Sale and Leaseback Transaction pursuant to the covenant
described under "Limitation on Indebtedness"; and
<PAGE>
(b) create a Lien on such Property securing such Attributable Debt without
equally and ratably securing the notes as described above under "Limitation on
Liens".
Future Subsidiary Guarantors. The Company shall cause each Domestic
Subsidiary (other than the Spin For Cash Joint Venture as long as the Company
owns 50% or less of the equity interests therein) having an aggregate of $10.0
million or more of Indebtedness or Preferred Stock outstanding at any time to
promptly execute and deliver to the Trustee a Subsidiary Guarantee, provided
that (a) with respect to any Subsidiary acquired after the Issue Date in
accordance with the terms of this Indenture, any Indebtedness or Preferred Stock
outstanding on or prior to the date on which such Subsidiary was acquired by the
Company (unless such Indebtedness or Preferred Stock was Incurred or issued, as
applicable, as consideration, or to provide all or any portion of the funds or
credit support utilized to consummate, the transactions or series of
transactions pursuant to which such Subsidiary became a Subsidiary or was
otherwise acquired by the Company), (b) Indebtedness in respect of Capital Lease
Obligations and Purchase Money Indebtedness and (c) intercompany Indebtedness
shall not be considered for purposes of this covenant. In addition, any
Subsidiary that Guarantees Indebtedness of the Company will be required to
execute and deliver to the Trustee a Subsidiary Guarantee.
Notwithstanding the foregoing, the License Subsidiary shall not be subject to
the foregoing covenant until the earlier of such time as (1) prior approval of
such covenant with respect to the License Subsidiary is received in Nevada or
(2) a registered public offering of the Exchange Notes is made pursuant to a
Shelf Approval that includes a prior approval of such covenant (the "Applicable
Date"). Further, notwithstanding any other covenant described herein, until the
Applicable Date, the License Subsidiary shall not Incur any Indebtedness or take
any other action whatsoever that would have required it to execute and deliver a
Subsidiary Guarantee but for the immediately preceding sentence.
Each Subsidiary Guarantee shall be automatically and unconditionally released
and discharged upon any sale, exchange or transfer of all of the Capital Stock
in, or all or substantially all the assets of, such Subsidiary Guarantor (in
each case other than to the Company or an affiliate of the Company).
Mergers and Sales of Assets
The Company may not consolidate with or merge into any other corporation or
sell, convey, lease or transfer its Properties and assets substantially as an
entirety in any one transaction or series of transactions unless:
(a) the corporation formed by such consolidation or into which the Company
is merged or the Person to which the Properties and assets of the Company are
so transferred shall be a corporation organized and existing under the laws of
the United States of America, any state thereof or the District of Columbia
and shall execute and deliver to the Trustee a supplemental indenture
expressly assuming the due and punctual payment when due of the principal of
and interest (including Special Interest, if any) on the Exchange Notes and
the performance of each of the other covenants of the Company under the
Indenture,
(b) each Subsidiary Guarantor shall execute and deliver to the Trustee a
supplemental indenture confirming the obligation of such Subsidiary Guarantor
to pay the principal of and interest (including Special Interest, if any) on
the notes pursuant to such Subsidiary Guarantor's Subsidiary Guarantee,
(c) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing,
(d) such surviving corporation or such Person, as the case may be, shall
not immediately thereafter have outstanding Indebtedness secured by any Liens
not permitted by the Indenture or shall have secured the notes equally and
ratably with (or, at the option of the Company, prior to) any Indebtedness
secured thereby, and
(e) in the case of a sale, conveyance, lease or other transfer of assets
substantially as an entirety, such Property and assets shall have been
transferred as an entirety or virtually as an entirety to one Person.
<PAGE>
Events of Default
The Indenture defines an "Event of Default" with respect to the Exchange
Notes of each series as being any one of the following events:
(a) default for 30 days in any payment of interest (including Special
Interest, if any) on any Exchange Note of such series;
(b) default in the payment of all or any part of the principal of any
Exchange Note of such series when due (whether at maturity, upon acceleration
or otherwise);
(c) default, for 60 days after written notice thereof, in performance of
any other term, covenant or agreement in the Indenture;
(d) default on other Indebtedness of over $30.0 million (or its foreign
currency equivalent), after the applicable grace period, which results in
acceleration of the maturity of such Indebtedness or failure to pay such
Indebtedness at final maturity;
(e) certain events of bankruptcy, insolvency or reorganization with
respect to the Company and its Significant Subsidiaries (as that term is
defined in Regulation S-X, Rule 1-02(w)); or
(f) a Subsidiary Guarantee ceases to be in full force and effect (other
than in accordance with the terms of the Indenture and such Subsidiary
Guarantee) or a Subsidiary Guarantor denies or disaffirms its obligations
under its Subsidiary Guarantee.
In case an Event of Default shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of all of the
Exchange Notes of the applicable series then outstanding may declare such
principal amount to be due and payable immediately.
The Indenture requires the Company to file annually with the Trustee an
officers' certificate as to whether there has been any default under the terms
of the Indenture. The Indenture provides that the Trustee may withhold notice to
the holders of the Exchange Notes of any default (except in payment of principal
or interest (including Special Interest, if any)) if it considers such to be in
the interest of the holders of the Exchange Notes.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Indenture
provides that the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of the
holders of the Exchange Notes of a series unless such holders shall have offered
to the Trustee reasonable indemnity. Subject to such provisions for
indemnification and certain other rights of the Trustee, the Indenture provides
that the holders of a majority in aggregate principal amount of the Exchange
Notes of the applicable series then outstanding shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee with
respect to the Exchange Notes of such series.
No holder of any Exchange Note of either series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder unless:
(a) such holder shall have previously given to the Trustee written notice
of a continuing Event of Default,
(b) the holders of at least 25% in aggregate principal amount of all of
the Exchange Notes of such series then outstanding shall have made written
request to the Trustee to institute such proceeding as Trustee,
(c) such holder or holders shall have offered to the Trustee
reasonable indemnity,
(d) the Trustee shall have failed to institute such proceeding within 60
days after receipt of notice from such holders, and
<PAGE>
(e) the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the Exchange Notes of such series then
outstanding a direction inconsistent with such request.
However, the holder of any Exchange Note will have an absolute right to receive
payment of the principal of and interest on such Exchange Note when due and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such holder.
Modification and Waiver
Certain modifications and amendments of the Indenture as it relates to a
series may be made by the Company, the Subsidiary Guarantors and the Trustee
only with the consent of the holders of not less than a majority in aggregate
principal amount of all of the Exchange Notes of such series then outstanding,
provided that no such modification or amendment may, without the consent of the
holder of each Exchange Note of such series affected thereby,
(a) change the Stated Maturity of the principal of, or any installment of
interest (including Special Interest, if any) on, any such Exchange Note;
(b) reduce the principal amount of or the rate of interest (including
Special Interest, if any) on any such Exchange Note;
(c) change the place of payment where, or the coin or currency in which,
any principal of and interest (including Special Interest, if any) on any such
Exchange Note is payable;
(d) impair the right to institute suit for the enforcement of any such
payment on or with respect to any such Exchange Note;
(e) at any time after a Change of Control Triggering Event or Put Event
has occurred, change the time at which the Change of Control Offer or Put
Event Offer related thereto must be made or at which the Exchange Notes must
be repurchased pursuant to such Change of Control Offer or Put Event Offer; or
(f) reduce the above-stated percentage of Exchange Notes of any series
then outstanding the consent of the holders of which is necessary to modify or
amend the Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults.
The holders of not less than a majority in aggregate principal amount of all
of the Exchange Notes of a series then outstanding may waive (a) compliance by
the Company or any Subsidiary Guarantor with certain restrictive provisions of
the Indenture or (b) compliance by the Company or any Subsidiary Guarantor with
any other provision of the Indenture, including a past default under the
Indenture, except a default in the payment of the principal of or interest on
any Exchange Note or in respect of a provision which under the Indenture cannot
be modified or amended without the consent of the holder of each Exchange Note
of such series affected thereby.
Defeasance of Notes or Certain Covenants
Defeasance and Discharge. The Indenture provides that the Company shall be
deemed to have paid and discharged all obligations in respect of the Exchange
Notes of any series (except for certain obligations to register the transfer or
exchange of Exchange Notes, to replace stolen, lost or mutilated Exchange Notes,
to maintain paying agencies and hold money for payment in trust) on the 93rd day
after the date of deposit with the Trustee, in trust, of money or U.S.
Government Obligations, which through the payment of interest and principal in
respect thereof in accordance with their terms will provide money in an amount
sufficient to pay each installment of principal and interest on the Exchange
Notes of such series on the Stated Maturity of such payments, in accordance with
the terms of the Indenture and such Exchange Notes. Such discharge may only
occur if, among other things, the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling to the effect
that holders of the Exchange Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, and in
<PAGE>
the same manner and at the same time, as would have been the case if such
deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants. The Indenture provides that the Company may
elect to omit to comply with the restrictive covenants of the Indenture
described under "Limitation on Indebtedness", "Limitation on Liens", "Limitation
on Sale and Leaseback Transactions" and "Future Subsidiary Guarantors" and with
the provisions described under "Repurchase at the Option of Holders upon a
Change of Control Triggering Event" and "Repurchase at the Option of Holders
Upon Granting of a Lien" with respect to the Exchange Notes of any series if the
Company deposits with the Trustee, in trust, money or U.S. Government
Obligations, which through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay each installment of principal and interest on the notes of
such series on the Stated Maturity of such payments, in accordance with the
terms of the Indenture and such Exchange Notes. Such a trust may only be
established if, among other things, the Company has delivered to the Trustee an
opinion of counsel to the effect that the holders of the Exchange Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain covenants and will be subject to federal
income tax on the same amount, and in the same manner and at the same times, as
would have been the case if such deposit and defeasance had not occurred.
Certain Definitions
"Approved Investments" means any Investment (a) approved by the Nevada
Commission and (b) rated AA (or the equivalent) or higher by S&P and Aa2 (or the
equivalent) or higher by Moody's.
"Asset Sale" means any sale, lease, transfer, issuance or other disposition
(or series of related sales, leases, transfers, issuances or dispositions) by
the Company or any Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (a) any shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares or investments by foreign
nationals mandated by applicable law) or (b) any other assets of the Company or
any Subsidiary outside of the ordinary course of business of the Company or such
Subsidiary (other than, in the case of clauses (a) and (b) above, (i) any
disposition by a Subsidiary to the Company or by the Company or a Subsidiary to
a Wholly Owned Subsidiary and (ii) any disposition effected in compliance with
the covenant described under "Merger and Sales of Assets").
"Attributable Debt" in respect of a Sale and Leaseback Transaction means, at
any date of determination, (a) if such Sale and Leaseback Transaction is a
Capital Lease Obligation, the amount of Indebtedness represented thereby
according to the definition of "Capital Lease Obligation" and (b) in all other
instances, the present value (determined in accordance with GAAP) of the total
obligations of the lessee for net rental payments (after excluding amounts paid
in respect of insurance, taxes, assessments, utilities, labor and similar
charges not relating to payments for use of the Property) during the remaining
term of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of any date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (a) the sum
of the product of the numbers of years (rounded to the nearest one-twelfth of
one year) from the date of determination to the dates of each successive
scheduled principal payment of such Indebtedness or redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such
payment by (b) the sum of all such payments.
"Business Day" means any calendar day that is not a Saturday, Sunday or legal
holiday in New York, New York and on which commercial banks are open for
business in New York, New York and Nevada.
"Capital Lease Obligations" means any obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP; and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligations determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty. For purposes of
<PAGE>
"Certain Covenants--Limitation on Liens", a Capital Lease Obligation shall be
deemed secured by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares or other
equivalents (however designated) of any class of corporate stock or partnership
interests or any other participations, rights, warrants, options or other
interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"Change of Control" means the occurrence of any of the
following events:
(a) if any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act or any successor provisions to either of the
foregoing), including any group acting for the purpose of acquiring, holding,
voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act, becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act, except that a person will be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of 35% or more of the total voting
power of the Voting Stock of the Company (for purposes of this clause (a),
such person or group shall be deemed to beneficially own any Voting Stock of a
corporation held by any other corporation (the "parent corporation") so long
as such person or group beneficially owns, directly or indirectly, in the
aggregate a majority of the total voting power of the Voting Stock of such
parent corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the assets of
the Company and the Subsidiaries (other than sales of investments held to fund
jackpot liabilities to make lump sum payments to jackpot winners), considered
as a whole to another person (other than a disposition of such assets as an
entirety or virtually as an entirety to a Wholly Owned Subsidiary) shall have
occurred, or the Company merges, consolidates or amalgamates with or into any
other Person or any other Person merges, consolidates or amalgamates with or
into the Company, in any event pursuant to a transaction in which the
outstanding Voting Stock of the Company is reclassified into or exchanged for
cash, securities or other Property, other than any such transaction where:
(1) the outstanding Voting Stock of the Company is reclassified into or
exchanged for other Voting Stock of the Company or for Voting Stock of the
surviving corporation, and
(2) the holders of the Voting Stock of the Company immediately prior to
such transaction own, directly or indirectly, not less than a majority of
the Voting Stock of the Company or the surviving corporation immediately
after such transaction and in substantially the same proportion as before
the transaction; or
(c) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election or appointment by such Board
or whose nomination for election by the shareholders of the Company was
approved by a vote of not less than three-fourths of the directors then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then
in office; or
(d) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company.
"Change of Control Triggering Event" means the occurrence of both a Change of
Control and a Rating Decline with respect to the Exchange Notes.
"Consolidated Interest Coverage Ratio" means, as of any date of
determination, the ratio of:
(a) the aggregate amount of EBITDA for the most recent four consecutive
fiscal quarters ending at least 45 days prior to such determination date to
<PAGE>
(b) Consolidated Interest Expense for such four fiscal
quarters;
provided, however, that (i) if
(A) since the beginning of such period the Company or any Subsidiary has
Incurred any Indebtedness that remains outstanding or Repaid any
Indebtedness or
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is an Incurrence or Repayment of
Indebtedness, then
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Incurrence or Repayment as if such
Indebtedness was Incurred or Repaid on the first day of such period, provided
that, in the event of any such Repayment of Indebtedness, EBITDA for such
period shall be calculated as if the Company or such Subsidiary had not
earned any interest income actually earned during such period in respect of
the funds used to Repay such Indebtedness, and
(ii) if
(A) since the beginning of such period the Company or any Subsidiary
shall have made any Asset Sale or an Investment (by merger or otherwise)
in any Subsidiary (or any Person which becomes a Subsidiary) or an
acquisition of Property which constitutes all or substantially all of an
operating unit of a business,
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is such an Asset Sale, Investment or
acquisition or
(C) since the beginning of such period any Person (that subsequently
became a Subsidiary or was merged with or into the Company or any
Subsidiary since the beginning of such period) shall have made such an
Asset Sale, Investment or acquisition, then
EBITDA for such period shall be calculated after giving pro forma effect
to such Asset Sale, Investment or acquisition as if such Asset Sale,
Investment or acquisition occurred on the first day of such period.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the base interest rate in effect for such floating rate of interest on the
date of determination had been the applicable base interest rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months). In the event the Capital Stock of any Subsidiary is sold during the
period, the Company shall be deemed, for purposes of clause (i) above, to have
Repaid during such period the Indebtedness of such Subsidiary to the extent the
Company and its continuing Subsidiaries are no longer liable for such
Indebtedness after such sale.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Subsidiaries (excluding interest
expense attributable to Jackpot Liabilities), plus, to the extent not included
in such total interest expense, and to the extent Incurred by the Company or its
Subsidiaries,
(a) interest expense attributable to leases constituting part of a Sale
and Leaseback Transaction and to Capital Lease Obligations,
(b) amortization of debt discount and debt issuance cost,
including commitment fees,
(c) capitalized interest,
(d) non-cash interest expenses,
(e) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing,
<PAGE>
(f) net costs associated with Hedging Obligations (including
amortization of fees),
(g) Disqualified Stock Dividends,
(h) Preferred Stock Dividends,
(i) interest Incurred in connection with Investments in
discontinued operations,
(j) unpaid interest accruing on any Indebtedness of any other Person to
the extent such Indebtedness is Guaranteed by the Company or any
Subsidiary, and
(k) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income (loss) of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(a) any net income (loss) of any Person (other than the Company) if such
Person is not a Subsidiary, except that:
(1) subject to the exclusion contained in clause (c) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash distributed by such Person during such period to the
Company or a Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to a Subsidiary, to the
limitations contained in clause (b) below), and
(2) the Company's equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net Income,
(b) any net income (loss) of any Subsidiary if such Subsidiary is subject
to restrictions, directly or indirectly, on the payment of dividends or the
making of distributions, directly or indirectly, to the Company (which
restrictions have not been permanently waived), except that:
(1) subject to the exclusion contained in clause (c) below, the
Company's equity in the net income of any such Subsidiary for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash distributed by such Subsidiary during such period to the
Company or another Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to another
Subsidiary, to the limitation contained in this clause), and
(2) the Company's equity in a net loss of any such Subsidiary for such
period shall be included in determining such Consolidated Net Income,
(c) any gain (but not loss) realized upon the sale or other disposition of
any Property of the Company or any of its consolidated Subsidiaries (including
pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business, provided that any loss
associated with the sale of U.S. Treasury securities in connection with the
July 1999 lump sum election period shall not be included in such Consolidated
Net Income,
(d) any extraordinary gain or loss,
(e) any interest income from investments purchased to fund
Jackpot Liabilities,
(f) the cumulative effect of a change in accounting
principles during such period and
<PAGE>
(g) any non-cash compensation expense realized for grants of restricted
stock, performance shares, stock options or other rights to officers,
directors and employees of the Company or any Subsidiary, provided that such
shares, options or other rights can be redeemed at the option of the holder
only for Capital Stock of the Company (other than Disqualified Stock).
"Consolidated Net Tangible Assets" means the total amount of assets of the
Company and its consolidated Subsidiaries (less applicable reserves) after
deducting therefrom: (a) all current liabilities of the Company and its
consolidated Subsidiaries (excluding intercompany items among the Company and
its consolidated Subsidiaries and excluding any current liabilities constituting
Funded Indebtedness by reason of being renewable or extendable) and (b)
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, such assets and exclusions and deductions
therefrom to be in such amounts, if any, as would appear on a consolidated
balance sheet of the Company and its consolidated Subsidiaries as of the date of
computation, prepared in accordance with GAAP applied on a consistent basis.
"Credit Facilities" means, with respect to the Company or any Subsidiary, one
or more debt or commercial paper facilities with banks or other institutional
lenders (including the Existing Credit Facilities) providing for revolving
credit loans, term loans, receivables or inventory financing (including through
the sale of receivables or inventory to such lenders or to special purpose,
bankruptcy remote entities formed to borrow from such lenders against such
receivables or inventory) or letters of credit, in each case together with any
extensions, revisions, refinancings or replacements thereof by a lender or
syndicate of lenders.
"Currency Exchange Protection Agreement" means, in respect of a Person, any
foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable, in either case at the option of the holder
thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise,
(b) is or may become redeemable or repurchaseable at the
option of the holder thereof, in whole or in part, or
(c) is convertible or exchangeable at the option of the
holder thereof for Indebtedness or Disqualified Stock,
on or prior to, in the case of clause (a), (b) or (c), the date which is 91 days
after the latest Stated Maturity of any of the notes then outstanding; provided,
however, that if such Capital Stock is issued to any employee or to any plan for
the benefit of employees of the Company or its Subsidiaries or by any such plan
to such employees, such Capital Stock shall not constitute Disqualified Stock
solely because it may be required to be repurchased by the Company in order to
satisfy applicable statutory or regulatory obligations.
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Subsidiary. The amount of any such dividend shall be equal to the quotient of
such dividend divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the Company.
"Domestic Subsidiary" means any Subsidiary other than (a) a Foreign
Subsidiary or (b) a Subsidiary of a Foreign Subsidiary.
"EBITDA" means, for any period, an amount equal to, for the
Company and its consolidated Subsidiaries:
<PAGE>
(a) the sum of Consolidated Net Income for such period, plus the following
to the extent reducing Consolidated Net Income for such period:
(1) the provision for taxes based on income or profits or
utilized in computing net loss,
(2) Consolidated Interest Expense,
(3) depreciation,
(4) amortization, and
(5) any other non-cash items (other than any such non-cash item to the
extent that it represents an accrual of or reserve for cash expenditures
in any future period), minus
(b) all non-cash items increasing Consolidated Net Income for such period
(other than any such non-cash item to the extent that it will result in the
receipt of cash payments in any future period or represents a reversal of any
accrual of, or cash reserve for, anticipated cash charges in any prior period,
in either case taken after the Issue Date).
Notwithstanding the foregoing clause (a), the provision for taxes and the
depreciation, amortization and non-cash items of a Subsidiary shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary or
its shareholders.
"Event of Default" has the meaning set forth under "Events of
Default".
"Existing Credit Facilities" means the Credit Agreement dated as of May 22,
1997, as amended, supplemented or otherwise modified from time to time, by and
among the Company, the lenders party thereto, The Bank of New York, as
Administrative Agent, Wells Fargo Bank, National Association, as Documentation
Agent, and the other Co-Agents named therein.
"Fair Market Value" means, with respect to any Property, the price that could
be negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Fair Market Value shall be determined,
except as otherwise provided, (a) if such Property has a Fair Market Value equal
to or less than $5.0 million, by any Officer of the Company or (b) if such
Property has a Fair Market Value in excess of $5.0 million, by a majority of the
Board of Directors of the Company and evidenced by a resolution of such Board of
Directors, dated within 30 days of the relevant transaction, delivered to the
Trustee.
"Foreign Subsidiary" means any Subsidiary which is not organized under the
laws of the United States of America or any State thereof or the District of
Columbia.
"Funded Indebtedness" means, with respect to any Person, Indebtedness of such
Person if such Indebtedness shall be payable more than one year from the date of
such computation or shall be extendable or renewable at the option of such
Person to a time more than one year after the date of computation; and all
guarantees (direct or indirect) of such Indebtedness of others.
"GAAP" means United States generally accepted accounting principles as in
effect on the Issue Date, including those set forth:
(a) in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants,
<PAGE>
(b) in the statements and pronouncements of the Financial
Accounting Standards Board,
(c) in such other statements by such other entity as approved by a
significant segment of the accounting profession, and
(d) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise), or
(b) entered into for the purpose of assuring in any other manner the
obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning. The term
"Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligation" of any Person means any obligation of such Person
pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement
or any other similar agreement or
arrangement.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by merger, conversion, exchange or otherwise),
extend, assume, Guarantee or become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or obligation on the balance sheet of such Person (and
"Incurrence" and "Incurred" shall have meanings correlative to the foregoing);
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time, and is not theretofore classified as
Indebtedness, becoming Indebtedness shall not be deemed an Incurrence of such
Indebtedness; provided further, however, that solely for purposes of determining
compliance with "Certain Covenants--Limitation on Indebtedness", amortization of
debt discount shall not be deemed to be the Incurrence of Indebtedness, provided
that in the case of Indebtedness sold at a discount, the amount of such
Indebtedness Incurred shall at all times be the aggregate principal amount at
Stated Maturity.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(a) the principal of and premium (if any) in respect of:
(1) debt of such Person for money borrowed, and
(2) debt evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable;
(b) all Capital Lease Obligations of such Person and all Attributable Debt
in respect of Sale and Leaseback Transactions entered into by such Person;
<PAGE>
(c) all obligations of such Person issued or assumed as the deferred
purchase price of Property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(d) all obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit transaction (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in (a) through (c) above) entered into in the
ordinary course of business of such Person to the extent such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit);
(e) the amount of all obligations of such Person with respect to the
Repayment of any Disqualified Stock or, with respect to any Subsidiary of such
Person, any Preferred Stock (but excluding, in each case, any accrued
dividends);
(f) all obligations of the type referred to in clauses (a) through (e) of
other Persons and all dividends of other Persons for the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including by means of any Guarantee;
(g) all obligations of the type referred to in clauses (a) through (f) of
other Persons secured by any Lien on any Property of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such Property or the amount of
the obligation so secured; and
(h) to the extent not otherwise included in this definition,
Hedging Obligations of such Person;
provided, however, that notwithstanding the foregoing, there shall be excluded
from the definition of Indebtedness all obligations with respect to Jackpot
Liabilities but only to the extent such obligations are offset by U.S. Treasury
securities, cash designated for satisfying such liabilities and other Approved
Investments on the Company's balance sheet to be used to satisfy such
obligations.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date. The amount of
Indebtedness represented by a Hedging Obligation shall be equal to:
(1) zero if such Hedging Obligation has been Incurred pursuant to clause
(f) or (g) of the definition of the term Permitted Indebtedness, or
(2) the notional amount of such Hedging Obligation if not Incurred
pursuant to such clauses.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect against fluctuations in interest rates.
"Investment" by any Person means any direct or indirect loan (other than
advances to customers in the ordinary course of business that are recorded as
accounts receivable on the balance sheet of such Person), advance or other
extension of credit or capital contribution (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation
of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or
other securities or evidence of Indebtedness issued by, any other Person.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or the
equivalent) by Moody's and BBB- (or the equivalent) by S&P.
"Issue Date" means the date on which the notes are initially
issued.
<PAGE>
"Jackpot Liabilities" means discounted payments due to winners for jackpots
won and amounts accrued for jackpots not yet won that are contractual
obligations of the Company to the extent that such liabilities are offset
dollar-for-dollar by U.S. Treasury securities, cash designated for satisfying
such liabilities and other Investments.
"Lien" means, with respect to any Property of any Person, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease
Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
"Moody's" means Moody's Investors Service, Inc. or any
successor to the rating agency business thereof.
"Officer" means the Chief Executive Officer, the President, the
Chief Financial Officer or any Executive Vice President of the
Company.
"Permitted Refinancing Indebtedness" means any Indebtedness that Refinances
any other Indebtedness, including any successive Refinancings, so long as:
(a) such Indebtedness is in an aggregate principal amount (or if Incurred
with original issue discount, an aggregate issue price) not in excess of the
sum of:
(1) the aggregate principal amount (or if Incurred with original issue
discount, the aggregate accreted value) then outstanding of the
Indebtedness being Refinanced, and
(2) an amount necessary to pay any fees and expenses, including premiums
and defeasance costs, related to such Refinancing,
(b) the Average Life of such Indebtedness is equal to or greater than the
Average Life of the Indebtedness being Refinanced,
(c) the Stated Maturity of such Indebtedness is no earlier than the Stated
Maturity of the Indebtedness being Refinanced, and
(d) the new Indebtedness shall not be senior in right of
payment to the Indebtedness that is being Refinanced;
provided, however, that Permitted Refinancing Indebtedness shall not include
Indebtedness of a Subsidiary that is not a Subsidiary Guarantor that Refinances
Indebtedness of the Company or a Subsidiary Guarantor.
"Person" means any individual, corporation, company (including any limited
liability company), association, partnership, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to the payment of
dividends, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of any other class of
Capital Stock issued by such Person.
"Preferred Stock Dividends" means all dividends with respect to Preferred
Stock of Subsidiaries held by Persons other than the Company or a Wholly Owned
Subsidiary. The amount of any such dividend shall be equal to the quotient of
such dividend divided by the difference between one and the maximum statutory
federal income rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Preferred Stock.
<PAGE>
"pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms hereof, a calculation performed in accordance with
Article 11 of Regulation S-X promulgated under the Securities Act, as
interpreted in good faith by the Board of Directors of the Company after
consultation with the independent certified public accountants of the Company,
or otherwise a calculation made in good faith by the Board of Directors of the
Company after consultation with the independent certified public accountants of
the Company, as the case may be.
"Property" means, with respect to any Person, all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
subsidiaries under GAAP.
"Purchase Money Indebtedness" means Indebtedness:
(a) consisting of the deferred purchase price of property, conditional sale
obligations, obligations under any title retention agreement, other purchase
money obligations and obligations in respect of industrial revenue bonds and
(b) Incurred to finance the acquisition, construction or lease by the
Company or a Subsidiary Guarantor of such Property, including additions and
improvements thereto;
provided, however, that such Indebtedness is Incurred within 180 days after the
acquisition, construction or lease of such Property by the Company or such
Subsidiary Guarantor.
"Rating Agencies" mean Moody's and S&P.
"Rating Date" means the date which is 90 days prior to the earlier of (a) a
Change of Control and (b) public notice of the occurrence of a Change of Control
or of the intention of the Company to effect a Change of Control.
"Rating Decline" means, with respect to the Exchange Notes, the occurrence of
the following on, or within 90 days after, the earlier of the date of public
notice of the occurrence of a Change of Control or of the intention of the
Company to effect a Change of Control (which period shall be extended so long as
the rating of the Exchange Notes is under publicly announced consideration for
possible downgrade by any of the Rating Agencies): (a) in the event the Exchange
Notes are assigned an Investment Grade Rating by both Rating Agencies on the
Rating Date, the rating of the Exchange Notes by one of the Rating Agencies
shall be below an Investment Grade Rating; or (b) in the event the Exchange
Notes are rated below an Investment Grade Rating by at least one of the Rating
Agencies on the Rating Date, the rating of the Exchange Notes by at least one of
the Rating Agencies shall be decreased by one or more gradations (including
gradations within rating categories as well as between rating categories).
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Repay" means, in respect of any Indebtedness, to repay, prepay, repurchase,
redeem, legally defease or otherwise retire such Indebtedness. "Repayment" and
"Repaid" shall have correlative meanings. For purposes of the definition of
"Consolidated Interest Coverage Ratio", Indebtedness shall be considered to have
been Repaid only to the extent the related loan commitment, if any, shall have
been permanently reduced in connection therewith.
"S&P" means Standard & Poor's Ratings Service or any successor to the rating
agency business thereof.
"Spin For Cash Joint Venture" means the Company's joint venture with Anchor
Gaming called Spin For Cash on the Issue Date.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
<PAGE>
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company or any
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that is subordinate or junior in right of payment to the notes or the
applicable Subsidiary Guaranty pursuant to a written agreement to that effect.
"Subsidiary" means (a) a Person more than 50% of the outstanding Voting Stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries of the Company, or by the Company and one or more other
Subsidiaries of the Company and (b) the Spin For Cash Joint Venture.
"Subsidiary Guarantor" means, unless released from its Subsidiary Guarantee
as permitted by the Indenture, each Domestic Subsidiary that becomes a Guarantor
of the notes pursuant to the covenant described under "Certain Covenants --
Future Subsidiary
Guarantors".
"Subsidiary Guaranty" means a Guarantee on the terms set forth in the
Indenture by a Subsidiary Guarantor of the Company's obligations with respect to
the Exchange Notes.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means, at any time, a Subsidiary all the Voting
Stock of which (except directors' qualifying shares) is at such time owned,
directly or indirectly, by the Company and its other Wholly Owned Subsidiaries.
Book-Entry System
The Exchange Notes of each series will be initially issued in the form of one
or more global certificates ("Global Securities") registered in the name of The
Depository Trust Company ("DTC") or its nominee.
Upon the issuance of a Global Security, DTC or its nominee will credit the
accounts of persons holding through it with the respective principal amounts of
the Exchange Notes represented by such Global Security purchased by such persons
in the Offering. Such accounts shall be designated by the initial purchasers.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with DTC ("participants") or persons that may hold
interests through participants. Any person acquiring an interest in a Global
Security through an offshore transaction in reliance on Regulation S of the
Securities Act may hold such interest through Cedel or Euroclear. Ownership of
beneficial interests in a Global Security will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by DTC
(with respect to participants' interests) and such participants (with respect to
the owners of beneficial interests in such Global Security other than
participants). The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.
Payment of principal of and interest on Exchange Notes represented by a
Global Security will be made in immediately available funds to DTC or its
nominee, as the case may be, as the sole registered owner and the sole holder of
the Exchange Notes represented thereby for all purposes under the Indenture. IGT
has been advised by DTC that upon receipt of any payment of principal of or
interest on any Global Security, DTC will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
or face amount of such Global Security as shown on the records of DTC. Payments
by participants to owners of beneficial interests in a Global Security held
through such participants will be governed by standing instructions and
customary practices as is now the case with securities held for customer
accounts registered in "street name" and will be the sole responsibility of such
participants.
<PAGE>
A Global Security may not be transferred except as a whole by DTC or a
nominee of DTC to a nominee of DTC or to DTC. A Global Security is exchangeable
for certificated Exchange Notes only if:
(a) DTC notifies IGT that it is unwilling or unable to continue as a
depositary for such Global Security or if at any time DTC ceases to be a
clearing agency registered under the Exchange Act,
(b) IGT in its discretion at any time determines not to have all the
Exchange Notes represented by such Global Security, or
(c) there shall have occurred and be continuing an Event of Default with
respect to the Exchange Notes represented by such Global Security.
Any Global Security that is exchangeable for certificated Exchange Notes
pursuant to the preceding sentence will be exchanged for certificated Exchange
Notes in authorized denominations and registered in such names as DTC or any
successor depositary holding such Global Security may direct. Subject to the
foregoing, a Global Security is not exchangeable, except for a Global Security
of like denomination to be registered in the name of DTC or any successor
depositary or its nominee. In the event that a Global Security becomes
exchangeable for certificated Exchange Notes,
(a) certificated Exchange Notes will be issued only in fully registered
form in denominations of $1,000 or integral multiples thereof,
(b) payment of principal of and interest on the certificated Exchange Notes
will be payable, and the transfer of the certificated notes will be
registrable, at the office or agency of IGT maintained for such purposes, and
(c) no service charge will be made for any registration of transfer or
exchange of the certificated Exchange Notes, although IGT may require payment
of a sum sufficient to cover any tax or governmental charge imposed in
connection therewith.
So long as DTC or any successor depositary for a Global Security, or any
nominee, is the registered owner of such Global Security, DTC or such successor
depositary or nominee, as the case may be, will be considered the sole owner or
holder of the Exchange Notes represented by such Global Security for all
purposes under the Indenture and the Exchange Notes. Except as set forth above,
owners of beneficial interests in a Global Security will not be entitled to have
the Exchange Notes represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Exchange Notes in definitive form and will not be considered to be
the owners or holders of any Exchange Notes under such Global Security.
Accordingly, each person owning a beneficial interest in a Global Security must
rely on the procedures of DTC or any successor depositary, and, if such person
is not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the
Indenture. IGT understands that under existing industry practices, in the event
that IGT requests any action of holders or that an owner of a beneficial
interest in a Global Security desires to give or take any action which a holder
is entitled to give or take under the Indenture, DTC or any successor depositary
would authorize the participants holding the relevant beneficial interest to
give or take such action and such participants would authorize beneficial owners
owning through such participants to give or take such action or would otherwise
act upon the instructions of beneficial owners owning through them.
DTC has advised IGT that DTC is a limited-purpose trust company organized
under the Banking Law of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered under the Exchange Act. DTC
was created to hold the securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers (which
may include the initial purchasers), banks, trust companies, clearing
corporations and certain other organizations some of whom (or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies, that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
<PAGE>
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in Global Securities among participants of DTC, it is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of IGT, the Trustee or the
initial purchasers will have any responsibility for the performance by DTC or
its participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
<PAGE>
EXCHANGE OFFERS; REGISTRATION RIGHTS
IGT agreed, jointly and severally, under a registration rights agreement with
the initial purchasers of the Outstanding Notes, for the benefit of the holders
of the Outstanding Notes, to keep the Exchange Offers open for not less than 20
days and not more than 30 days (or longer if required by applicable law) after
the date notice of the Exchange Offers is mailed to the holders of the
Outstanding Notes.
In the event that (a) applicable interpretations of the staff of the SEC do
not permit IGT to effect such Exchange Offers, (b) for any other reason the
registration statement registering the Exchange Notes is not declared effective
within 180 days after the date of the original issuance of the Outstanding Notes
or the Exchange Offers are not consummated within 210 days after the original
issuance of the Outstanding Notes, (c) the initial purchasers of the Outstanding
Notes so request with respect to Outstanding Notes not eligible to be exchanged
for Exchange Notes in the Exchange Offers or (d) any holder of Outstanding Notes
(other than an initial purchaser) is not eligible to participate in the Exchange
Offers or does not receive freely tradable Exchange Notes in the Exchange Offers
other than by reason of such holder being an affiliate of IGT (it being
understood that the requirement that a Participating Broker-Dealer deliver this
prospectus in connection with sales of Exchange Notes shall not result in such
Exchange Notes being not "freely tradable"), IGT will, at its cost, (i) as
promptly as practicable, file a shelf registration statement covering resales of
the Outstanding Notes or the Exchange Notes, as the case may be, (ii) use its
reasonable best efforts to cause the shelf registration statement to be declared
effective under the Securities Act and (iii) use its reasonable best efforts to
keep the shelf registration statement effective until two years after the
original issuance of the Outstanding Notes. IGT will, in the event a shelf
registration statement is filed, among other things, provide to each holder for
whom such shelf registration statement was filed copies of the prospectus which
is a part of the shelf registration statement, notify each such holder when the
shelf registration statement has become effective and take certain other actions
as are required to permit unrestricted resales of the Outstanding Notes or the
Exchange Notes, as the case may be. A holder selling such Outstanding Notes or
Exchange Notes pursuant to the shelf registration statement generally would be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the registration rights agreement which are
applicable to such holder (including certain indemnification obligations).
If (a) on or prior to the 90th day following the date of original issuance of
the Outstanding Notes, neither a registration statement registering the Exchange
Notes nor the shelf registration statement has been filed with the SEC, (b) on
or prior to the 180th day following the date of original issuance of the
Outstanding Notes, the registration statement registering the Exchange Notes has
not been declared effective, (c) on or prior to the 210th day following the date
of original issuance of the Outstanding Notes, neither the Exchange Offers have
been consummated nor the shelf registration statement has been declared
effective or (d) after either the registration statement registering the
Exchange Notes or the shelf registration statement has been declared effective,
such registration statement thereafter ceases to be effective or usable (subject
to certain exceptions) in connection with resales of Outstanding Notes or
Exchange Notes in accordance with and during the periods specified in the
registration rights agreement (each such event referred to in clauses (a)
through (d), a "Registration Default"), interest ("Special Interest") will
accrue on the principal amount of the Outstanding Notes (in addition to the
stated interest on the notes) from and including the date on which any such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured. Special Interest will accrue at a rate of
0.25% per annum following the occurrence of such Registration Default.
The summary of certain provisions of the registration rights agreement is not
complete and is subject to the provisions of the registration rights agreement.
You may obtain a copy of the registration rights agreement upon request to IGT.
Based upon no-action letters issued by the staff of the SEC to third parties,
IGT believes that the Exchange Notes issued in the Exchange Offers in exchange
for Outstanding Notes would generally be freely transferable after the Exchange
Offer without further registration under the Securities Act if the holder of the
Exchange Notes represents:
<PAGE>
o that it is not an "affiliate," as defined in Rule 405 of the
Securities Act, of IGT
o that it is acquiring the Exchange Notes in the ordinary
course of its business and
o that it has no arrangement or understanding with any person
to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Notes;
provided that, in the case of broker-dealers, a prospectus meeting the
requirements of the Securities Act be delivered as required. However, the SEC
has not considered the Exchange Offers in the context of a no-action letter and
there can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offers. Holders of Outstanding Notes
wishing to accept the Exchange Offer must represent to IGT that the conditions
have been met. Each broker-dealer that receives Exchange Notes for its own
account in the Exchange Offers, where it acquired the Outstanding Notes
exchanged for the Exchange Notes for its own account as a result of
market-making or other trading activities, may be deemed to be an "underwriter"
within the meaning of the Securities Act and must acknowledge that it will
deliver a prospectus in connection with the resale of the Exchange Notes. The
letter of transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for
Outstanding Notes where the Outstanding Notes were acquired by the broker-dealer
as a result of market-making activities or other trading activities. IGT has
agreed that, for a period of 180 days after closing of the Exchange Offer, it
will make this prospectus available to any broker-dealer for use in connection
with the resale. A broker-dealer that delivers a prospectus to purchasers in
connection with those resales will be subject to certain of the civil liability
provisions under the Securities Act, and will be bound by the provisions of the
Registration Agreement (including certain indemnification and contribution
rights and obligations). See "The Exchange Offers-Resale of the Exchange Notes"
and "Plan of Distribution."
Each holder of the Outstanding Notes (other than certain specified holders)
who wishes to exchange Outstanding Notes for Exchange Notes in the Exchange
Offers will be required to represent
o that it is not an affiliate of IGT,
o any Exchange Notes to be received by it will be acquired in
the ordinary course of its business, and
o at the time of commencement of the Exchange Offers, it had no arrangement
with any person to participate in the distribution (within the meaning of
the Securities Act) of the Exchange Notes.
If the holder is a broker-dealer who acquired the Outstanding Notes for its
own account as a result of market-making or other trading activities, it may be
deemed to be an "underwriter" within the meaning of the Securities Act and will
be required to acknowledge that it must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of the Exchange
Notes. The SEC has taken the position that those broker-dealers may fulfill
their prospectus delivery requirements with respect to the Exchange Notes with
the prospectus contained in the Exchange Offer registration statement, except
that the prospectus cannot be used for a resale of an unsold allotment from the
original sale of the Outstanding Notes. Under the registration rights agreement,
IGT is required to allow those broker-dealers and any other persons subject to
similar prospectus delivery requirements to use the prospectus contained in the
Exchange Offer registration statement in connection with the resale of the
Exchange Notes.
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following is a general discussion of the material United States federal
income tax consequences that IGT expects to apply to holders. As used in this
discussion, the term "Holder" means a holder of the Outstanding Notes who
purchased the Outstanding Notes for cash in the original offering, exchanges the
Outstanding Notes for Exchange Notes in the Exchange Offers, and holds the
Outstanding Notes, and will hold the Exchange Notes, as capital assets. This
discussion is a descriptive summary only and is not a complete technical
analysis or listing of all potential tax considerations that may be relevant to
holders. This discussion is based on the current provisions of the Internal
Revenue Code of 1986, as amended, the applicable Treasury regulations, and
public administrative and judicial interpretations of the Internal Revenue Code
and applicable Treasury regulations, all of which are subject to change. Any
change could be applied retroactively. This discussion is also based on the
information contained in this prospectus and the related documents, and on
certain representations from IGT as to factual matters. This discussion does not
cover all aspects of United States federal taxation that may be relevant to, or
the actual tax effect that any of the matters described in this discussion will
have on, particular holders and does not address foreign, state, or local tax
consequences. IGT has not sought and will not seek any ruling from the Internal
Revenue Service with respect to the Exchange Notes. The Internal Revenue Service
could take a different position concerning the tax consequences of the exchange
of Outstanding Notes for Exchange Notes or the ownership or disposition of the
Exchange Notes, and the Internal Revenue Service's position could be sustained
by a court.
The United States federal income tax consequences to a Holder may vary
depending upon the Holder's particular situation or status. Some of the rules
applicable to Holders that are subject to special rules under the Internal
Revenue Code are not discussed below. Examples of these Holders include
insurance companies, tax-exempt organizations, mutual funds, retirement plans,
financial institutions, dealers in securities or foreign currency, persons that
hold the Exchange Notes as part of a "straddle" or as a "hedge" against currency
risk or in connection with a conversion transaction, persons that have a
functional currency other than the United States dollar, investors in
pass-through entities, traders in securities that elect to mark to market, and
except as expressly addressed in this discussion, Non-U.S. Holders.
For purposes of this discussion, a "U.S. Holder" means a beneficial owner of
Exchange Notes that is a citizen or resident of the United States, a corporation
or other entity taxable as a corporation created or organized in the United
States or under the laws of the Unites States or of any political subdivision
thereof (including the states and the District of Columbia), a domestic
partnership as defined in Section 7701(a) of the Code, an estate whose income is
includable in gross income for United States federal income tax purposes
regardless of its source, or a trust whose administration is subject to the
primary supervision of a United States court and which has one or more United
States persons who control all substantial decisions of the trust. A Non-U.S.
Holder is a beneficial owner of Exchange Notes other than a U.S. Holder. In the
case of a Holder of Exchange Notes that is a domestic partnership within the
meaning of Section 7701(a)(30)(B) of the Code, each partner generally will take
into account its allocable share of income or loss from the Exchange Notes,
under the rules of U.S. federal income taxation applicable to such partner, and
taking into account the activities of the partnership and the partner.
U.S. Holders
Stated Interest/Original Issue Discount
U.S. Holders of Exchange Notes generally will include stated interest in
gross income in accordance with their methods of accounting for United States
federal income tax purposes. As of the date of this prospectus, IGT intends to
take the position (which generally will be binding on Holders) that the
Outstanding Notes were not issued with original issue discount within the
meaning of Section 1273 of the Code. The Internal Revenue Service may or may not
agree with this conclusion.
Disposition
In general, a U.S. Holder of Exchange Notes will recognize gain or loss upon
the sale, exchange, redemption or other taxable disposition of the Exchange
Notes measured by the difference between (i) the amount of cash and fair market
value of property received (reduced by any amounts attributable to accrued but
<PAGE>
unpaid interest, which will be taxable as such) and (ii) such Holder's tax basis
in the Exchange Notes. Any such gain or loss will generally be capital gain or
loss, and will be long-term gain or loss with respect to Exchange Notes held for
more than one year. The deductibility of capital losses is subject to
limitations.
The Exchange Offers
The exchange of Outstanding Notes for Exchange Notes pursuant to the Exchange
Offers will not be considered a taxable exchange for federal income tax purposes
because the Exchange Notes will not differ materially in kind or extent from the
Outstanding Notes and because the exchange will occur by operation of the terms
of the Outstanding Notes. Accordingly, such exchange will have no federal income
tax consequences to Holders of the Outstanding Notes. A Holder's adjusted tax
basis and holding period in an Exchange Note will be the same as such Holder's
adjusted tax basis and holding period, respectively, in the Outstanding Notes
exchanged therefor.
Holders considering the exchange of Outstanding Notes for Exchange Notes
should consult their own tax advisors concerning the United States federal
income tax consequences in light of their particular situations as well as any
consequences arising under state, local and foreign income tax and other tax
law.
Non-U.S. Holders
Under present United States federal income tax law, assuming certain
certification requirements are satisfied (which generally can be satisfied by
providing Internal Revenue Form W-8 or substantially similar form, identifying
the beneficial owner of the instrument as a foreign person and disclosing the
Non-U.S. Holder's name and address), and subject to the discussion of backup
withholding below:
(a) payments of interest on the Exchange Notes to any Non-U.S. Holder will
not be subject to United States federal income tax or withholding tax,
provided that (1) the Holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of IGT
entitled to vote, (2) the Holder is not (i) a bank receiving interest
pursuant to a loan agreement entered into in the ordinary course of its trade
or business or (ii) a controlled foreign corporation that is related to IGT
through stock ownership, and (3) such interest payments are not effectively
connected with the conduct of a United States trade or business of the
Holder; and
(b) a Holder of Exchange Notes who is a Non-U.S. Holder will not be subject
to the United States federal income tax on gain realized on the sale,
exchange, or other disposition of Exchange Notes, unless (1) such Holder is
an individual who is present in the United States for 183 days or more during
the taxable year and certain other requirements are met, or (2) the gain is
effectively connected with the conduct of a United States trade or business
of the Holder.
If an Non-U.S. Holder fails to satisfy the requirements described in (a)
above, interest on the Exchange Notes generally will be subject to United States
withholding tax at a 30% rate unless (i) an applicable income tax treaty
provides for the reduction or elimination of such withholding tax or (ii) such
interest is considered to be effectively connected with a United States trade or
business conducted by such holder.
If interest on the Exchange Notes or gain realized on the disposition of the
Exchange Notes is effectively connected with a Non-U.S. Holder's conduct of a
United States trade or business, the Non-U.S. Holder generally will be subject
to United States federal income tax (and generally not United States withholding
tax) on such interest or gain as if it were a U.S. Holder. If such Non-U.S.
Holder is a foreign corporation, such foreign corporation's earnings and profits
attributable to such effectively connected income (and subject to certain
adjustments) may, in certain circumstances, be subject to an additional "branch
profits tax" at a 30% rate, or if applicable, a lower treaty rate.
Information Reporting and Backup Withholding
IGT will, where required, report to the Holders of Exchange Notes and the
Internal Revenue Service the amounts of any interest paid on the Exchange Notes
in each calendar year and the amounts of federal tax withheld, if any, with
respect to such payments. A noncorporate U.S. Holder may be subject to
information reporting and to backup withholding at a rate of 31% with respect to
payments of principal and interest made on Exchange Notes, or on proceeds of the
disposition of Exchange Notes before maturity, unless such U.S. Holder provides
<PAGE>
a correct taxpayer identification number or proof of an applicable exemption,
and otherwise complies with applicable requirements of the information reporting
and backup withholding rules.
Under temporary United States Treasury regulations, United States information
reporting requirements and backup withholding tax will generally not apply to
interest paid on the Exchange Notes to a Non-U.S. Holder at an address outside
the United States. Payments by a United States office of a broker of the
proceeds of a sale of the Exchange Notes are subject to both backup withholding
at a rate of 31% and information reporting unless the Holder certifies its
Non-U.S. Holder status under penalties of perjury and provides its name and
address or otherwise establishes an exemption. Information reporting
requirements (but not backup withholding) will also apply to payments of the
proceeds of sales of the Exchange Notes by foreign offices of United States
brokers, or foreign brokers with certain types of relationships to the United
States, unless the broker has documentary evidence it its records that the
Holder is a Non-U.S. Holder and certain other conditions are met, or the Holder
otherwise establishes an exemption.
On October 6, 1997, the United States Treasury Department issued final
Treasury regulations governing information reporting and the certification
procedures regarding withholding and backup withholding on certain amounts paid
to Non-U.S. Holders after December 31, 2000. The new Treasury regulations may
alter certain of the rules set forth above. Prospective investors should consult
their tax advisors concerning the effect, if any, of such new Treasury
regulations on an investment in the Exchange Notes.
Any amount withheld under the backup withholding rules may be refunded or
credited against the Non-U.S. Holder's United States federal income tax
liability, provided that the required information is furnished to the Internal
Revenue Service.
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account in the
Exchange Offers must acknowledge that it will deliver a prospectus in connection
with any resale of the Exchange Notes. A broker-dealer may use this prospectus,
as it may be amended or supplemented from time to time, by in connection with
resales of Exchange Notes received in exchange for Outstanding Notes where the
Outstanding Notes were acquired as a result of market-making activities or other
trading activities. IGT has agreed that for a period of 180 days after closing
of the Exchange Offers, it will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any the
resale.
IGT will not receive any proceeds from any sale of Exchange Notes by any
broker-dealer. Exchange Notes received by broker-dealers for their own account
in the Exchange Offers may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the Exchange Notes or a combination of the methods of resale, at
market prices prevailing at the time of resale, at prices related to the
prevailing market prices or negotiated prices. Any resale may be made directly
to purchasers or to or through brokers or dealers who may receive compensation
in the form of commissions or concessions from the broker-dealer and/or the
purchasers of the Exchange Notes. Any broker-dealer that resells Exchange Notes
that were received by it for its own account in the Exchange Offers and any
broker or dealer that participates in a distribution of the Exchange Notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any resale of Exchange Notes and any commissions or concessions
received by those persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 180 days after closing of the Exchange Offers, IGT will
promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests the documents
in the letter of transmittal. IGT has agreed to pay all expenses incident to
IGT's performance of, or compliance with, the registration rights agreement and
all expenses incident to the Exchange Offers, including the expenses of one
counsel for the holders of the Outstanding Notes but excluding commissions or
concessions of any brokers or dealers, and will indemnify the holders, including
any broker-dealers, and certain parties related to the holders against certain
liabilities, including liabilities under the Securities Act.
IGT has not entered into any arrangements or understanding with any person to
distribute the Exchange Notes to be received in the Exchange Offers.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information filed by us at the SEC's public reference rooms in Washington, D.C.,
Chicago, Illinois and New York, New York. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our filings with the SEC
are also available to the public from commercial document retrieval services and
at the SEC's Web site at "http://www.sec.gov."
If IGT is not subject to the informational requirements of the Exchange Act,
IGT will also provide to any prospective purchaser of the Exchange Notes or
beneficial owner of the Exchange Notes in connection with any sale thereof
reports and other information required by Rule 144A(d)(4) under the Securities
Act.
DOCUMENTS INCORPORATED BY REFERENCE
This prospectus hereby incorporates by reference the following documents
previously filed with the SEC:
o IGT's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998;
o IGT's Quarterly Reports on Form 10-Q for the fiscal quarters ended January
2, 1999 and April 3, 1999;
<PAGE>
o IGT's Current Reports on Form 8-K dated December 23, 1998, March 10, 1999,
April 29, 1999 and April 30, 1999; and
o IGT's Proxy Statement dated January 15, 1999.
All documents filed by IGT pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this prospectus and prior to the termination
of the offering of the Exchange Notes shall be deemed to be incorporated by
reference into this prospectus and to be part of this prospectus from the date
of filing thereof.
Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated herein modifies or replaces such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus. IGT will
provide without charge to each person to whom a copy of this prospectus has been
delivered, and who makes a written or oral request, a copy of any and all of the
documents incorporated by reference in this prospectus (other than exhibits
unless such exhibits are specifically incorporated by reference into such
documents). Requests should be submitted in writing or by telephone to
International Game Technology, 9295 Prototype Drive, Reno, Nevada, 89511,
Attention: Secretary (telephone (775) 448-7777).
LEGAL MATTERS
Brian McKay, who is our Senior Vice President, General Counsel and Secretary,
and O'Melveny & Myers LLP, San Francisco, California, will pass on the validity
of the Exchange Notes. As of April 3, 1999, Brian McKay owned 50,000 shares of
IGT common stock.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from IGT's Annual Report on Form
10-K for the year ended September 30, 1998, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
<PAGE>
===================================================================
$1,000,000,000
International Game Technology
Offer to Exchange
All Outstanding 7.875% Senior Notes due 2004
For 7.875% Series B Senior Notes due 2004
and
All Outstanding 8.375% Senior Notes due 2009
For 8.375% Series B Senior Notes due 2009
[LOGO]
----------------
PROSPECTUS
__________, 1999
----------------
===================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. Indemnification of Directors and Officers.
Subsection 1 of Section 78.7502 of the Nevada General Corporation Law (the
"Nevada Law") empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Subsection 2 of Section 78.7502 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above against expenses,
including amounts paid in settlement and attorneys' fees actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted under similar standards, except that no indemnification may be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged by a court of competent jurisdiction to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which such action or suit was brought
determines that, despite the adjudication of liability, such person is fairly
and reasonably entitled to indemnity for such expenses as the court deems
proper.
Section 78.7502 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (1) and (2), or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Section 78.751 of the Nevada Law provides that the
indemnification provided for by Section 78.7502 shall not be deemed exclusive or
exclude any other rights to which the indemnified party may be entitled and that
the scope of indemnification shall continue as to directors, officers, employees
or agents who have ceased to hold such positions, and to their heirs, executors
and administrators. Section 78.752 of the Nevada Law empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such whether or not
the corporation would have the power to indemnify him against such liabilities
under Section 78.7502.
Section 4.10 of the Bylaws of the Registrant provides for indemnification
of its officers and directors, substantially identical in scope to that
permitted under the above Sections of the Nevada Law. The Bylaws provide,
pursuant to Subsection 2 of Section 78.751, that the expenses of officers and
directors incurred in defending any action, suit or proceeding, whether civil or
criminal, must be paid by the corporation as they are incurred and in advance of
the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay all amounts so
advanced if it is ultimately determined by a court of competent jurisdiction
that the officer or director is not entitled to be indemnified by the
corporation. The Registrant also enters into indemnification agreements
consistent with Nevada law with certain of its directors and officers.
ITEM 21. Exhibits and Financial Statement Schedules.
The following exhibits are part of this registration statement on Form S-4
and are numbered in accordance with Item 601 of Regulation S-K.
<PAGE>
ITEM 22. Undertakings
(a) International Game Technology hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) under the Securities Act of 1933, as amended (the meaning
of Rule 145(c) under the Securities Act of 1933, as amended (the "Securities
Act"), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415 under the Securities Act, will be filed as a part
of an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(d) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
(e) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act or 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(f)
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act;
<PAGE>
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii)to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by IGT pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed part of the registration statement as of the time
it was declared effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, International Game
Technology certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Reno, State of Nevada, on June 16, 1999.
INTERNATIONAL GAME TECHNOLOGY
By: /s/ Maureen T. Mullarkey
Maureen T. Mullarkey
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
Each of the undersigned officers and directors of International Game Technology,
hereby constitutes and appoint Charles N. Mathewson, G. Thomas Baker and Maureen
Mullarkey, and each of them, his true and lawful attorneys-in-fact and agents,
each with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this registration statement, including post-effective amendments, to file the
same, with exhibits thereto, and other documents in connection therewith, with
the SEC, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby, ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------------------------------------------------------------------------
Chief Executive June 18, 1999
/s/ Charles N. Mathewson Officer and Chairman
Charles N. Mathewson of the Board of
Directors
President and Chief June 18, 1999
/s/ G. Thomas Baker Operating Officer
G. Thomas Baker
Chief Financial June 18, 1999
/s/ Maureen T. Mullarkey Officer and Vice
Maureen T. Mullarkey President, Finance
(principal financial
officer and accounting
officer)
Director and Vice June 18, 1999
/s/ Albert J. Crosson Chairman of the Board
Albert J. Crosson of Directors
Director June 18, 1999
/s/ John J. Russell
John J. Russell
Director June 18, 1999
/s/ Warren L. Nelson
Warren L. Nelson
Director June 18, 1999
/s/ Wilbur K. Keating
Wilbur K. Keating
Director June 18, 1999
/s/Frederick B. Rentschler
Frederick B. Rentschler
Director June 18, 1999
/s/ Claudine B. Williams
Claudine B. Williams
<PAGE>
Director June 18, 1999
/s/ Rockwell A. Schnabel
Rockwell A. Schnabel
<PAGE>
EXHIBIT INDEX
Pursuant to Item 601(a)(2) of Regulation S-K, this exhibit index immediately
precedes the exhibits.
3.1 Articles of Incorporation of International Game Technology, as amended
(incorporated by reference to Exhibit 3.1 to Registrant's Report on Form
10-K for the year ended September 30, 1995).
3.2 Second Restated Code of Bylaws of International Game Technology, dated
November 11, 1987 (incorporated by reference to Exhibit 3.2 to
Registrant's Report on Form 10-K for the year ended September 30, 1995).
4.1 Note Agreement for the 7.84% Senior Notes due September 1, 2004
(incorporated by reference to Exhibit 4.1 to Registrant's Report on Form
10-K for the year ended September 30, 1995).
4.2 Indenture, dated as of May 19, 1999 by and between International Game
Technology and The Bank of New York.*
4.3 Registration Rights Agreement, dated as of May 11, 1999, by
and among International Game Technology, Salomon Smith
Barney Inc., BNY Capital Markets, Inc., Goldman, Sachs &
Co., Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner
& Smith, Incorporated.*
5.1 Opinion of O'Melveny & Myers LLP regarding the validity of the Exchange
Notes.*
5.2 Opinion of Brian McKay regarding the validity of the
Exchange Notes.*
10.1 Stock Option Plan for Key Employees of International Game
Technology, as amended (incorporated by reference to Exhibit
10.26 to Registration Statement No. 33-12610 filed by
Registrant).
10.2 International Game Technology 1993 Stock Option Plan (incorporated by
reference to Exhibit A to the Proxy Statement for the 1997 Annual Meeting
of Shareholders).
10.3 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3 to
Registrant's Report on Form 10-K for the year ended September 30, 1997).
10.4 Employment Agreement with David P. Hanlon, former Chief Executive Officer,
President, Chief Operating Officer, Chief Financial Officer and Treasurer
dated December 1, 1994 and amendment dated January 1, 1995 (incorporated
by reference to Exhibit 10.8 to Registrant's Report on Form 10-K for the
year ended September 30, 1996).
10.5 Employment Agreement with Robert A. Bittman, Executive Vice President,
Product Development dated March 12, 1996 (incorporated by reference to
Exhibit 10.9 to Registrant's Report on Form 10-K for the year ended
September 30, 1996).
10.6 Form of officers and directors indemnification agreement (incorporated by
reference to Exhibit 10.10 to Registrant's Report on Form 10-K for the
year ended September 30, 1996).
10.7 Credit Agreement by and among International Game Technology and the Bank
of New York, Wells Fargo and other banks, dated May 22, 1997 (incorporated
by reference to Exhibit 10.11 to Registrant's Report on Form 10-Q for the
quarter ended June 30, 1997).
10.7A Amendment No. 1 to Credit Agreement by and among
International Game Technology, The Bank of New York, Wells
Fargo and other banks, dated August 19, 1997.*
10.7B Amendment No. 2 to Credit Agreement by and among
International Game Technology, The Bank of New York, Wells
Fargo and other banks, dated January 16, 1998.*
10.7C Amendment No. 3 to Credit Agreement by and among
International Game Technology, The Bank of New York, Wells
Fargo and other banks, dated April 20, 1999.*
10.7D Amendment and Restatement of Credit Agreement by and among International
Game Technology, The Bank of New York, Wells Fargo and other banks, dated
April 30, 1999.*
<PAGE>
10.8 Employment Agreement with G. Thomas Baker, President, Chief Operating
Officer dated March 12, 1997 (incorporated by reference to exhibit 10.8 to
Registrant's Report on Form 10-K for the year ended September 30, 1997).
10.9 Facility Agreement between I.G.T. (Australia) Pty. Limited and National
Australia Bank Limited, dated March 18, 1998; guarantee from International
Game Technology to National Australia Bank Limited, dated March 18, 1998
(incorporated by reference to Exhibit 10.9 to Registrant's Report on Form
10-Q for the quarter ended March 31, 1998).
10.10 Joint Venture Agreement, dated December 3, 1996 by and between
International Game Technology and Anchor Games, a d.b.a. of Anchor Coin.
(incorporated by reference to Exhibit 10.10 to Registrant's Report on Form
10-K for the year ended September 30, 1998).
10.11 IGT Profit Sharing Plan (As Amended and Restated Effective as of December
31, 1998) (incorporated by reference to Exhibit 10.11 to Registrant's
Report on Form 10-Q for the quarter ended April 3, 1999).
11 Computation of Earnings Per Share (incorporated by reference to Exhibit 11
to Registrant's Report on Form 10-K for the year ended September 30, 1998.
The information required by this item for the quarters ended January 2,
1999 and April 3, 1999 is included in the notes to the financial
statements which are incorporated by reference in this registration
statement).
12 Computation of Unaudited Pro Forma Ratios of Earnings to
Fixed Charges.*
21 Subsidiaries (incorporated by reference to Exhibit 21 to Registrant's
Report on Form 10-K for the year ended September 30, 1998).
23.1 Consent of Deloitte & Touche LLP.*
23.2 Consent of O'Melveny & Myers LLP (included in Exhibit 5.1 hereto)
23.3 Consent of Brian McKay (included in Exhibit 5.2 hereto)
24 Power of Attorney (included on the signature page hereof).
25.1 Form T-1, Statement of Eligibility of Trustee.*
25.2 Form T-1, Statement of Eligibility of Trustee.*
99.1 Form of Letter of Transmittal for Outstanding Senior Notes
due 2004.*
99.2 Form of Notice of Guaranteed Delivery for Outstanding Senior
Notes due 2004.*
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees for Outstanding Senior Notes
due 2004.*
99.4 Form of Letter to Clients for Outstanding Senior Notes due
2004.*
99.5 Form of Letter of Transmittal for Outstanding Senior Notes
due 2009.*
99.6 Form of Notice of Guaranteed Delivery for Outstanding Senior
Notes due 2009.*
99.7 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees for Outstanding Senior Notes
due 2009.*
99.8 Form of Letter to Clients for Outstanding Senior Notes due
2009.*
- ----------------
* Filed herewith.
EXECUTION COPY
International Game Technology, Issuer
7.875% Senior Notes due 2004
8.375% Senior Notes due 2009
INDENTURE
Dated as of May 19, 1999
The Bank of New York,
Trustee
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.......................................1
SECTION 1.02. Other Definitions................................18
SECTION 1.03. Incorporation by Reference of
Trust Indenture Act.............................19
SECTION 1.04. Rules of Construction............................19
ARTICLE II
The Securities
SECTION 2.01. Form and Dating..................................20
SECTION 2.02. Execution and Authentication.....................20
SECTION 2.03. Registrar and Paying Agent.......................21
SECTION 2.04. Paying Agent To Hold Money in Trust..............21
SECTION 2.05. Securityholder Lists.............................22
SECTION 2.06. Replacement Securities...........................22
SECTION 2.07. Outstanding Securities...........................22
SECTION 2.08. Temporary Securities.............................22
SECTION 2.09. Cancelation......................................23
SECTION 2.10. Defaulted Interest...............................23
SECTION 2.11. CUSIP Numbers....................................23
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee...............................23
SECTION 3.02. Selection of Securities To Be Redeemed...........24
SECTION 3.03. Notice of Redemption.............................24
SECTION 3.04. Effect of Notice of Redemption...................25
SECTION 3.05. Deposit of Redemption Price......................25
SECTION 3.06. Securities Redeemed in Part......................25
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities............................25
SECTION 4.02. Limitation on Indebtedness.......................26
SECTION 4.03. Limitation on Liens..............................28
SECTION 4.04. Limitation on Sale and Leaseback
Transactions....................................30
SECTION 4.05. Put Event........................................30
SECTION 4.06. Change of Control Triggering Event...............32
SECTION 4.07. Future Subsidiary Guarantors.....................34
SECTION 4.08. Maintenance of Non-Investment Company
Status..........................................34
SECTION 4.09. Compliance Certificate...........................35
SECTION 4.10. Covenant Suspension..............................35
SECTION 4.11. Further Instruments and Acts.....................35
i
<PAGE>
Page
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets........35
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default................................36
SECTION 6.02. Acceleration.....................................38
SECTION 6.03. Other Remedies...................................38
SECTION 6.04. Waiver of Past Defaults..........................39
SECTION 6.05. Control by Majority..............................39
SECTION 6.06. Limitation on Suits..............................39
SECTION 6.07. Rights of Holders To Receive Payment.............39
SECTION 6.08. Collection Suit by Trustee.......................40
SECTION 6.09. Trustee May File Proofs of Claim.................40
SECTION 6.10. Priorities.......................................40
SECTION 6.11. Undertaking for Costs............................40
SECTION 6.12. Waiver of Stay or Extension Laws.................41
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee................................41
SECTION 7.02. Rights of Trustee................................42
SECTION 7.03. Individual Rights of Trustee.....................43
SECTION 7.04. Trustee's Disclaimer.............................43
SECTION 7.05. Notice of Defaults...............................43
SECTION 7.06. Reports by Trustee to Holders....................43
SECTION 7.07. Compensation and Indemnity.......................44
SECTION 7.08. Replacement of Trustee...........................45
SECTION 7.09. Successor Trustee by Merger......................46
SECTION 7.10. Eligibility; Disqualification....................46
SECTION 7.11. Preferential Collection of Claims
Against Company................................46
SECTION 7.12. Trustee's Application for Instructions
from the Company................................46
SECTION 7.13. Reports by Trustee to Gaming Authorities.........47
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance......................................47
SECTION 8.02. Conditions to Defeasance.........................48
SECTION 8.03. Application of Trust Money.......................49
SECTION 8.04. Repayment to Company.............................50
SECTION 8.05. Indemnity for Government Obligations.............50
SECTION 8.06. Reinstatement....................................50
ii
<PAGE>
Page
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders.......................50
SECTION 9.02. With Consent of Holders..........................51
SECTION 9.03. Compliance with Trust Indenture Act..............52
SECTION 9.04. Revocation and Effect of Consents
and Waivers.....................................52
SECTION 9.05. Notation on or Exchange of Securities............52
SECTION 9.06. Trustee To Sign Amendments.......................53
SECTION 9.07. Payment for Consent..............................53
ARTICLE X
Subsidiary Guarantees
SECTION 10.01. Subsidiary Guarantees...........................53
SECTION 10.02. Contribution....................................55
SECTION 10.03. Successors and Assigns..........................55
SECTION 10.04. No Waiver.......................................55
SECTION 10.05. Modification....................................56
SECTION 10.06. Execution of Supplemental Indenture
for Subsidiary Guarantors......................56
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls....................56
SECTION 11.02. Notices.........................................56
SECTION 11.03. Communication by Holders with Other
Holders........................................57
SECTION 11.04. Certificate and Opinion as to
Conditions Precedent...........................57
SECTION 11.05. Statements Required in Certificate
or Opinion.....................................58
SECTION 11.06. When Securities Disregarded.....................58
SECTION 11.07. Rules by Trustee, Paying Agent
and Registrar..................................58
SECTION 11.08. Legal Holidays..................................58
SECTION 11.09. Governing Law...................................59
SECTION 11.10. No Recourse Against Others......................59
SECTION 11.11. Successors......................................59
SECTION 11.12. Multiple Originals..............................59
SECTION 11.13. Table of Contents; Headings.....................59
Appendix A - Provisions Relating to Initial Securities
and Exchange Securities
Exhibit 1 to
Appendix A - Form of Initial Security
Exhibit A - Form of Exchange Security
Exhibit B - Form of Supplemental Indenture
iii
<PAGE>
INDENTURE dated as of May 19, 1999, among INTERNATIONAL
GAME TECHNOLOGY, a Nevada corporation (the "Company"), each
Subsidiary that becomes a party hereto (collectively, the
"Subsidiary Guarantors") and THE BANK OF NEW YORK, a New York
banking corporation, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's 7.875%
Senior Notes due 2004 and 8.375% Senior Notes due 2009 (together, the "Initial
Securities"), each to be issued as in this Indenture provided and, if and when
issued pursuant to a registered private exchange for the Initial Securities, the
Company's 7.875% Senior Notes due 2004 and 8.375% Senior Notes due 2009
(together, the "Exchange Securities" and, together with the Initial Securities,
the "Securities"):"
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Affiliate" of any specified Person means: any other Person directly
or indirectly controlling or controlled by (including under direct or indirect
common control with) such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Approved Investments" means any Investment (a) approved by the
Nevada Gaming Commission and (b) rated AA (or the equivalent) or higher by S&P
and Aa2 (or the equivalent) or higher by Moody's.
"Asset Sale" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions) by the Company or any Subsidiary, including any disposition by
means of a merger, consolidation or similar transaction (each referred to for
the purposes of this definition as a "disposition"), of (a) any shares of
Capital Stock of a Subsidiary (other than directors' qualifying shares or
investments by foreign nationals mandated by applicable law) or (b) any other
assets of the Company or any Subsidiary outside of the ordinary course of
business of the Company or such Subsidiary (other than, in the case of clauses
(a) and (b) above, (i) any disposition by a Subsidiary to the Company or by the
Company or a Subsidiary to a Wholly Owned Subsidiary and (ii) any disposition
effected in compliance with the covenant described under Section 5.01).
<PAGE>
2
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, at any date of determination, (a) if such Sale and Leaseback Transaction
is a Capital Lease Obligation, the amount of Indebtedness represented thereby
according to the definition of "Capital Lease Obligation" and (b) in all other
instances, the present value (determined in accordance with GAAP) of the total
obligations of the lessee for net rental payments (after excluding amounts paid
in respect of insurance, taxes, assessments, utilities, labor and similar
charges not relating to payments for use of the Property) during the remaining
term of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of any date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (a)
the sum of the product of the numbers of years (rounded to the nearest
one-twelfth of one year) from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of
such payment by (b) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means any calendar day that is not a Saturday, Sunday
or legal holiday in New York, New York and on which commercial banks are open
for business in New York, New York and Nevada.
"Capital Lease Obligations" means any obligation under a lease that
is required to be capitalized for financial reporting purposes in accordance
with GAAP; and the amount of Indebtedness represented by such obligation shall
be the capitalized amount of such obligations determined in accordance with
GAAP; and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty. For
purposes of Section 4.03, a Capital Lease Obligation shall be deemed secured by
a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares or
other equivalents (however designated) of any class of corporate stock or
partnership interests or any other participa tions, rights, warrants, options or
other interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
<PAGE>
3
"Change of Control" means the occurrence of any of the
following events:
(a) if any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act or any successor provisions to either
of the foregoing), including any group acting for the purpose of
acquiring, holding, voting or disposing of securities within the meaning
of Rule 13d-5(b)(1) under the Exchange Act, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act, except that a person
will be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
35% or more of the total voting power of the Voting Stock of the Company
(for purposes of this clause (a), such person or group shall be deemed to
beneficially own any Voting Stock of a corporation held by any other
corporation (the "parent corporation") so long as such person or group
beneficially owns, directly or indirectly, in the aggregate a majority of
the total voting power of the Voting Stock of such parent corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the
assets of the Company and the Subsidiaries (other than sales of
Investments held to fund jackpot liabilities to make lump sum payments to
jackpot winners), considered as a whole, to another Person (other than a
disposition of such assets as an entirety or virtually as an entirety to a
Wholly Owned Subsidiary) shall have occurred, or the Company merges,
consolidates or amalgamates with or into any other Person or any other
Person merges, consolidates or amalgamates with or into the Company, in
any such event pursuant to a transaction in which the outstanding Voting
Stock of the Company is reclassified into or exchanged for cash,
securities or other Property, other than any such transaction where:
(1) the outstanding Voting Stock of the Company is
reclassified into or exchanged for other Voting Stock of the Company
or for Voting Stock of the surviving corporation, and
(2) the holders of the Voting Stock of the Company immediately
prior to such transaction own, directly or indirectly, not less than
a majority of the Voting Stock of the Company or the surviving
corporation immediately after such transaction and in substantially
the same proportion as before the transaction; or
(c) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election or appointment by
such Board or whose nomination for election by the shareholders of the
<PAGE>
4
Company was approved by a vote of not less than three-fourths of the
directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office; or
(d) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company.
"Change of Control Triggering Event" means the occurrence of both a
Change of Control and a Rating Decline with respect to the notes.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the applicable provisions hereof and,
thereafter, means the successor and, for purposes of any provision contained
herein and required by the TIA, each other obligor on the indenture securities.
"Consolidated Interest Coverage Ratio" means, as of any
date of determination, the ratio of:
(a) the aggregate amount of EBITDA for the most recent four
consecutive fiscal quarters ending at least 45 days prior to such
determination date to
(b) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that (i) if
(A) since the beginning of such period the Company or any Subsidiary
has Incurred any Indebtedness that remains outstanding or Repaid any
Indebtedness or
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is an Incurrence or Repayment of
Indebtedness, then
Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Incurrence or Repayment as if
such Indebtedness was Incurred or Repaid on the first day of such period,
provided that, in the event of any such Repayment of Indebtedness, EBITDA
for such period shall be calculated as if the Company or such Subsidiary
had not earned any interest income actually earned during such period in
respect of the funds used to Repay such Indebtedness, and
(ii) if
(A) since the beginning of such period the Company or any Subsidiary
shall have made any Asset Sale or an Invest ment (by merger or otherwise)
in any Subsidiary (or any Person which becomes a Subsidiary) or an
acquisition of
<PAGE>
5
Property which constitutes all or substantially all of an
operating unit of a business,
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is such an Asset Sale, Investment or
acquisition or
(C) since the beginning of such period any Person (that subsequently
became a Subsidiary or was merged with or into the Company or any
Subsidiary since the beginning of such period) shall have made such an
Asset Sale, Investment or acquisition, then
EBITDA for such period shall be calculated after giving pro forma effect
to such Asset Sale, Investment or acquisi tion as if such Asset Sale,
Investment or acquisition occurred on the first date of such period.
If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the base interest rate in effect for such floating rate of
interest on the date of determi nation had been the applicable base interest
rate for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months). In the event the Capital Stock of any Subsidiary
is sold during the period, the Company shall be deemed, for purposes of clause
(i) above, to have Repaid during such period the Indebtedness of such Subsidiary
to the extent the Company and its continuing Subsidiaries are no longer liable
for such Indebtedness after such sale.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Subsidiaries (excluding
interest expense attributable to Jackpot Liabilities), plus, to the extent not
included in such total interest expense, and to the extent Incurred by the
Company or its Subsidiaries,
(a) interest expense attributable to leases constitu ting part of a
Sale and Leaseback Transaction and to Capital Lease Obligations,
(b) amortization of debt discount and debt issuance cost, including
commitment,
(c) capitalized interest,
(d) noncash interest expenses,
(e) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing,
(f) net costs associated with Hedging Obligations (including
amortization of fees),
<PAGE>
6
(g) Disqualified Stock Dividends,
(h) Preferred Stock Dividends,
(i) interest Incurred in connection with Investments in discontinued
operations,
(j) unpaid interest accruing on any Indebtedness of any other Person
to the extent such Indebtedness is Guaranteed by the Company or any
Subsidiary, and
(k) the cash contributions to any employee stock owner ship plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Subsi diaries; provided, however,
that there shall not be included in such Consolidated Net Income:
(a) any net income (loss) of any Person (other than the Company) if
such Person is not a Subsidiary, except that:
(1) subject to the exclusion contained in clause (c) below,
the Company's equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash distributed by such Person during such
period to the Company or a Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other
distribution to a Subsidiary, to the limitations contained in clause
(b) below), and
(2) the Company's equity in a net loss of any such Person for
such period shall be included in determining such Consolidated Net
Income,
(b) any net income (loss) of any Subsidiary if such Subsidiary is
subject to restrictions, directly or indi rectly, on the payment of
dividends or the making of distributions, directly or indirectly, to the
Company (which restrictions have not been permanently waived), except
that:
(1) subject to the exclusion contained in clause (c) below,
the Company's equity in the net income of any such Subsidiary for
such period shall be included in such Consolidated Net Income up to
the aggregate amount of cash distributed by such Subsidiary during
such period to the Company or another Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution to another Subsidiary, to the limitation contained in
this clause), and
<PAGE>
7
(2) the Company's equity in a net loss of any such Subsidiary
for such period shall be included in determining such Consolidated
Net Income,
(c) any gain (but not loss) realized upon the sale or other
disposition of any Property of the Company or any of its consolidated
Subsidiaries (including pursuant to any Sale and Leaseback Transaction)
that is not sold or otherwise disposed of in the ordinary course of
business, provided that any loss associated with the sale of U.S. Treasury
securities held to fund jackpot liabilities to make lump sum payments to
jackpot winners shall not be included in such Consolidated Net Income,
(d) any extraordinary gain or loss,
(e) any interest income from investments purchased to fund Jackpot
Liabilities,
(f) the cumulative effect of a change in accounting principles
during such period, and
(g) any noncash compensation expense realized for grants of
restricted stock, performance shares, stock options or other rights to
officers, directors and employees of the Company or any Subsidiary,
provided that such shares, options or other rights can be redeemed at the
option of the holder only for Capital Stock of the Company (other than
Disqualified Stock).
"Consolidated Net Tangible Assets" means the total amount of assets
of the Company and its consolidated Subsidiaries (less applicable reserves)
after deducting therefrom: (a) all current liabilities of the Company and its
consolidated Subsi diaries (excluding intercompany items among the Company and
its consolidated Subsidiaries and excluding any current liabilities constituting
Funded Indebtedness by reason of being renewable or extendable) and (b)
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, such assets and exclusions and deductions
therefrom to be in such if any, as would appear on a consolidated balance sheet
of the Company and its consolidated Subsidiaries as of the date of computation,
prepared in accordance with GAAP applied on a consistent basis.
"Credit Facilities" means, with respect to the Company or any
Subsidiary, one or more debt or commercial paper facilities with banks or other
institutional lenders (including the Existing Credit Facilities) providing for
revolving credit loans, term loans, receivables or inventory financing
(including through the sale of receivables or inventory to such lenders or to
special purpose, bankruptcy remote entities formed to borrow from such lenders
against such receivables or inventory) or letters of credit, in each case
together with any extensions, revisions, refinancings or replacements thereof by
a lender or syndicate of lenders.
<PAGE>
8
"Currency Exchange Protection Agreement" means, in respect of a
Person, any foreign exchange contract, currency swap agreement, currency option
or other similar agreement or arrange ment designed to protect such Person
against fluctuations in currency exchange rates.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in either case at the option of the
holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise,
(b) is or may become redeemable or repurchaseable at the option of
the holder thereof, in whole or in part, or
(c) is convertible or exchangeable at the option of the holder
thereof for Indebtedness or Disqualified Stock,
on or prior to, in the case of clause (a), (b) or (c), the date which is 91 days
after the latest Stated Maturity of any of the Securities then outstanding;
provided, however, that if such Capital Stock is issued to any employee or to
any plan for the benefit of employees of the Company or its Subsidiaries or by
any such plan to such employees, such Capital Stock shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Company in order to satisfy applicable statutory or regulatory obligations.
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Subsidiary. The amount of any such dividend shall be equal to the quotient of
such dividend divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the Company.
"Domestic Subsidiary" means any Subsidiary other than (a) a Foreign
Subsidiary or (b) a Subsidiary of a Foreign Subsidiary.
"EBITDA" means, for any period, an amount equal to, for
the Company and its consolidated Subsidiaries:
(a) the sum of Consolidated Net Income for such period, plus the
following to the extent reducing Consolidated Net Income for such period:
(1) the provision for taxes based on income or
profits or utilized in computing net loss,
(2) Consolidated Interest Expense,
<PAGE>
9
(3) depreciation,
(4) amortization, and
(5) any other noncash items (other than any such noncash item
to the extent that it represents an accrual of or reserve for cash
expenditures in any future period), minus
(b) all noncash items increasing Consolidated Net Income for such
period (other than any such noncash item to the extent that it will result
in the receipt of cash pay ments in any future period or represents a
reversal of any accrual of, or cash reserve for, anticipated cash charges
in any prior period, in either case taken after the Issue Date).
Notwithstanding the foregoing clause (a), the provision for taxes and the
depreciation, amortization and noncash items of a Subsidiary shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary or
its shareholders.
"Event of Default" has the meaning set forth under
Section 6.01.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Credit Facilities" means the Credit Agreement dated as of
May 22, 1997, as amended, supplemented or otherwise modified from time to time,
by and among the Company, the lenders party thereto, The Bank of New York, as
Administrative Agent, Wells Fargo Bank, National Association, as Documentation
Agent, and the other Co-Agents named therein.
"Fair Market Value" means, with respect to any Property, the price
that could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compul sion to complete the transaction. Fair Market Value shall be
determined, except as otherwise provided, (a) if such Property has a Fair Market
Value equal to or less than $5.0 million, by any Officer of the Company or (b)
if such Property has a Fair Market Value in excess of $5.0 million, by a
majority of the Board of Directors of the Company and evidenced by a resolution
of such Board of Directors, dated within 30 days of the relevant transaction,
delivered to the Trustee.
"Foreign Subsidiary" means any Subsidiary which is not
organized under the laws of the United States of America or any
<PAGE>
10
State thereof or the District of Columbia.
"Funded Indebtedness" means, with respect to any Person,
Indebtedness of such Person if such Indebtedness shall be payable more than one
year from the date of such computation or shall be extendable or renewable at
the option of such Person to a time more than one year after the date of
computation; and all guarantees (direct or indirect) of such Indebtedness of
others.
"GAAP" means United States generally accepted accounting principles
as in effect on the Issue Date, including those set forth:
(a) in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants,
(b) in the statements and pronouncements of the Financial Accounting
Standards Board,
(c) in such other statements by such other entity as
approved by a significant segment of the accounting
profession, and
(d) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
SEC.
"Gaming Authority" means the United States federal government, any
foreign government, or any state, county municipality or other political
subdivision or any agency or other governmental authority thereof that now or
hereafter has jurisdiction over all or any portion of the gaming activities of
the Company or any of its Subsidiaries.
"Gaming Law" means any law, statute, ordinance, code, regulation,
constitutional provision, rule, order, directive or other enforcement
requirement now or hereafter in existence of any Gaming Authority.
"Gaming License" means any license, qualification, finding of
suitability, approval, franchise, or other authorization of the Company and its
Subsidiaries on the date of this Indenture or thereafter required to own, lease,
operate or otherwise conduct the gaming business of the Company and its
Subsidiaries, including all licenses granted under any Gaming Laws.
<PAGE>
11
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrange ments, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise), or
(b) entered into for the purpose of assuring in any other manner the
obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning. The
term "Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligation" of any Person means any obligation of such
Person pursuant to any Interest Rate Agreement, Currency Exchange Protection
Agreement or any other similar agreement or arrangement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Security register described in Section 2.05.
"Incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (by merger, conversion, exchange or
otherwise), extend, assume, Guarantee or become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or obligation on the balance sheet of
such Person (and "Incurrence" and "Incurred" shall have meanings correlative to
the foregoing); provided, however, that a change in GAAP that results in an
obligation of such Person that exists at such time, and is not theretofore
classified as Indebtedness, becoming Indebtedness shall not be deemed an
Incurrence of such Indebtedness; provided further, however, that solely for
purposes of determining compliance with Section 4.02, amortization of debt
discount shall not be deemed to be the Incurrence of Indebtedness, provided that
in the case of Indebtedness sold at a discount, the amount of such Indebtedness
Incurred shall at all times be the aggregate principal amount at Stated
Maturity.
<PAGE>
12
"Indebtedness" means, with respect to any Person on any
date of determination (without duplication):
(a) the principal of and premium (if any) in respect
of:
(1) debt of such Person for money borrowed, and
(2) debt evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is
responsible or liable;
(b) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale and Leaseback Transactions entered
into by such Person;
(c) all obligations of such Person issued or assumed as the deferred
purchase price of Property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);
(d) all obligations of such Person for the reimburse ment of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (a) through (c)
above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect to the
Repayment of any Disqualified Stock or, with respect to any Subsidiary of
such Person, any Preferred Stock (but excluding, in each case, any accrued
dividends);
(f) all obligations of the type referred to in clauses (a) through
(e) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(g) all obligations of the type referred to in clauses (a) through
(f) of other Persons secured by any Lien on any Property of such Person
(whether or not such obliga tion is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the value of such
Property or the amount of the obligation so secured; and
(h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person;
<PAGE>
13
provided, however, that notwithstanding the foregoing, there shall be excluded
from the definition of Indebtedness all obligations with respect to Jackpot
Liabilities but only to the extent such obligations are offset by U.S. Treasury
securities, cash designated for satisfying such liabilities and other Approved
Investments on the Company's balance sheet to be used to satisfy such
obligations.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date. The amount
of Indebtedness represented by a Hedging Obligation shall be equal to:
(1) zero if such Hedging Obligation has been Incurred pursuant to
clause (f) or (g) of the definition of the term Permitted Indebtedness, or
(2) the notional amount of such Hedging Obligation if not Incurred
pursuant to such clauses.
"Indenture" means this Indenture as amended or supple mented from
time to time.
"Interest Rate Agreement" means, for any Person, any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement designed to protect against fluctuations in interest
rates.
"Investment" by any Person means any direct or indirect loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such Person), advance or other
extension of credit or capital contribution (by means of transfers of cash or
other Property to others or payments for Property or services for the account or
use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation
of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or
other securities or evidence of Indebtedness issued by, any other Person.
"Investment Grade Rating" means a rating equal to or higher than
Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P.
"Issue Date" means the date on which the Securities are
initially issued.
"Jackpot Liabilities" means discounted payments due to winners for
jackpots won and amounts accrued for jackpots not yet won that are contractual
obligations of the Company to the extent that such liabilities are offset
dollar-for-dollar by U.S. Treasury securities, cash designated for satisfying
such liabilities and other Investments.
<PAGE>
14
"License Subsidiary" means IGT, the Company's Wholly
Owned Subsidiary that holds the Company's domestic Gaming
Licenses.
"Lien" means, with respect to any Property of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing use fulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (inclu ding any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
"Moody's" means Moody's Investors Service, Inc. or any
successor to the rating agency business thereof.
"Officer" means the Chief Executive Officer, the President, the
Chief Financial Officer, any Executive Vice President, any Senior Vice
President, the Secretary or any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers
of the Company, at least one of whom shall be the principal executive officer or
the principal financial officer of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"Permitted Refinancing Indebtedness" means any Indebtedness that
Refinances any other Indebtedness, including any successive Refinancings, so
long as:
(a) such Indebtedness is in an aggregate principal amount (or if
Incurred with original issue discount, an aggregate issue price) not in
excess of the sum of:
(1) the aggregate principal amount (or if Incurred with
original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being Refinanced, and
(2) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs, related to such
Refinancing,
(b) the Average Life of such Indebtedness is equal to or greater
than the Average Life of the Indebtedness being Refinanced,
(c) the Stated Maturity of such Indebtedness is no earlier than the
Stated Maturity of the Indebtedness being Refinanced, and
<PAGE>
15
(d) the new Indebtedness shall not be senior in right of payment to
the Indebtedness that is being Refinanced;
provided, however, that Permitted Refinancing Indebtedness shall not include
Indebtedness of a Subsidiary that is not a Subsidiary Guarantor that Refinances
Indebtedness of the Company or a Subsi diary Guarantor.
"Person" means any individual, corporation, company (including any
limited liability company), association, partner ship, joint venture, trust,
unincorporated organization, govern ment or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a prefer ence with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquida tion or dissolution of such Person, over shares of any
other class of Capital Stock issued by such Person.
"Preferred Stock Dividends" means all dividends with respect to
Preferred Stock of Subsidiaries held by Persons other than the Company or a
Wholly Owned Subsidiary. The amount of any such dividend shall be equal to the
quotient of such dividend divided by the difference between one and the maximum
statutory federal income rate (expressed as a decimal number between 1 and 0)
then applicable to the issuer of such Preferred Stock.
"principal" of any Indebtedness (including the Securities) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms hereof, a calculation performed in accordance
with Article 11 of Regulation S-X promulgated under the Securities Act, as
interpreted in good faith by the Board of Directors after consultation with the
independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of the Company, as the case may be.
"Property" means, with respect to any Person, all types of real,
personal, tangible, intangible or mixed property owned by such Person whether or
not included in the most recent consolidated balance sheet of such Person and
its subsidiaries under GAAP.
"Purchase Money Indebtedness" means Indebtedness:
(a) consisting of the deferred purchase price of property,
conditional sale obligations, obligations under any title retention
agreement, other purchase money obligations and obligations in respect of
industrial revenue bonds; and
<PAGE>
16
(b) Incurred to finance the acquisition, construction or lease by
the Company or a Subsidiary Guarantor of such Property, including
additions and improvements thereto;
provided, however, that such Indebtedness is Incurred within 180 days after the
acquisition, construction or lease of such Property by the Company or such
Subsidiary Guarantor.
"Rating Agencies" mean Moody's and S&P.
"Rating Date" means the date which is 90 days prior to the earlier
of (a) a Change of Control and (b) public notice of the occurrence of a Change
of Control or of the intention of the Company to effect a Change of Control.
"Rating Decline" means, with respect to the Securities, the
occurrence of the following on, or within 90 days after, the earlier of the date
of public notice of the occurrence of a Change of Control or of the intention of
the Company to effect a Change of Control (which period shall be extended so
long as the rating of the Securities is under publicly announced consideration
for possible downgrade by any of the Rating Agencies): (a) in the event the
Securities are assigned an Investment Grade Rating by both Rating Agencies on
the Rating Date, the rating of the Securities by one of the Rating Agencies
shall be below an Investment Grade Rating; or (b) in the event the Securities
are rated below an Investment Grade Rating by at least one of the Rating
Agencies on the Rating Date, the rating of the Securities by at least one of the
Rating Agencies shall be decreased by one or more gradations (including
gradations within rating categories as well as between rating categories).
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replace ment for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Repay" means, in respect of any Indebtedness, to repay, prepay,
repurchase, redeem, legally defease or otherwise retire such Indebtedness.
"Repayment" and "Repaid" shall have correlative meanings. For purposes of the
definition of "Consoli dated Interest Coverage Ratio", Indebtedness shall be
considered to have been Repaid only to the extent the related loan commitment,
if any, shall have been permanently reduced in connection therewith.
"Responsible Officer" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who
<PAGE>
17
shall have direct responsibility for the administration of this
Indenture.
"SEC" means the Securities and Exchange Commission.
"S&P" means Standard & Poor's Ratings Service or any successor to
the rating agency business thereof.
"Shelf Approval" means an approval for continuous or delayed public
offerings of securities granted to the Company, together with any related
approvals granted at the same time in connection with such public offerings, by
the Nevada State Gaming Control Board and the Nevada Gaming Commission pursuant
to Nevada Gaming Commission Regulation 16.115, as amended.
.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 of
Regulation S-X promulgated by the SEC.
"Spin For Cash Joint Venture" means the Company's joint venture with
Anchor Gaming called Spin For Cash on the Issue Date.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company or
any Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that is subordinate or junior in right of payment to the Securities or
the applicable Subsidiary Guaranty pursuant to a written agreement to that
effect.
"Subsidiary" means (a) a Person more than 50% of the outstanding
Voting Stock of which is owned, directly or indi rectly, by the Company or by
one or more other Subsidiaries of the Company, or by the Company and one or more
other Subsidiaries of the Company and (b) the Spin For Cash Joint Venture.
"Subsidiary Guarantor" means, unless released from its Subsidiary
Guarantee as permitted by this Indenture, each Domestic Subsidiary that becomes
a Guarantor of the Securities pursuant to Section 4.07.
"Subsidiary Guaranty" means a Guarantee on the terms as set forth in
this Indenture by a Subsidiary Guarantor of the Company's obligations with
respect to the Securities.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture; provided, however,
that, in the event the TIA is amended after such date, "Trust Indenture Act"
means, to the extent required by
<PAGE>
18
any such amendments, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer within the Corporate Trust
Administration department of the Trustee (or any successor group of the trustee)
with direct responsibility for the admin istration of this Indenture and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obli gations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means, at any time, a Subsidiary all the
Voting Stock of which (except directors' qualifying shares which shall be deemed
to include investments by foreign nationals mandated by applicable law) is at
such time owned, directly or indirectly, by the Company and its other Wholly
Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined Term
in Section
"Applicable Date"......................................... 4.07
"Bankruptcy Law".......................................... 6.01
"Change of Control Offer"................................. 4.06
"Change of Control Payment Date".......................... 4.06
"Change of Control Purchase Price"........................ 4.06
"Claiming Guarantor"...................................... 10.02
"Contributing Party"...................................... 10.02
"covenant defeasance option".............................. 8.01
"Custodian"............................................... 6.01
"Events of Default"....................................... 6.01
"Exchange Security"....................................... Appendix A
<PAGE>
19
"Global Security"......................................... Appendix A
"legal defeasance option"................................. 8.01
"Legal Holiday"........................................... 11.08
"Notice of Default"....................................... 6.01
"Obligations"............................................. 10.01
"Paying Agent"............................................ 2.03
"Permitted Indebtedness".................................. 4.02
"Put Event Offer"......................................... 4.05
"Put Event Payment Date".................................. 4.05
"Put Event Purchase Price"................................ 4.05
"Put Fall-Away Date"...................................... 4.05
"Registered Exchange Offer"............................... Appendix A
"Registrar"............................................... 2.03
"Sale and Leaseback Transaction".......................... 4.04
"Shelf Registration Statement"............................ Appendix A
"Suspended Covenants"..................................... 4.10
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"indenture securities" means the Securities and the
Subsidiary Guarantees.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the Company, each
Subsidiary Guarantor and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
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(4) "including" means including without limitation;
(5) words in the singular include the plural and words
in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the greater
of (i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect to
such Preferred Stock.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the Initial
Securities and the Exchange Securities are set forth in Appendix A, which is
hereby incorporated in and expressly made part of this Indenture. The Initial
Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 to Appendix A which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is sub ject, if any, or usage, provided that any such
notation, legend or endorsement is in a form reasonably acceptable to the
Company. Each Security shall be dated the date of its authentication. The terms
of the Securities set forth in Exhibit 1 to Appendix A and Exhibit A are part of
the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Securities and
may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
At any time after the execution and delivery of this Indenture, the
Company may deliver Securities executed by the Company to the Trustee for
authentication, together with a written order of the Company in the form of an
Officers' Certificate for
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21
the authentication and delivery of such Securities, and the Trustee in
accordance with such written order of the Company shall authenticate and deliver
such Securities.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to authenti
cation by the Trustee includes authentication by such agent. An authenticating
agent has the same rights as any Registrar, Paying Agent or agent for service of
notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Wholly Owned Subsidiary acts as Paying Agent, it shall segregate the money
held by it as Paying Agent and hold it as a separate trust fund. The Company at
any time may require a Paying
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22
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that such
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.07. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not out standing. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.06, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.08. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the
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23
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities and deliver them in exchange for temporary Securities.
SECTION 2.09. Cancelation. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and shall return cancelled securities to the Company. The Company
may not issue new Securities to replace Securities it has redeemed, paid or
delivered to the Trustee for cancelation.
SECTION 2.10. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Security holders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.11. CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that neither the Company nor the Trustee shall have any
responsibility for any defect in the "CUSIP" number that appears on any
Security, check, advice of payment or redemption notice, and any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company shall promptly notify
the Trustee in the event of any change in the CUSIP numbers.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 or paragraph 6 of the Securities, it shall
notify the Trustee in writing of the redemption date, the principal amount of
Securities to be redeemed and that such redemption is being made pursuant to
paragraph 5 or paragraph 6 of the Securities.
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24
The Company shall give each notice to the Trustee provided for in
this Section at least 45 days before the redemp tion date unless the Trustee
consents to a shorter period or unless a shorter period is required by the
applicable Gaming Authority with respect to a redemption pursuant to paragraph 6
of the Securities. Such notice shall be accompanied by an Officers' Certificate
and an Opinion of Counsel from the Company to the effect that such redemption
will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee
considers fair and appropriate and in accordance with methods generally used at
the time of selection by fiduciaries in similar circumstances. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securi ties, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities (including CUSIP numbers)
to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(5) if fewer than all the outstanding Securities are to
be redeemed, the identification and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after the
redemption date;
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25
(7) the paragraph of the Securities pursuant to which
the Securities called for redemption are being redeemed; and
(8) that no representation is made as to the correct ness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Securities.
At the Company's written request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section at least 45 days before the redemption date.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemp tion price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date that is on or prior to
the date of redemption). Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the redemption
date, the Company shall deposit with the Paying Agent (or, if the Company or a
Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date that is on or prior to the date of
redemption) on all Securities to be redeemed on that date other than Securities
or portions of Securities called for redemption that have been delivered by the
Company to the Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying
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26
Agent, as the case may be, is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the rate borne by the applicable Securities to the
extent lawful.
SECTION 4.02. Limitation on Indebtedness. The Company shall not, and
shall not permit any Subsidiary to, Incur, directly or indirectly, any
Indebtedness unless, after giving effect to the application of the proceeds
thereof, no Default or Event of Default would occur as a consequence of such
Incurrence or be continuing following such Incurrence and either:
(1) after giving effect to the Incurrence of such Indebtedness and
the application of the proceeds thereof, the Consolidated Interest
Coverage Ratio would be greater than 2.50 to 1.00, or
(2) such Indebtedness is Permitted Indebtedness.
The term "Permitted Indebtedness" means: (a) Indebtedness of the
Company evidenced by the Securities and of Subsidiary Guarantors evidenced by
Subsidiary Guarantees; (b) Indebtedness of the Company under Credit Facilities,
provided that the aggregate principal amount of all such Indebtedness under
Credit Facilities at any one time outstanding shall not exceed $250.0 million;
(c) Indebtedness in respect of Capital Lease Obligations and Purchase Money
Indebtedness, provided that (1) the aggregate principal amount of such
Indebtedness does not exceed the Fair Market Value (on the date of the
Incurrence thereof) of the Property acquired, constructed or leased, and (2) the
aggregate principal amount of all Indebtedness Incurred and then outstanding
pursuant to this clause (c) (together with all Permitted Refinancing
Indebtedness Incurred and then outstanding in respect of Indebtedness previously
Incurred pursuant to this clause (c)) does not exceed $25.0 million; (d)
Indebtedness of the Company owing to and held by any Wholly Owned Subsidiary and
Indebtedness of a Subsidiary owing to and held by the Company or any Wholly
Owned Subsidiary; provided, however, that any subsequent issue or transfer of
Capital Stock or other event that results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness by the
issuer thereof; (e) Indebtedness of a Subsidiary Incurred and outstanding on or
prior to the date on which such Subsidiary was acquired by the Company or
otherwise became a Subsidiary (other than Indebtedness Incurred as consideration
in, or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of transactions pursuant to which such
Subsidiary became a Subsidiary of the Company or was otherwise acquired by the
Company), provided that at the time such Subsidiary was acquired by the Company
or otherwise became a Subsidiary and after giving
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27
effect to the Incurrence of such Indebtedness, the Company would have been able
to Incur $1.00 of additional Indebtedness pursuant to clause (1) of the first
paragraph of this Section 4.02; (f) Indebtedness under Interest Rate Agreements
entered into by the Company or a Subsidiary for the purpose of limiting interest
rate risk in the ordinary course of the financial management of the Company or
such Subsidiary and not for speculative purposes, provided that the obligations
under such agreements are directly related to payment obligations on
Indebtedness otherwise permitted by the terms of this Section 4.02, including
the Securities; (g) Indebtedness under Currency Exchange Protection Agreements
entered into by the Company or a Subsidiary for the purpose of limiting currency
exchange rate risks directly related to transactions entered into by the Company
or such Subsidiary in the ordinary course of business and not for speculative
purposes; (h) Indebtedness in connection with one or more standby letters of
credit, completion guarantees, performance or surety bonds and banker's
acceptances issued by the Company or a Subsidiary in the ordinary course of
business (including pursuant to contractual, lease, license, worker's
compensation or self-insurance obligations) and not in connection with the
borrowing of money or the obtaining of advances or credit; (i) any Guarantee by
the Company of Indebtedness or other obligations of any of its Subsidiaries so
long as the Incurrence of such Indebtedness or other obligations of such
Subsidiaries is permitted under the terms of this Indenture; (j) Indebtedness
arising from agreements of the Company and its Subsidiaries providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, Incurred or assumed in connection with the disposition of any assets,
business or Subsidiary; (k) Indebtedness outstanding on the Issue Date not
otherwise described in clauses (a) through (j) above; (l) Indebtedness in an
aggregate principal amount outstanding at any one time not to exceed $25.0
million; and (m) Permitted Refinancing Indebtedness Incurred in respect of
Indebtedness Incurred pursuant to clause (1) of the first paragraph of this
Section 4.02 and clauses (a), (c), (e) and (k) above.
Notwithstanding anything to the contrary contained in
this Section 4.02,
(a) the Company shall not, and shall not permit any Subsidiary
Guarantor to, Incur any Indebtedness pursuant to this Section 4.02 if the
proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations unless such Indebtedness shall be subordinated to
the Securities or the applicable Subsidiary Guaranty, as the case may be,
to at least the same extent as such Subordinated Obligations, and
(b) the Company shall not permit any Subsidiary that is not a
Subsidiary Guarantor to Incur any Indebtedness pursuant to this Section
4.02 if the proceeds thereof are used, directly or indirectly, to
Refinance any Indebtedness of the Company or any Subsidiary Guarantor.
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28
For purposes of determining compliance with this Section 4.02,
Indebtedness need not be permitted solely by reference to one provision but may
be permitted in part by one such provision and in part by one or more other
provisions of this Section 4.02 permitting such Indebtedness and in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (a) through (m) of the
definition thereof, the Company shall, in its sole discretion, classify such
item of Indebtedness on the date of its Incurrence in any manner that complies
with this Section 4.02.
SECTION 4.03. Limitation on Liens. The Company shall not, and shall
not permit any Subsidiary to, create, assume, Incur or suffer to exist any Lien
upon any of its Property or Indebtedness or shares of Capital Stock of any
Subsidiaries, whether owned at the Issue Date or thereafter acquired, without
making effective provision whereby the Securities shall be secured equally and
ratably with (or, at the option of the Company, prior to) any and all other
obligations and Indebtedness thereby secured; provided, however, that the
foregoing restriction shall not apply to:
(a) Liens for taxes, assessments or governmental charges or levies
on the Property of the Company or any Subsidiary if the same shall not at
the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings, provided
that any reserve or other appropriate provision that shall be required in
conformity with GAAP shall have been made therefor;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law on the
Property of the Company or any Subsidiary arising in the ordinary course
of business and securing payment of obligations which are not yet
delinquent or which are being contested in good faith;
(c) Liens on the Property of the Company or any Subsidiary Incurred
in the ordinary course of business to secure performance of obligations
with respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety bonds or other obligations of a like nature,
in each case which are not Incurred in connection with the payment of
Indebtedness;
(d) Liens on Property at the time the Company or any Subsidiary
acquired such Property, including any acquisition by means of a merger or
consolidation with or into the Company or any Subsidiary, provided that
such Lien was not Incurred in connection with or in contemplation of such
acquisition, and provided, further that any such Lien may not extend to
any other Property of the Company or any Subsidiary except as otherwise
provided herein;
(e) Liens on the Property of a Person at the time such
Person becomes a Subsidiary; provided, however, that any such
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29
Lien may not extend to any other Property of the Company or any other
Subsidiary which is not a direct Subsidiary of such Person except as
otherwise provided herein;
(f) pledges or deposits by the Company or any Subsi diary under
workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to which
the Company or any Subsidiary is party, or deposits to secure public or
statutory obligations of the Company, or deposits for the payment of rent,
in each case Incurred in the ordinary course of business;
(g) Liens on Property to secure Indebtedness permitted to be
Incurred pursuant to clause (c) of the definition of Permitted
Indebtedness, provided that such Lien may not extend to any Property of
the Company or any Subsidiary other than the Property acquired,
constructed or leased with the proceeds of such Indebtedness and any
improvements or accessions to such Property;
(h) rights of way, zoning restrictions, minor defects or
irregularities in title, covenants and restrictions, licenses, easements,
building restrictions and such other encumbrances or charges against real
Property;
(i) Liens arising out of judgments or decrees which involve
uninsured amounts not exceeding $15.0 million (or the foreign currency
equivalent) and which are being contested in good faith, provided that any
reserve or other appropriate provision that shall be required in
conformity with GAAP shall have been made therefor;
(j) Liens consisting of leases, subleases or licenses (including
licenses of patents, trademarks and other intellectual property) granted
to third parties in the ordinary course of business of the Company or any
Subsidiary, and interests or title of a lessor, sublessor or licensor
under any lease or license;
(k) Liens Incurred pursuant to regulatory requirements to secure the
performance of obligations of the Company or any Subsidiary in connection
with liabilities to jackpot winners and potential jackpot winners;
(l) Liens existing on the Issue date and not otherwise
described in clauses (a) through (k) above; or
(m) Liens on the Property of the Company of any Subsi diary to
secure any Refinancing, in whole or in part, of any Indebtedness secured
by Liens referred to in clause (d), (e), (g) or (l) above; provided,
however, that any such Lien shall be limited to all or part of the same
Property that secured the original Lien (together with improvements and
accessions to such Property) and the aggregate principal amount of
Indebtedness that is secured by such Lien shall not be
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30
increased to an amount greater than the sum of (i) the outstanding
principal amount, or, if greater, the committed amount, of the
Indebtedness secured by Liens described under clause (d), (e), (g) or (l)
above, as the case may be, at the time of such Refinancing and (ii) an
amount necessary to pay any premiums, fees and other expenses incurred by
the Company or any Subsidiary in connection with such Refinancing.
Notwithstanding the foregoing provisions of this Section 4.03, the
Company may, and may permit any Subsidiary to, create, assume, Incur or suffer
to exist any Lien upon any Property which is not excepted by clauses (a) through
(m) above without equally and ratably securing the Securities, provided that the
aggregate amount of all Indebtedness then outstanding secured by such Lien and
all other Liens not specifically excepted pursuant to clauses (a) through (m)
above does not exceed 15% of Consolidated Net Tangible Assets at the end of the
immediately preceding fiscal year of the Company.
Further, notwithstanding the foregoing provisions, this covenant
shall not prohibit any Lien on the Capital Stock of the License Subsidiary prior
to the Put Fall-Away Date.
SECTION 4.04. Limitation on Sale and Leaseback Transactions. The
Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, sell or transfer (other than to the Company or a Subsidiary) any
Property owned on the date of this Indenture or thereafter acquired with the
intention that the Company or any Subsidiary shall take back a lease thereof (a
"Sale and Leaseback Transaction") unless the Company or such Subsidiary would be
entitled to:
(a) Incur Indebtedness in an amount equal to the Attributable Debt
with respect to such Sale and Leaseback Transaction pursuant to Section
4.02; and
(b) create a Lien on such Property securing such Attributable Debt
without equally and ratably securing the Securities as required by Section
4.03.
SECTION 4.05. Put Event. Until the earlier of (a) approval by the
Nevada Gaming Authorities of an agreement by the Company as contemplated by
Section 4.03 not to grant a Lien on the Capital Stock of the License Subsidiary
or (b) a registered public offering of Securities pursuant to a Shelf Approval
that includes prior approval of such agreement (such earlier date being referred
to herein as the "Put Fall-Away Date"), if the Company shall grant any Lien on
the Capital Stock of the License Subsidiary (a "Put Event"), each Holder of
Securities shall have the right to require the Company to repurchase all or any
part of such Holder's Securities pursuant to the offer described below (the "Put
Event Offer") at a purchase price (the "Put Event Purchase Price") equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the purchase date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
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31
Within 30 days following any Put Event, the Company shall:
(a) cause a notice of the Put Event Offer to be sent at least once to
the Dow Jones New Service or similar business news service in the
United States and
(b) send, by first-class mail, with a copy to the Trustee, to each
Holder of Securities, at such Holder's address appearing in the
security register, a notice stating:
(1) that a Put Event has occurred and a Put Event Offer is being
made pursuant to this Section 4.05 and that all Securities
timely tendered will be accepted for payment;
(2) the Put Event Purchase Price and the purchase date, which
shall be, subject to any contrary requirements of applicable
law, a Business Day no earlier than 30 days nor later that 60
days from the date such notice is mailed (the "Put Event
Payment Date");
(3) the circumstances and relevant facts regarding the Put Event;
and
(4) the procedures that Holders of Securities must follow in order
to tender their Securities (or portions thereof) for payment
and the procedures that Holders of Securities must follow in
order to withdraw an election to tender Securities (or
portions thereof) for payment.
Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
or its agent at the address specified in the notice at least three Business Days
prior to the Put Event Payment Date. Holders shall be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day
prior to the Put Event Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Security that was delivered for purchase by the Holder and a statement that such
Holder is withdrawing its election to have such Security purchased.
On or prior to the Put Event Payment Date, the Company shall
irrevocably deposit with the Trustee or with the Paying Agent (or, if the
Company or any of its Wholly Owned Subsidiaries is acting as the Paying agent,
segregate and hold in trust) in cash an amount equal to the Put Event Purchase
Price payable to the Holders entitled thereto, to be held for payment in
accordance with the provisions of this Section 4.05. On the Put Event Payment
Date, the Company shall deliver to the Trustee the Securities or portions
thereof that have been properly tendered to and are to be accepted by the
Company for payment. The Trustee or the Paying Agent shall, on the Put Event
Payment Date, mail or
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32
deliver payment to each tendering Holder of the Put Event Purchase Price. In the
event that the aggregate Put Event Purchase Price is less than the amount
delivered by the Company to the Trustee or the Paying Agent, the Trustee or the
Payment Agent, as the case may be, shall deliver the excess to the Company
immediately after the Put Event Payment Date.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the purchase of securities pursuant to this
section. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Section, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.06. Change of Control Triggering Event. Upon the
occurrence of a Change of Control Triggering Event, each Holder of Securities
shall have the right to require the Company to repurchase all or any part of
such Holder's Securities pursuant to the offer described below (the "Change of
Control Offer") at a purchase price (the "Change of Control Purchase Price")
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the purchase date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date).
Within 30 days following any Change of Control Triggering Event, the
Company shall:
(a) cause a notice of the Change of Control Offer to be sent at
least once to the Dow Jones News Service or similar business news service
in the United States and
(b) send, by first-class mail, with a copy to the Trustee, to each
Holder of Securities, at such Holder's address appearing in the security
register, a notice stating:
(1) that a Change of Control Triggering Event has occurred and
a Change of Control Offer is being made pursuant to this Section
4.06 and that all Securities timely tendered will be accepted for
payment;
(2) the Change of Control Purchase Price and the purchase
date, which shall be, subject to any contrary requirements of
applicable law, a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed (the "Change of
Control Payment Date");
(3) that any Security (or portion thereof) accepted for
payment (and duly paid on the Change of Control Payment Date)
pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date;
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33
(4) that any Security (or portions thereof) not
properly tendered will continue to accrue interest;
(5) the circumstances and relevant facts regarding
the Change of Control Triggering Event; and
(6) the procedures that Holders of Securities must follow in
order to tender their Securities (or portions thereof) for payment
and the procedures that Holders of Securities must follow in order
to withdraw an election to tender Securities (or portions thereof)
for payment.
Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
or its agent at the address specified in the notice at least three Business Days
prior to the Change of Control Payment Date. Holders shall be entitled to
withdraw their election if the Trustee or the Company receives not later than
one Business Day prior to the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security that was delivered for purchase by the Holder
and a statement that such Holder is withdrawing its election to have such
Security purchased.
On or prior to the Change of Control Payment Date, the Company shall
irrevocably deposit with the Trustee or with the Paying Agent (or, if the
Company or any of its Wholly Owned Subsidiaries is acting as the Paying Agent,
segregate and hold in trust) in cash an amount equal to the Change of Control
Purchase Price payable to the Holders entitled thereto, to be held for payment
in accordance with the provisions of this Section 4.06. On the Change of Control
Payment Date, the Company shall deliver to the Trustee the Securities or
portions thereof that have been properly tendered to and are to be accepted by
the Company for payment. The Trustee or the Paying Agent shall, on the Change of
Control Payment Date, mail or deliver payment to each tendering Holder of the
Change of Control Purchase Price. In the event that the aggregate Change of
Control Purchase Price is less than the amount delivered by the Company to the
Trustee or the Paying Agent, the Trustee or the Paying Agent, as the case may
be, shall deliver the excess to the Company immediately after the Change of
Control Payment Date.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the purchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Section, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Section by virtue thereof.
Notwithstanding the foregoing, the Company will not be required to
make a Change of Control Offer upon a Change of Control Triggering Event if a
third party makes the Change of
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34
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.06 applicable to a Change of Control
Offer made by the Company and purchases all of the Securities validly tendered
and not withdrawn
under such Change of Control Offer.
SECTION 4.07. Future Subsidiary Guarantors. (a) The Company shall
cause each Domestic Subsidiary (other than the Spin For Cash Joint Venture as
long as the Company owns 50% or less of the equity interests therein) having an
aggregate of $10.0 million or more of Indebtedness or Preferred Stock
outstanding at any time to promptly become a Subsidiary Guarantor by causing
such Subsidiary to execute and deliver to the Trustee a Supplemental Indenture
in the form of Exhibit B hereto as contemplated by Section 10.06, provided that
(1) with respect to any Subsidiary acquired after the Issue Date in accordance
with the terms of this Indenture, any Indebtedness or Preferred Stock
outstanding on or prior to the date on which such Subsidiary was acquired by the
Company (unless such Indebtedness or Preferred Stock was Incurred or issued, as
applicable, as consideration, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of transactions
pursuant to which such Subsidiary became a Subsidiary or was otherwise acquired
by the Company), (2) Indebtedness in respect of Capital Lease Obligations and
Purchase Money Indebtedness and (3) intercompany Indebtedness, shall not be
considered for purposes of this Section 4.07.
(b) The Company shall cause any Subsidiary that Guarantees
Indebtedness of the Company (other than the Securities) to promptly become a
Subsidiary Guarantor by causing such Subsidiary to execute and deliver to the
Trustee a Supplemental Indenture in the form of Exhibit B hereto as contemplated
by Section 10.06.
(c) Notwithstanding the foregoing, the License Subsidiary shall not
be subject to the requirements of this Section 4.07 until the earlier of such
time as (1) prior approval of this Section 4.07 with respect to the License
Subsidiary is received in Nevada or (2) a registered public offering of the
Securities is made pursuant to a Shelf Approval that includes a prior approval
of this Section 4.07 (the "Applicable Date"). Further, notwithstanding any other
provision of this Article IV, until the Applicable Date, the License Subsidiary
shall not Incur any Indebtedness or take any other action whatsoever that would
have required it to become a Subsidiary Guarantor pursuant to this Section 4.07
but for the immediately preceding sentence.
(d) Each Subsidiary Guarantee shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer of
all the Capital Stock in, or all or substantially all the assets of, the
applicable Subsidiary Guarantor (in each case other than to the Company or an
affiliate of the Company).
SECTION 4.08. Maintenance of Non-Investment Company
Status. The Company shall not at any time be or become an
"investment company" registered or required to be registered
under
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35
the Investment Company Act of 1940, as amended, or any successor
law, rule or regulation.
SECTION 4.09. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company and the Subsidiary Guarantors, if any, also
shall comply with TIA ss. 314(a)(4).
SECTION 4.10. Covenant Suspension. During any period
of time that:
(a) the Securities have Investment Grade Ratings from
both Rating Agencies, and
(b) no Default or Event of Default has occurred and is
continuing,
the Company and the Subsidiaries will not be subject to the covenants contained
in Sections 4.02 and 4.07 (together, the "Suspended Covenants") and any
Subsidiary Guarantees existing at such time shall be released. If the Company
and the Subsidiaries are not subject to the Suspended Covenants for any period
of time as a result of the preceding sentence and, subsequently, one or both of
the Rating Agencies withdraws its ratings or downgrades the ratings assigned to
the Securities below the required Investment Grade Ratings or a Default or Event
of Default occurs and is continuing, then the Company and the Subsidiaries will
thereafter again be subject to the Suspended Covenants.
SECTION 4.11. Further Instruments and Acts. Upon
request of the Trustee, the Company shall execute and deliver such
further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of
this Indenture.
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets. (a) The Company shall not consolidate with or merge into
any other Person or sell, convey, lease or transfer its Property
and assets substantially as an entirety in any one transaction or
series of transactions unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person to which the Properties and assets of the
Company are so transferred shall be a corporation organized and existing
under the laws of the
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36
United States of America, any state thereof or the District of Columbia
and shall execute and deliver to the Trustee a supplemental indenture
expressly assuming the due and punctual payment when due of the principal
of and interest (including Special Interest, if any) on the Securities and
the performance of each of the other covenants of the Company under this
Indenture;
(2) each Subsidiary Guarantor shall execute and deliver to the
Trustee a supplemental indenture confirming the obligation of such
Subsidiary Guarantor to pay the principal of and interest (including
Special Interest, if any) on the Securities pursuant to such Subsidiary
Guarantor's Subsidiary Guarantee;
(3) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(4) such surviving corporation or such Person, as the case may be,
shall not immediately thereafter have outstanding Indebtedness secured by
any Liens not permitted by this Indenture or shall have secured the
Securities equally and ratably with (or, at the option of the Company,
prior to) any Indebtedness secured thereby; and
(5) in the case of a sale, conveyance, lease or other transfer of
assets substantially as an entirety, such Property and assets shall have
been transferred as an entirety or virtually as an entirety to one Person.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. The following events
shall be "Events of Default":
(1) the Company defaults in any payment of interest (including
Special Interest, if any) on any Security when the same becomes due and
payable, and such default continues for a period of 30 days;
(2) the Company defaults in the payment of all or any part of the
principal of, or premium, if any, on any Security when the same becomes
due and payable at its Stated Maturity, upon acceleration, redemption,
optional redemption, required repurchase or otherwise;
(3) the Company fails to comply with any covenant or agreement in
the Securities or in this Indenture (other than a failure that is the
subject of the foregoing clauses (1) or (2)) and such failure continues
for 60 days after written notice is given to the Company as specified
below;
<PAGE>
37
(4) a default by the Company or any Subsidiary under any
Indebtedness over $30.0 million (or its foreign currency equivalent),
after the applicable grace period, which results in acceleration of the
maturity of such Indebtedness, or the failure to pay any such Indebtedness
at final maturity;
(5) the Company or any Significant Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of
it or for any substantial part of its property; or
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of
its Property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary; or
(D) grants any similar relief under any foreign
laws;
and in each such case the order or decree remains unstayed
and in effect for 60 days; or
(7) any Subsidiary Guarantee ceases to be in full force and effect
(other than in accordance with the terms of this Indenture and such
Subsidiary Guarantee) or any Subsidiary Guarantor denies or disaffirms its
obligations under its
Subsidiary Guarantee.
The foregoing will constitute Events of Default what ever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of
<PAGE>
38
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities of a series then outstanding notify the Company (and in the case of
such notice by Holders, the Trustee) of the Default and the Company does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default and any event that with the giving of notice or the lapse
of time would become an Event of Default, its status and what action the Company
is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(5) or (6) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the Securities of a
series then outstanding by notice to the Company and the Trustee, may declare
the principal of and accrued and unpaid interest on all the Securities of that
series to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(5) or (6) with respect to the Company occurs, the principal of
and accrued and unpaid interest on all the Securities shall, automatically and
without any action by the Trustee or any Holder, become and be immediately due
and payable. The Holders of a majority in aggregate principal amount of the
outstanding Securities of a series by notice to the Trustee and the Company may
rescind any declaration of acceleration if the rescission would not conflict
with any judgment or decree and if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities of that series or to enforce the
performance of any provision of the Securities of that series or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities of that series or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
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39
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of the Securities of a series then outstanding by
notice to the Trustee may waive an existing Default and its consequences except
(i) a Default in the payment of the principal of or interest on a Security of
such series or (ii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder of such series
affected. When a Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
aggregate principal amount of the Securities of a series then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee with respect to the Securities of that series. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders of such series or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to reasonable indemnification against all losses and expenses caused by taking
or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder
may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) such Holder shall have previously given to the
Trustee written notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding of that series shall have made a written
request, and such Holder of or Holders shall have offered reasonable
indemnity, to the Trustee to pursue such proceeding as trustee; and
(3) the Trustee has failed to institute such proceeding and has not
received from the Holders of at least a majority in aggregate principal
amount of the Securities of that series outstanding a direction
inconsistent with such request, within 60 days after such notice, request
and offer.
The foregoing limitations on the pursuit of remedies by a
Securityholder shall not apply to a suit instituted by a Holder of Securities
for the enforcement of payment of the principal of or interest on such Security
on or after the applicable due date specified in such Security. A Securityholder
may not use this Indenture to prejudice the rights of another Securityholder of
the same series or to obtain a preference or priority over another
Securityholder of the same series.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right
<PAGE>
40
of any Holder to receive payment of principal of and interest on the Securities
held by such Holder, on or after the respective due dates expressed in such
Holder's Securities, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects
any money or property pursuant to this Article VI, it shall pay out
the money or property in the following order:
FIRST: to the Trustee for amounts due under
Section 7.07;
SECOND: to Securityholders for amounts due and unpaid
on the Securities of that series for principal and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities
of that series for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder of the applicable series and
the Trustee a notice that states the record date, the payment date and amount to
be paid.
SECTION 6.11. Undertaking for Costs. In any suit for
the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by
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41
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
aggregate principal amount of a series of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its
own wilful misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01;
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42
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall not be liable for interest on
any money received by it.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA and
the provisions of this Article VII shall apply to the Trustee in its role as
Registrar, Paying Agent and Security Custodian.
(i) The Trustee shall not be deemed to have notice of a Default or
an Event of Default unless (a) a Trust Officer of the Trustee has received
written notice thereof from the Company, a Subsidiary Guarantor or any Holder or
(b) a Trust Officer shall
have actual knowledge thereof.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document. The Trustee may, however, in its discretion make
such further inquiry or investigation into such facts or matters as it may see
fit and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney at the expense of the Company
and shall incur no liability of any kind by reason of such inquiry or
investigation.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents, attorneys or
custodians and shall not be responsible for the misconduct or
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43
negligence of any agent, attorney or custodian appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or
negligence.
(e) The Trustee may consult with counsel of its own selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it here under in good faith and in accordance with the advice or opinion of such
counsel.
(f) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty unless so specified herein.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or
co-registrar may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity, priority or
adequacy of this Indenture or the Secur ities, it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company or any Subsidiary Guarantor in this
Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
SECTION 7.05. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is actually known to a Trust Officer of the
Trustee, the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 90 days after it is known to a Trust Officer or written
notice of it is received by the Trustee. Except in the case of a Default or
Event of Default in payment of principal of or interest on any Security, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each December 31 beginning with December 31, 1999, and in any
event prior to March 31 in each year, the Trustee shall mail to each
Securityholder a brief report dated as of December 31 each year that complies
with TIA ss. 313(a),
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44
if and to the extent required by such subsection. The Trustee
shall also comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee from time to time such compensation as shall be agreed upon from
time to time in writing for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company and each
Subsidiary Guarantor shall jointly and severally fully indemnify the Trustee
against any and all loss, liability, claim, damage or expense (including
reasonable attorneys' fees and expenses) incurred by it in connection with the
acceptance and administration of this trust and the performance of its duties
hereunder, including the costs and expenses of defending itself against any
claim (whether asserted by the Company, any Holder or any other Person). The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company of any claim for
which it may seek indemnity of which a Responsible Officer has actually received
written notice shall not relieve the Company or any Subsidiary Guarantor of its
obligations hereunder except to the extent such failure shall have materially
prejudiced the Company. The Company shall defend the claim and the Trustee shall
cooperate in the defense. If the Trustee is advised by counsel in writing that
it may have available to it defenses which are in conflict with the defenses
available to the Company, then the Trustee may have separate counsel and the
Company and the Subsidiary Guarantors, as applicable, shall pay the reasonable
fees and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct or negligence. The Company need not pay for
any settlement made by the Trustee without the Company's consent, such consent
not to be unreasonably withheld. All indemnifications and releases from
liability granted hereunder to the Trustee shall extend to its officers,
directors, employees, agents, attorneys, custodians, successors and assigns.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the resignation or removal of the Trustee
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45
and the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(5) or (6) with respect to the
Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company and applicable Gaming Authorities at least 30
days prior to the proposed resignation. The Holders of a majority in aggregate
principal amount of the Securities of a series then outstanding may remove the
Trustee by so notifying the Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property;
(4) the Trustee otherwise becomes incapable of acting;
or
(5) the Trustee becomes disqualified or is found unsuitable under
any applicable Gaming Law, or the Trustee's relationship with the Company may,
in the Company's discretion, jeopardize any material Gaming License or franchise
or right or approval granted thereto.
If the Trustee resigns, is removed by the Company or by the Holders
of a majority in aggregate principal amount of the Securities of a series then
outstanding, or if a vacancy exists in the office of Trustee for any reason (the
Trustee in such event being referred to herein as the retiring Trustee), the
Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall upon payment of all of
its costs and the costs of its agents and counsel promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in aggregate principal amount of the Securities of a series then outstanding
may petition at the expense of the Company any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
who has been a bona fide Holder of a Security for at least six months may
petition any court of competent
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46
jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any such successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
(or, in the case of a corporation included in a bank holding company system, the
related bank holding company shall have) a combined capital and surplus of at
least $50,000,000 as set forth in its (or its related bank holding company's)
most recent published annual report of condition. The Trustee shall comply with
TIA ss. 310(b), subject to the penultimate paragraph thereof; provided, however,
that there shall be excluded from the operation of TIA ss. 310(b)(1) any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
SECTION 7.12. Trustee's Application for Instructions from the
Company. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable to the Company for any action taken
by, or omission of, the Trustee in accordance with a
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47
proposal included in such application on or after the date specified in such
application (which date shall not be less than three Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to any earlier date) unless prior
to taking any such action (or the effective date in the case of any omission),
the Trustee shall have received written instructions in response to such
application specifying the action to be taken or omitted.
SECTION 7.13. Reports by Trustee to Gaming Authorities. (a) The
Trustee shall promptly report the names of all Holders of the Securities to any
Gaming Authorities upon request of such Gaming Authorities or the Company. The
Trustee shall provide to any Gaming Authorities upon request of such Gaming
Authorities or the Company, copies of all written communications from the
Trustee to all Holders, notice of any Default, notice of any transfer or
assignment of the Trustee's rights under this Indenture, any amendment to this
Indenture or the Securities and notice of any recession, annulment or waiver in
respect of an Event of Default under this Indenture.
(b) The Trustee shall cooperate with the Company in providing
information relating to the Securities or the Holders to any Gaming Authority
pursuant to applicable Gaming Laws.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securi ties; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities of a
series (other than Securi ties of such series replaced pursuant to Section 2.06)
for cancelation or (ii) all outstanding Securities of a series have become due
and payable, whether at maturity or as a result of the mailing of a notice of
redemption pursuant to Article III and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities of such series, including interest thereon to maturity or such
redemption date (other than Securities of such series replaced pursuant to
Section 2.06), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Section 8.01(c),
cease to be of further effect with respect to such series of Securities. The
Trustee shall acknowledge satisfaction and discharge of this Indenture with
respect to such series of Securities on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel and at the cost and expense of
the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time
may terminate (i) all of its obligations under the Securities of a series and
this Indenture with respect to such series ("legal defeasance option") or (ii)
with respect to any series, its obligations under Sections 4.02, 4.03, 4.04,
4.05, 4.06, 4.07 and 4.08 and the operation of Sections 6.01(4), 6.01(5),
6.01(6) and 6.01(7) (but, in the case of Sections 6.01(5)
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48
and (6), with respect only to Significant Subsidiaries)("covenant
defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities of the applicable series may not be accelerated because of an Event
of Default. If the Company exer cises its covenant defeasance option, payment of
the Securities of the applicable series may not be accelerated because of an
Event of Default specified in Sections 6.01(3) (with respect to the covenants of
Article IV identified in the immediately preceding paragraph), 6.01(4), 6.01(5),
6.01(6) and 6.01(7) (with respect only to Significant Subsidiaries in the case
of Sections 6.01(5) and 6.01(6)). If the Company exercises its legal defeasance
option or its covenant defeasance option, each Subsidiary Guarantor, if any,
shall be released from all its obligations under its Subsidiary Guarantee.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 7.07, 7.08, 8.05 and 8.06 shall
survive until the Securities of the applicable series have been paid in full.
Thereafter, the Company's obligations in Sections 7.07 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company
may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment
of principal of and interest on the Securities of the
applicable series to maturity or redemption, as the case may
be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities of the applicable series to maturity or redemption,
as the case may be;
(3) 91 days pass after the deposit is made and during the 91-day
period no Default specified in Section 6.01(5) or (6) with respect to the
Company or any other Person making such deposit occurs that is continuing
at the end of the period;
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49
(4) no Default or Event of Default has occurred and is
continuing on the date of such deposit and after giving
effect thereto;
(5) the deposit does not constitute a default under any
other agreement or instrument binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940, as amended;
(7) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable Federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Securityholders of the applicable series will not
recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders of the applicable series will not recognize income, gain
or loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred; and
(9) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities of the applicable series as
contemplated by this Article VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities of the
applicable series.
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50
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years,
and, thereafter, Securityholders entitled to the money must look to the Company
for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against
deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the
Subsidiary Guarantors, if any, and the Trustee may amend this Indenture or the
Securities of any series without notice to or consent of any Securityholder of
such series:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
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51
(4) to add additional Guarantees with respect to the Securities or
to release Subsidiary Guarantors from Subsidiary Guarantees as provided
for herein;
(5) to secure the Securities or add to the covenants of the Company
for the benefit of the Holders or surrender any right or power herein
conferred upon the Company;
(6) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA; or
(7) to make any change that does not adversely affect
the rights of any Securityholder.
After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Securityholders of the affected series a notice briefly
describing such amendment. The failure to give such notice to all such
Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company the Subsidiary
Guarantors, if any, and the Trustee may amend this Indenture with respect to the
Securities of any series without notice to any Securityholder of such series but
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Securities of that series then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Securities of such series). However, without the consent of each Securityholder
of a series affected thereby, an amendment may not:
(1) change the Stated Maturity of the principal of, or any
installment of interest (including Special Interest, if any) on, any
Security of that series;
(2) reduce the principal amount of or the rate of interest
(including Special Interest, if any) on any Security of that series;
(3) change the place of payment where, or the coin or currency in
which, any principal of and interest (including Special Interest, if any)
on any such Security of that series is payable;
(4) impair the right of any Holder to receive payment of principal
of and interest on such Holder's Securities on or after the due dates
therefor or to institute suit for the enforcement of any payment on or
with respect to such Holder's Securities or any Subsidiary Guaranty;
(5) reduce the amount payable upon the redemption or repurchase of
any Security of that series under Article III, Section 4.05 or Section
4.06 or, at any time after a Put Event or Change of Control Triggering
Event has occurred, change the time at which any Put Event Offer or Change
of
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52
Control Offer must be made or at which the Securities of that series must
be repurchased pursuant to such Put Event Offer
or Change of Control Offer;
(6) reduce the amount of Securities of that series
whose Holders must consent to an amendment or waiver; or
(7) make any change in Section 6.04 or 6.07 or the
second sentence of this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Securityholders of the affected series a notice briefly
describing such amendment. The failure to give such notice to all
Securityholders of such series, or any defect therein, shall not impair or
affect the validity of an amendment under this Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall comply
with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder of
that series. An amendment or waiver becomes effective upon the execution of such
amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders of a series entitled to give
their consent or take any other action described above or required or permitted
to be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders of a series at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to give such consent or to
revoke any consent previously given or to take any such action, whether or not
such Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver such Security to the
Trustee. The Trustee may place an appropriate notation on the
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53
Security regarding the changed terms and return such Security to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture with respect to a series or the Securities of a
series unless such consideration is offered to be paid to all Holders that so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
ARTICLE X
Subsidiary Guarantees
SECTION 10.01. Subsidiary Guarantees. Each Subsidiary Guarantor
hereby unconditionally guarantees, jointly and severally, to each Holder and to
the Trustee and its successors and assigns (a) the full and punctual payment of
principal of and interest on the Securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under this Indenture and the Securities and (b) the full and
punctual performance within applicable grace periods of all other obligations of
the Company under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Obligations"). Each Subsidiary Guarantor
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice or further assent from such Subsidiary Guarantor, and that
such Subsidiary Guarantor will remain bound under this Article X notwithstanding
any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
default under the Securities or the Obligations. The obligations of each
Subsidiary
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54
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations or
any of them; (e) the failure of any Holder or the Trustee to exercise any right
or remedy against any other guarantor of the Obligations; or (f) any change in
the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
Except as expressly set forth in Sections 4.07(d), 4.10 and 8.01(b),
the obligations of each Subsidiary Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of set off, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Subsidiary Guarantor herein shall not be
discharged or impaired or otherwise affected by the failure of any Holder or the
Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the Securities or any other agreement, by any waiver or modification
of any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of such Subsidiary Guarantor or would otherwise operate as
a discharge of such Subsidiary Guarantor as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein shall continue to be effective or be reinstated, as the case may
be, if at any time payment, or any part thereof, of principal of or interest on
any Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Subsidiary Guarantor hereby
promises to and will, upon receipt of written
<PAGE>
55
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee an amount equal to the sum of (i) the unpaid amount of
such Obligations, (ii) accrued and unpaid interest on such Obligations (but only
to the extent not prohibited by law) and (iii) all other monetary Obligations of
the Company to the Holders and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled to
any right of subrogation in respect of any Obligations guaranteed hereby until
payment in full in cash of all Obligations. Each Subsidiary Guarantor further
agrees that, as between it, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article VI for the purposes of such Subsidiary
Guarantor's Subsidiary Guaranty herein, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article VI, such Obligations (whether or not due
and payable) shall forthwith become due and payable by such Subsidiary Guarantor
for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Section 10.01.
SECTION 10.02. Contribution. Each of the Company and any Subsidiary
Guarantor (a "Contributing Party") agrees that, in the event a payment shall be
made by any other Subsidiary Guarantor under any Subsidiary Guaranty (the
"Claiming Guarantor"), the Contributing Party shall indemnify the Claiming
Guarantor in an amount equal to the amount of such payment multiplied by a
fraction, the numerator of which shall be the net worth of the Contributing
Party on the date hereof and the denominator of which shall be the aggregate net
worth of the Company and all the Subsidiary Guarantors on the date hereof (or,
in the case of any Subsidiary Guarantor becoming a party hereto pursuant to
Section 9.01, the date of the amendment hereto executed and delivered by such
Subsidiary Guarantor).
SECTION 10.03. Successors and Assigns. This Article X shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.04. No Waiver. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article X shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any
<PAGE>
56
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article X at
law, in equity, by statute or otherwise.
SECTION 10.05. Modification. No modification, amendment or waiver of
any provision of this Article X, nor the consent to any departure by any
Subsidiary Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Subsidiary Guarantor in any case shall
entitle such Subsidiary Guarantor to any other or further notice or demand in
the same, similar or other circumstances.
SECTION 10.06. Execution of Supplemental Indenture for Subsidiary
Guarantors. Each Subsidiary which is required to become a Subsidiary Guarantor
pursuant to Section 4.07 shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit B hereto pursuant to which such
Subsidiary shall become a Subsidiary Guarantor under this Article X and shall
guarantee the Obligations. Concurrently with the execution and delivery of such
supplemental indenture, the Company shall deliver to the Trustee an Opinion of
Counsel to the effect that such supplemental indenture has been duly authorized,
executed and delivered by such Subsidiary and that, subject to the application
of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and
other similar laws relating to creditors' rights generally and to the principles
of equity, whether considered in a proceeding at law or in equity, the
Subsidiary Guaranty of such Subsidiary Guarantor is a legal, valid and binding
obligation of such Subsidiary Guarantor, enforceable against such Subsidiary
Guarantor in accordance with its terms.
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision that is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail or sent by
facsimile (with a hard copy delivered in person or by mail promptly thereafter)
and addressed as follows:
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57
if to the Company:
International Game Technology
9295 Prototype Drive
P.O. Box 10580
Reno, NV 89510
Attention of: Chief Financial Officer
if to any Subsidiary Guarantor, to such
Subsidiary Guarantor:
c/o International Game Technology
9295 Prototype Drive
P.O. Box 10580
Reno, NV 89510
if to the Trustee:
The Bank of New York
101 Barclay Street 21W
New York, New York 10286
Attention of: Corporate Trust Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any,
<PAGE>
58
provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of
such individual, such covenant or condition has been complied
with.
SECTION 11.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities of a series have
concurred in any direction, waiver or consent, Securities owned by the Company,
any Subsidiary Guarantor or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
Subsidiary Guarantor shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
that a Trust Officer of the Trustee actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent or co-registrar may make reasonable rules for
their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
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59
SECTION 11.09. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 11.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company and each
Subsidiary Guarantor in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 11.13. Table of Contents; Headings. The table of contents
and headings of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not intended to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
INTERNATIONAL GAME TECHNOLOGY,
by
Name:
Title:
THE BANK OF NEW YORK, as
Trustee,
by
Name:
Title:
<PAGE>
1
APPENDIX A
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO
RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN
RELIANCE ON REGULATION S.
PROVISIONS RELATING TO INITIAL SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following terms shall
have the meanings indicated below:
"Definitive Security" means a certificated Initial Security or
Exchange Security bearing, if required, the restricted securities legend set
forth in Section 2.3(c) hereto.
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Exchange Securities" means the Exchange Securities due 2004 and the
Exchange Securities due 2009.
"Exchange Securities due 2004" means the 7.875% Senior Notes due
2004 to be issued as provided for in this Indenture in connection with a
Registered Exchange Offer pursuant to the Registration Agreement.
"Exchange Securities due 2009" means the 8.375% Senior Notes due
2009 to be issued as provided for in this Indenture in connection with a
Registered Exchange Offer pursuant to the Registration Agreement.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means the purchasers named in Schedule I to the
Purchase Agreement.
"Initial Securities" means the Initial Securities due 2004 and the
Initial Securities due 2009.
"Initial Securities due 2004" means the 7.875% Senior Notes due 2004
to be issued as provided in this Indenture.
"Initial Securities due 2009" means the 8.375% Senior Notes due 2009
to be issued as provided in this Indenture.
"Private Exchange" means the offer by the Company, pursuant to
Section 2(f) of the Registration Agreement, to issue and deliver to the Initial
Purchasers, in exchange for the Initial Securities held by the Initial
Purchasers as part of their initial distribution, a like aggregate principal
amount of the applicable Private Exchange Securities.
<PAGE>
2
"Private Exchange Securities" means the 7.875% Senior Notes due 2004
and the 8.375% Senior Notes due 2009 to be issued pursuant to this Indenture in
connection with a Private Exchange pursuant to the Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated May 11,
1999, between the Company and the Initial Purchasers relating to the Initial
Securities.
"QIB" means a "qualified institutional buyer" as
defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant
to the Registration Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for the Initial Securities, a
like aggregate principal amount of the applicable Exchange Securities registered
under the Securities Act.
"Registration Agreement" means the Registration Rights Agreement
dated May 11, 1999, between the Company and the Initial Purchasers relating to
the Securities.
"Securities" means the Initial Securities due 2004 and the Exchange
Securities due 2004, treated as a single class, and the Initial Securities due
2009 and the Exchange Securities due 2009, treated as a single class.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depository) or any successor person thereto, who
shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement issued
by the Company in connection with the offer and sale of Initial Securities
pursuant to the Registration Agreement.
"Transfer Restricted Securities" means any Securities that bear or
are required to bear the legend set forth in Section 2.3(c) hereto.
1.2 Other Definitions
Defined in
Term Section:
"Agent Members"................................................2.1(b)
"Global Security"..............................................2.1(a)
"Regulation S".................................................2.1
"Rule 144A"....................................................2.1
<PAGE>
3
2. The Securities
2.1 Form and Dating
The Initial Securities will be offered and sold by the Company
pursuant to the Purchase Agreement. Unless registered under the Securities Act,
the Initial Securities will be resold, initially only to QIBs in reliance on
Rule 144A under the Securities Act ("Rule 144A") and in reliance on Regulation S
under the Securities Act ("Regulation S"). Initial Securities may thereafter be
transferred to, among others, QIBs, purchasers in reliance on Regulation S and
IAIs under Rule 501(a)(1), (2), (3) or (7) under the Securities Act, subject to
the restrictions on transfers set forth therein.
(a) Global Securities. Initial Securities shall be issued initially
in the form of one or more permanent global securities in definitive, fully
registered form (each, a "Global Security") without interest coupons and with
the global securities legend and the restricted securities legend set forth in
Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the
Initial Securities represented thereby with the Securities Custodian, and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as provided in this
Indenture. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee as hereinafter provided. Initial
Securities due 2004 and Initial Securities due 2009, the beneficial interests in
which are sold to QIBs, will initially be represented by Global Securities
bearing CUSIP number 459902AD4 and 459902AG7, respectively, and Initial
Securities due 2004 and Initial Securities due 2009, the beneficial interests in
which are sold pursuant to Regulation S, will initially be represented by Global
Securities bearing CUSIP number U45955AA6 and 445955AB4, respectively. Initial
Securities due 2004 and Initial Securities due 2009, the beneficial interests in
which are sold to IAIs, will initially be represented by Global Securities
bearing CUSIP number 459902AE2 and 459902AH5, respectively.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Company, authenticate and
deliver initially one or more Global Securities that (a) shall be registered in
the name of the Depository for such Global Security or Global Securities or the
nominee of such Depository and (b) shall be delivered by the Trustee to such
Depository or pursuant to such Depository's instructions or held by the Trustee
as Securities Custodian.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository or by the Trustee as Securities Custodian
or under such Global Security, and the Depository may be treated by the Company,
the Trustee and any
<PAGE>
4
agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices of such Depository
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.
(c) Definitive Securities. Except as provided in Section 2.4 hereto,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1)
Initial Securities due 2004 and Initial Securities due 2009 for original issue
in an aggregate principal amount of $400,000,000 and $600,000,000, respectively,
and (2) the applicable Exchange Securities for issue only in a Registered
Exchange Offer or a Private Exchange pursuant to the Registration Agreement, for
a like principal amount of Initial Securities, upon a written order of the
Company signed by two Officers, at least one of whom shall be the principal
executive officer or the principal financial officer of the Company. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities or Exchange Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed
$1,000,000,000 except as provided in Section 2.07 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of
Definitive Securities. When Definitive Securities are presented to
the Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (A),
(B) or (C) below, and are accompanied
<PAGE>
5
by the following additional information and documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect;
or
(B) if such Definitive Securities are being
transferred to the Company, a certification to that
effect; or
(C) if such Definitive Securities are being trans ferred
pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act, (i) a certification to that effect and
(ii) if the Company so requests, an opinion of counsel or other
evidence reasonably satisfactory to it as to the compliance with the
restrictions set forth in the legend set forth in Section 2.3(c)(i)
hereto.
(b) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any)
and the procedures of the Depository therefor. A transferor of a
beneficial interest in a Global Security shall deliver a written order
given in accordance with the Depository's procedures containing
information regarding the participant account of the Depository to be
credited with a beneficial interest in the Global Security and such
account shall be credited in accordance with such instructions with a
beneficial interest in the Global Security and the account of the Person
making the transfer shall be debited by an amount equal to the beneficial
interest in the Global Security being transferred. In the case of a
transfer of a beneficial interest in a Global Security to an IAI, the
transferee must furnish a signed letter to the Trustee containing certain
representations and agreements (the form of which letter can be obtained
from the Trustee or the Company).
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global
Security, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Global Security to which
such interest is being transferred in an amount equal to the principal
amount of the interest to be so transferred, and the Registrar shall
reflect on its books and records the date and a corresponding decrease in
the principal amount of Global Security from which such interest is being
transferred.
(iii) Notwithstanding any other provisions of this Appendix A (other
than the provisions set forth in Section 2.4), a Global Security may not
be transferred as a whole except by the Depository to a nominee of the
Depository
<PAGE>
6
or by a nominee of the Depository to the Depository or another nominee of
the Depository or by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 hereto prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be
exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the Initial
Securities intended to ensure that such transfers comply with Rule 144A,
Regulation S or such other applicable exemption from registration under
the Securities Act, as the case may be) and such other procedures as may
from time to time be adopted by the Company.
(c) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii),
(iv) and (v), each Security certificate evidencing the Global Securities
and the Definitive Securities (and all Securities issued in exchange
therefor or in substitution thereof) shall bear a legend in substantially
the following form:
"THISSECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR
THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF
(OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE
OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH
TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE
BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT
FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR
THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
<PAGE>
7
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES
ACT OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY
AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND
OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY
IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE
COMPANY THAT IT IS (1) A QUALIFIED INSTITU TIONAL BUYER WITHIN THE MEANING OF
RULE 144A OR (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING
THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S.
PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING
THE REQUIREMENTS OF PARAGRAPH (k)(2)(1) OF RULE 902 UNDER) REGULATION S UNDER
THE SECURITIES ACT."
Each Definitive Security will also bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legends set forth above and rescind
any restriction on the transfer of such Transfer Restricted
Security; and
(B) in the case of any Transfer Restricted Security that is
represented by a Global Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for a
beneficial interest in a Global Security that does not bear the
legends set forth above and rescind any restriction on the transfer
of such Transfer Restricted Security,
in either case, if the Holder certifies in writing to the Registrar that its
request for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the
Initial Security).
(iii) After a transfer of any Initial Securities or Private Exchange
Securities during the period of the effectiveness of a Shelf Registration
Statement with respect to such Initial
<PAGE>
8
Securities or Private Exchange Securities, all requirements pertaining to
legends on such Initial Securities or Private Exchange Securities will
cease to apply, and an Initial Security or Private Exchange Security in
global form without restricted legends will be available to the transferee
of the beneficial interests in such Initial Securities or Private Exchange
Securities. Upon the occurrence of any of the circumstances described in
this paragraph, the Company will deliver an Officers' Certificate to the
Trustee instructing the Trustee to issue Securities without legends.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities pursuant to which certain Holders of
such Initial Securities are offered Exchange Securities in exchange for
their Initial Securities, Exchange Securities in global form will be
available to Holders that exchange such Initial Securities in such
Registered Exchange Offer. Upon the occurrence of any of the circumstances
described in this paragraph, the Company will deliver an Officers'
Certificate to the Trustee instructing the Trustee to issue Securities
without legends.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Securities pursuant to which Holders of such Initial Securities
are offered Private Exchange Securities in exchange for their Initial
Securities, Private Exchange Securities in global form with, to the extent
required by applicable law, the restricted securities legend set forth in
Exhibit 1 hereto, will be available to Holders that exchange such Initial
Securities in such Private Exchange.
(d) Cancelation or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned by the Depository to the Trustee for cancelation or retained
and canceled by the Trustee. At any time prior to such cancelation, if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(e) Obligations with Respect to Transfers and Exchanges
of Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's
or co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith
<PAGE>
9
(other than any such transfer taxes, assessments or similar governmental
charge payable upon exchange or transfer pursuant to Sections 3.06, 4.05,
4.06 and 9.05 of this Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning 15 days before the mailing of a notice of redemption or an offer
to repurchase Securities or 15 days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for
all other purposes whatsoever, whether or not such Security is overdue,
and none of the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or
exchange.
(f) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in
the Depository or any other Person with respect to the accuracy of the
records of the Depository or its nominee or of any participant or member
thereof, with respect to any ownership interest in the Securities or with
respect to the delivery to any participant, member, beneficial owner or
other Person (other than the Depository) of any notice (including any
notice of redemption or repurchase) or the payment of any amount, under or
with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders under the
Securities shall be given or made only to the registered Holders (which
shall be the Depository or its nominee in the case of a Global Security).
The rights of beneficial owners in any Global Security shall be exercised
only through the Depository subject to the applicable rules and procedures
of the Depository. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depository participants, members or beneficial owners in any
<PAGE>
10
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depository or with the
Trustee as Securities Custodian pursuant to Section 2.1 hereto shall be
transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depository notifies the Company
that it is unwilling or unable to continue as a Depository for such Global
Security or if at any time the Depository ceases to be a "clearing agency"
registered under the Exchange Act, and a successor Depository is not appointed
by the Company within 90 days of such notice,(ii) an Event of Default has
occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
Definitive Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depository to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depository shall
direct. Any Definitive Initial Security delivered in exchange for an interest in
the Global Security shall, except as otherwise provided by Section 2.3(c)
hereto, bear the restricted securities legend set forth in Exhibit 1 hereto.
(c) The registered Holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action that a Holder is
entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in definitive, fully
registered form without interest coupons.
<PAGE>
1
EXHIBIT 1
to APPENDIX A
[FORM OF FACE OF EACH INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPOR ATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INAS MUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT
OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH CASE IN
<PAGE>
2
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT
IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
OR (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S.
PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING
THE REQUIREMENTS OF PARAGRAPH (k)(2)(1) OF RULE 902 UNDER) REGULATION S UNDER
THE SECURITIES ACT.
[Definitive Securities Legend]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.]
<PAGE>
1
No. [up to]** $__________
[7.875% Senior Note due 2004]***
[8.375% Senior Note due 2009]****
CUSIP No. ______
International Game Technology, a Nevada corporation, promises to pay
to [ ], or registered assigns, the principal sum [of ______ Dollars]* [as set
forth on the Schedule of Increases or Decreases annexed hereto]** on May 15,
[2004]*** [2009].****
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
[CORPORATE SEAL]
INTERNATIONAL GAME TECHNOLOGY,
by /s/Maureen T. Imus
Name: Maureen T. Imus
Title: Chief Financial Officer
by_______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: May 19, 1999
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by /s/Michele L. Russo - Assistant Treasurer
Authorized Signatory
* Insert for Definitive Securities.
** Insert for Global Securities.
*** Insert for 7.875% Senior Note due 2004.
**** Insert for 8.375% Senior Note due 2009.
<PAGE>
2
[FORM OF REVERSE SIDE OF EACH INITIAL SECURITY]
[7.875% Senior Note due 2004]***
[8.375% Senior Note due 2009]****
1. Interest
(a) International Game Technology, a Nevada corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on May 15 and November 15 of each year. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from May 19, 1999. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities
represented hereby plus 1% per annum, and it shall pay interest on overdue
installments of interest at the rate borne by the Securities represented hereby
to the extent lawful.
(b) Special Interest. The holder of this Security is entitled to the
benefits of the Registration Rights Agreement dated May 11, 1999, between the
Company and the Purchasers named therein (the "Registration Agreement").
Capitalized terms used in this paragraph (b) but not defined herein have the
meanings assigned to them in the Registration Agreement. In the event that (i)
neither the Exchange Offer Registration Statement nor the Shelf Registration
Statement has been filed with the Commission on or prior to the 90th day
following the date of the original issuance of the Securities, (ii) the Exchange
Offer Registration Statement has not been declared effective on or prior to the
180th day following the date of the original issuance of the Securities, (iii)
neither the Registered Exchange Offer has been consummated nor the Shelf
Registration Statement has been declared effective on or prior to the 210th day
following the date of the original issuance of the Securities or (iv) after
either the Exchange Offer Registration Statement or the Shelf Registration
Statement have been declared effective, such Registration Statement thereafter
ceases to be effective or usable in connection with resales of the Securities at
any time that the Company is obligated to maintain the effectiveness thereof
pursuant to the Registration Agreement (each such event referred to in clauses
(i) through (iv) above being referred to herein as a "Registration Default"),
interest (the "Special Interest") shall accrue (in addition to stated interest
on the Securities) from and including the date on which the first such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured, at a rate equal to 0.25% per annum. The
Special Interest will be payable in cash semiannually in arrears each May 15 and
November 15.
*** Insert for 7.875% Senior Note due 2004.
**** Insert for 8.375% Senior Note due 2009.
<PAGE>
3
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a Definitive Security (including principal, premium and interest), by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on the Securities may also be made, in the case of a
Holder of at least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking association (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May
19, 1999 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The [7.875% Senior Notes due 2004]*** [8.375% Senior Notes due
2009]**** are senior obligations of the Company limited to $[400,000,000]***
[600,000,000]**** aggregate principal amount at any one time outstanding
(subject to Section 2.07 of the Indenture). This Security is one of the [Initial
Securities due 2004]*** [Initial Securities due 2009]**** referred to in the
Indenture. The Indenture imposes certain limitations on the ability of the
Company and its Subsidiaries to, among other things, Incur Indebtedness, create
or
<PAGE>
4
Incur Liens and enter into certain Sale and Leaseback Transactions. The
Indenture also imposes limitations on the ability of the Company to consolidate
with or merge into any other Person or sell, convey, lease or transfer its
Property and assets substantially as an entirety. If the Securities receive an
Investment Grade Rating, certain of the covenants in the Indenture will not be
applicable to the Company and its Subsidiaries for so long as the Securities
retain such Investment Grade Rating.
The Securities will not be guaranteed when issued. Upon the
occurrence of certain circumstances, a domestic subsidiary of the Company may
become obligated to guarantee all amounts payable by the Company under the
Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture.
5. Optional Redemption
The Company may redeem the Securities represented hereby in whole at
any time or in part from time to time at a redemption price equal to the greater
of:
(a) 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of
redemption); or
(b) the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of the interest accrued to the date
of redemption) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus [37.5]*** [50.0]**** basis points, plus accrued and
unpaid interest, if any, on the principal amount being redeemed to the
redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest
payment date that is on or prior to the date of redemption). "Treasury
Rate" means, with respect to any redemption date, (a) the yield, under
the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release
designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and
which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the Comparable
Treasury Issue (if no maturity is within three months before or after
the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be
determined and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest
month) or (b) if such release (or any successor release) is not
published during the week
<PAGE>
5
preceding the calculation date or does not contain such yields, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to
the Comparable Treasury Price for such redemption date. The Treasury Rate
shall be calculated on the third Business Day preceding the redemption
date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term ("Remaining Life") of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Securities being redeemed.
"Comparable Treasury Price" means, with respect to any redemption
date, (a) the average of five Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (b) if the Independent Investment Banker obtains fewer
than five such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Independent Investment Banker" means Salomon Smith Barney Inc. or
one of the other Reference Treasury Dealers identified in clause (a) of the
definition thereof appointed by the Company.
"Reference Treasury Dealer" means (a) each of Salomon Smith Barney
Inc., BNY Capital Markets, Inc., Goldman, Sachs & Co., Lehman Brothers Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and their respective
successors, provided that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer
and (b) any other Primary Treasury Dealer selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker by such
Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such
redemption date.
6. Mandatory Disposition Pursuant to Gaming Laws
If a Holder or beneficial owner of a Security is required by any
Gaming Authority of any jurisdiction in which the Company or any of its
Subsidiaries does business to be licensed, qualified or found suitable under
applicable Gaming Laws, the Holder or beneficial owner, as the case may be,
shall be obliged to apply for a license, qualification or a finding of
suitability within the required time period. If such Person fails to apply or
become licensed or
<PAGE>
6
qualified or is found unsuitable, the Company shall have the right,
at its option:
(a) to require such Person to dispose of its Securities or
beneficial interest therein within 30 days of receipt of
notice of the Company's election or such earlier date as may
be requested or prescribed by such Gaming Authority, or
(b) to redeem such Securities at a redemption price
equal to: (1) the lesser of (A) such Person's cost
to acquire such Securities or beneficial interest
therein and (B) 100% of the principal amount of such
Securities or beneficial interest therein, plus
accrued and unpaid interest, if any, to the earlier
of the redemption date or the date of the finding of
unsuitability, which may be less than 30 days
following the notice of redemption if so required or
prescribed by the applicable Gaming Authority or (2)
such other amount as may be required by applicable
law or by order of any applicable Gaming Authority.
The Company will notify the Trustee in writing of any such
redemption as soon as practicable. The Company shall not be responsible for any
costs or expenses any such Holder may incur in connection with its application
for a license, qualification or a finding of suitability.
7. Sinking Fund
The Securities are not subject to any sinking fund.
8. Notice of Redemption
Subject to paragraph 6 above, notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days before the
redemption date to each Holder of Securities to be redeemed at his or her
registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
9. Repurchase of Securities at the Option of Holders upon Put
Event or Change of Control Triggering Event
Upon a Put Event or Change of Control Triggering Event, any Holder
of Securities will have the right, subject to certain conditions specified in
the Indenture, to cause the Company to repurchase all or any part of the
Securities of such Holder at a purchase price equal to 101% of the principal
amount of the Secur ities to be repurchased plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant
<PAGE>
7
interest payment date that is on or prior to the date of purchase) as provided
in, and subject to the terms of, the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorse ments or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities represented hereby may be amended without prior
notice to any Securityholder but with the written consent of the Holders of at
least a majority in aggregate principal amount of the outstanding Securities
represented hereby and (ii) any default or noncompliance with any provision may
be waived with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities represented hereby. Subject to
certain exceptions set forth in the Indenture, without the consent of any Holder
of Securities, the Company and the Trustee may amend the Indenture or the
Securities (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to
comply with Article V of the Indenture; (iii) to provide for uncertificated
Securities in addition to or in place of certificated Securities; (iv) to add
Guarantees
<PAGE>
8
with respect to the Securities or to release Subsidiary Guarantors from
Subsidiary Guarantees; (v) to secure the Securities; (vi) to add additional
covenants or to surrender rights and powers conferred on the Company; (vii) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or (viii) to make any change that
does not adversely affect the rights of any Securityholder.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Securities of the
series represented hereby then outstanding, subject to certain limitations, may
declare all the Securities of the series represented hereby to be immediately
due and payable. Certain events of bankruptcy or insolvency are Events of
Default and shall result in the Securities being immediately due and payable
upon the occurrence of such Events of Default without any further act of the
Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities of the series represented hereby then
outstanding may direct the Trustee in its exercise of any trust or power under
the Indenture. The Holders of a majority in aggregate principal amount of the
Securities of the series represented hereby then outstanding, by written notice
to the Company and the Trustee, may rescind any declaration of acceleration and
its consequences if the rescission would not conflict with any judgment or
decree, and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
<PAGE>
9
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
10
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
- ------------------------------------------------------------
Date: ________________ Your Signature: _____________________
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) o to the Company; or
(2) o pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) o inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933) that purchases for its
own account or for the account of a qualified
institutional buyer to whom notice is given that
such transfer is being made in reliance on Rule
144A, in each case pursuant to and in compliance
with Rule 144A under the Securities Act of 1933; or
(4) o outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933; or
<PAGE>
11
(5) o to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933) that has furnished to the
Trustee a signed letter containing certain
representations and agreements (the form of which
letter can be obtained from the Trustee or the
Company); or
(6) o pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that
if box (4), (5) or (6) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.
--------------------------
Your Signature
Signature Guarantee:
Date: ______________________ __________________________
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program
- ------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing
<PAGE>
12
representations in order to claim the exemption from registration
provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE>
13
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:
Date of Amount of Amount of Principal Signature of
Exchange decrease in increase in amount of authorized
Principal Principal this Global signatory
Amount of Amount of Security of Trustee or
this Global this Global following such Securities
Security Security decrease or Custodian
increase
<PAGE>
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.05 (Put Event) or Section 4.06 (Change of Control
Triggering Event) of the Indenture, check the box:
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.05 or Section 4.06 of the
Indenture, state the amount:
$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:_______________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program.
<PAGE>
1
EXHIBIT A
[FORM OF FACE OF SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Definitive Securities Legend]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.]
<PAGE>
1
No. [up to]** $__________
[7.875% Senior Note due 2004]***
[8.375% Senior Note due 2009]****
CUSIP No. ______
International Game Technology, a Nevada corporation, promises to pay
to [ ], or registered assigns, the principal sum [of ________ Dollars]* [as set
forth on the Schedule of Increases or Decreases annexed hereto]** on May 15,
[2004]***
[2009]****.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
[CORPORATE SEAL]
INTERNATIONAL GAME TECHNOLOGY,
by
Name:
Title:
by
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: May 19, 1999
THE BANK OF NEW YORK,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by_________________________
Authorized Signatory
* Insert for Definitive Securities.
** Insert for Global Securities.
*** Insert for 7.875% Senior Note due 2004.
**** Insert for 8.375% Senior Note due 2009.
<PAGE>
2
[FORM OF REVERSE SIDE OF EACH SECURITY] [7.875% Senior Note
due 2004]*** [8.375% Senior Note due 2009]****
1. Interest.
International Game Technology, a Nevada corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on May 15 and November 15 of each year. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from May 19, 1999. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities
represented hereby plus 1% per annum, and it shall pay interest on overdue
installments of interest at the rate borne by the Securities represented hereby
to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a Definitive Security (including principal, premium and interest), by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on the Securities may also be made, in the case of a
Holder of at least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking association (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
<PAGE>
3
4. Indenture
The Company issued the Securities under an Indenture dated as of May
19, 1999 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The [7.875% Senior Notes due 2004]*** [8.375% Senior Notes due
2009]**** are senior obligations of the Company limited to $[400,000,000]***
[600,000,000]**** aggregate principal amount at any one time outstanding
(subject to Section 2.07 of the Indenture). This Security is one of the
[Exchange Securities due 2004]*** [Exchange Securities due 2009]**** referred to
in the Indenture issued in exchange for [Initial Securities due 2004]***
[Initial Securities due 2009]****. The Indenture imposes certain limitations on
the ability of the Company and its Subsidiaries to, among other things, Incur
Indebtedness, create or Incur Liens and enter into certain Sale and Leaseback
Transactions. The Indenture also imposes limitations on the ability of the
Company to consolidate with or merge into any other Person or sell, convey,
lease or transfer its Property and assets substantially as an entirety. If the
Securities receive an Investment Grade Rating, certain of the covenants in the
Indenture will not be applicable to the Company and its Subsidiaries for so long
as the Securities retain such Investment Grade Rating.
The Securities will not be guaranteed when issued. Upon the
occurrence of certain circumstances, a domestic subsidiary of the Company may
become obligated to guarantee all amounts payable by the Company under the
Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture.
5. Optional Redemption
The Company may redeem the Securities represented hereby in whole at
any time or in part from time to time at a redemption price equal to the greater
of:
(a) 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest
due on the relevant interest payment date that is on or prior to the
date of redemption); or
(b) the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of the interest accrued to the
date of redemption) discounted to the redemption date on a
semiannual basis (assuming a
<PAGE>
4
360-day year consisting of twelve 30-day months) at the Treasury
Rate plus [37.5]*** [50.0]**** basis points, plus accrued and unpaid
interest, if any, on the principal amount being redeemed to the
redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant
interest payment date that is on or prior to the date of
redemption).
"Treasury Rate" means, with respect to any redemption date, (a) the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated "H.15(519)" or any successor publication which is published weekly by
the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue shall be
determined and the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month) or (b) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, the rate per annum equal
to the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
Business Day preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term ("Remaining Life") of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Securities being redeemed.
"Comparable Treasury Price" means, with respect to any redemption
date, (a) the average of five Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (b) if the Independent Investment Banker obtains fewer
than five such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Independent Investment Banker" means Salomon Smith
Barney
Inc. or one of the other Reference Treasury Dealers identified in
clause (a) of the definition thereof appointed by the Company.
"Reference Treasury Dealer" means (a) each of Salomon Smith Barney
Inc., BNY Capital Markets, Inc., Goldman, Sachs & Co., Lehman Brothers Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and their respective
successors, provided that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company
<PAGE>
5
shall substitute therefor another Primary Treasury Dealer and (b) any other
Primary Treasury Dealer selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker by such
Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such
redemption date.
6. Mandatory Disposition Pursuant to Gaming Laws
If a Holder or beneficial owner of a Security is required by any Gaming
Authority of any jurisdiction in which the Company or any of its Subsidiaries
does business to be licensed, qualified or found suitable under applicable
Gaming Laws, the Holder or beneficial owner, as the case may be, shall be
obliged to apply for a license, qualification or a finding of suitability within
the required time period. If such Person fails to apply or become licensed or
qualified or is found unsuitable, the Company shall have the right, at its
option:
(a) to require such Person to dispose of its Securities or beneficial
interest therein within 30 days of receipt of notice of the Company's
election or such earlier date as may be requested or prescribed by
such Gaming Authority, or
(b) to redeem such Securities at a redemption price equal to: (1) the
lesser of (A) such Person's cost to acquire such Securities or
beneficial interest therein and (B) 100% of the principal amount of
such Securities or beneficial interest therein, plus accrued and
unpaid interest, if any, to the earlier of the redemption date or the
date of the finding of unsuitability, which may be less than 30 days
following the notice of redemption if so required or prescribed by the
applicable Gaming Authority or (2) such other amount as may be
required by applicable law or by order of any applicable Gaming
Authority.
The Company will notify the Trustee in writing of any such
redemption as soon as practicable. The Company shall not be responsible for any
costs or expenses any such Holder may incur in connection with its application
for a license, qualification or a
finding of suitability.
7. Sinking Fund
The Securities are not subject to any sinking fund.
8. Notice of Redemption
Subject to paragraph 6 above, notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days
<PAGE>
6
before the redemption date to each Holder of Securities to be redeemed at his or
her registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
9. Repurchase of Securities at the Option of Holders upon Put
Event or Change of Control Triggering Event
Upon a Put Event or Change of Control Triggering Event, any Holder
of Securities will have the right, subject to certain conditions specified in
the Indenture, to cause the Company to repurchase all or any part of the
Securities of such Holder at a purchase price equal to 101% of the principal
amount of the Secur ities to be repurchased plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of purchase) as provided in, and subject to
the terms of, the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorse ments or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE>
7
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to add Guarantees with respect to the
Securities or to release Subsidiary Guarantors from Subsidiary Guarantees; (v)
to secure the Securities; (vi) to add additional covenants or to surrender
rights and powers conferred on the Company; (vii) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; or (viii) to make any change that does not adversely
affect the rights of any Securityholder.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Securities of the
series represented hereby then outstanding, subject to certain limitations, may
declare all the Securities of the series represented hereby to be immediately
due and payable. Certain events of bankruptcy or insolvency are Events of
Default and shall result in the Securities being immediately due and payable
upon the occurrence of such Events of Default without any further act of the
Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities of the series represented hereby then
outstanding may direct the Trustee in its exercise of any trust or power under
the Indenture. The Holders of a majority in aggregate principal amount of the
Securities of the series represented hereby then outstanding, by written notice
to the Company and the Trustee, may rescind any declaration of acceleration and
its consequences if the rescission would not conflict with any judgment or
decree, and if all existing Events of Default have been cured or waived except
nonpayment of
<PAGE>
8
principal or interest that has become due solely because of the
acceleration.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
<PAGE>
9
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
10
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer
this Security on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------
Date: ________________ Your Signature: _____________________
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security. Signature
must be guaranteed by a participant in a recognized signature guaranty medallion
program.
<PAGE>
11
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:
Date of Amount of Amount of Principal Signature of
Exchange decrease in increase in amount of authorized
Principal Principal this Global signatory
Amount of Amount of Security of Trustee or
this Global this Global following such Securities
Security Security decrease or Custodian
increase
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.05 (Put Event) or Section 4.06 (Change of Control
Triggering Event) of the Indenture, check the
box:
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.05 or Section 4.06 of the
Indenture, state the amount:
$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the
Security)
Signature Guarantee:_______________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program.
<PAGE>
1
EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of ,
between [GUARANTOR] (the "Subsidiary Guarantor"), a subsidiary of International
Game Technology (or its successor), a Nevada corporation (the "Company"), and
THE BANK OF NEW YORK, a New York banking association, as trustee under the
indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company executed and delivered to the Trustee an
Indenture (the "Indenture") dated as of May 19, 1999, providing for the issuance
of an aggregate principal amount of $400,000,000 of 7.875% Senior Notes due 2004
and $600,000,000 of 8.375% Senior Notes due 2009 (together, the "Securities");
WHEREAS Section 4.07 of the Indenture provides that under certain
circumstances the Company is required to cause the Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the Subsidiary Guarantor shall unconditionally guarantee all the Company's
obligations under the Securities pursuant to a Subsidiary Guaranty on the terms
and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee and
the Company are authorized to execute and deliver this Supplemental Indenture;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Subsidiary Guarantor, the Company, and the Trustee mutually covenant and agree
for the equal and ratable benefit of the
holders of the Securities as follows:
1. Agreement to Guarantee. The Subsidiary Guarantor hereby agrees,
to unconditionally guarantee the Company's obligations under the Securities on
the terms and subject to the conditions set forth in Article X of the Indenture
and to be bound by all other
applicable provisions of the Indenture.
2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
<PAGE>
2
OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD
BE REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above
written.
[SUBSIDIARY GUARANTOR],
by
Name:
Title:
INTERNATIONAL GAME TECHNOLOGY,
by /s/Maureen T. Imus
Name: Maureen T. Imus
Title: Chief Finanical Officer
THE BANK OF NEW YORK, as Trustee,
by /s/Michele L. Russo
Name: Michele L. Russo
Title: Assistant Treasurer
EXECUTION COPY
INTERNATIONAL GAME TECHNOLOGY
7.875% Senior Notes due 2004
8.375% Senior Notes due 2009
REGISTRATION RIGHTS AGREEMENT
New York, New York
May 11, 1999
Salomon Smith Barney Inc.
BNY Capital Markets, Inc.
Goldman, Sachs & Co.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
International Game Technology, a corporation organized under the
laws of Nevada (the "Company"), proposes to issue and sell to certain purchasers
(the "Initial Purchasers"), upon the terms set forth in a purchase agreement of
even date herewith (the "Purchase Agreement"), $400,000,000 aggregate principal
amount of its 7.875% Senior Notes due 2004 and $600,000,000 aggregate principal
amount of its 8.375% Senior Notes due 2009 (collectively, the "Securities")
relating to the initial placement of the Securities (the "Initial Placement").
To induce the Initial Purchasers to enter into the Purchase Agreement and to
satisfy a condition of your obligations thereunder, the Company agrees with you
for your benefit and the benefit of the holders from time to time of the
Securities (including the Initial Purchasers) (each a "Holder" and, together,
the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have the respective meanings set forth in the Purchase Agreement. As used
in this Agreement, the following capitalized defined terms shall have the
following meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person shall mean any other person
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person shall mean the power, direct or indirect, to direct or cause
the direction of the management and policies of such person whether by contract
or otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Broker-Dealer" shall mean any broker or dealer registered as
such under the Exchange Act.
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"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Prospectus" shall mean the prospectus included in
the Exchange Offer Registration Statement, as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the New Securities covered by such Exchange Offer Registration Statement, and
all amendments and supplements thereto and all material incorporated by
reference therein.
"Exchange Offer Registration Period" shall mean the 180-day period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" shall mean a registration
statement of the Company on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Exchange Offer Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Exchanging Dealer" shall mean any Holder (which may include any
Initial Purchaser) that is a Broker-Dealer and elects to exchange for New
Securities any Securities that it acquired for its own account as a result of
market-making activities or other trading activities (but not directly from the
Company or any Affiliate of the Company).
"Holder" shall have the meaning set forth in the preamble hereto.
"Indenture" shall mean the Indenture relating to the Securities,
dated as of May 19, 1999, between the Company and The Bank of New York, as
trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"Initial Placement" shall have the meaning set forth in the
preamble hereto.
"Initial Purchaser" shall have the meaning set forth in the
preamble hereto.
"Losses" shall have the meaning set forth in Section 6(d) hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Securities registered under a Registration
Statement.
"Managing Underwriters" shall mean the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering.
"New Securities" shall mean debt securities of the Company identical
in all material respects to the Securities (except that the interest rate
step-up provisions and the transfer restrictions shall be modified or
eliminated, as appropriate) and to be issued under the Indenture or the New
Securities Indenture.
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"New Securities Indenture" shall mean an indenture between the
Company and the New Securities Trustee, identical in all material respects to
the Indenture (except that the interest rate step-up provisions and the transfer
restrictions shall be modified or eliminated, as appropriate).
"New Securities Trustee" shall mean a bank or trust company
reasonably satisfactory to the Initial Purchasers, as trustee with respect to
the New Securities under the New Securities Indenture.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities covered by such
Registration Statement, and all amendments and supplements thereto and all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble hereto.
"Registered Exchange Offer" shall mean the proposed offer of the
Company to issue and deliver to the Holders of the Securities that are not
prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the Securities, a like aggregate principal amount of the
New Securities.
"Registration Statement" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, any amendments
and supplements to such registration statement, including post-effective
amendments (in each case including the Prospectus contained therein), all
exhibits thereto and all material incorporated by reference therein.
"Securities" shall have the meaning set forth in the preamble
hereto.
"Shelf Registration" shall mean a registration effected pursuant
to Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Securities or New Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
"underwriter" shall mean any underwriter of Securities in connection
with an offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer. (a) The Company shall prepare and, not
later than 90 days following the date of the original issuance of the
Securities, shall file with the
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Commission the Exchange Offer Registration Statement with respect to the
Registered Exchange Offer. The Company shall cause the Exchange Offer
Registration Statement to become effective under the Act within 180 days of the
date of the original issuance of the
Securities.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming that such Holder is
not an Affiliate of the Company, acquires the New Securities in the ordinary
course of such Holder's business, has no arrangements with any person to
participate in the distribution of the New Securities and is not prohibited by
any law or policy of the Commission from participating in the Registered
Exchange Offer) to trade such New Securities from and after their receipt
without any limitations or restrictions under the Act and without material
restrictions under the securities laws of a substantial proportion of the
several states of the United States.
(c) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 20
Business Days and not more than 30 Business Days after the date notice
thereof is mailed to the Holders (or, in each case, longer if required by
applicable law);
(iii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented and amended as required,
under the Act to ensure that it is available for sales of New Securities
by Exchanging Dealers during the Exchange Offer Registration Period;
(iv) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan in New York
City, which may be the Trustee, the New Securities Trustee or an Affiliate
of either of them;
(v) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last Business Day on which
the Registered Exchange Offer is open;
(vi) prior to effectiveness of the Exchange Offer Registration
Statement, if requested or required by the Commission, provide a
supplemental letter to the Commission (A) stating that the Company is
conducting the Registered Exchange Offer in reliance on the position of
the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13,
1988) and Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B)
including a representation that the Company has not entered into any
arrangement or understanding with any person to distribute the New
Securities to be received in the Registered Exchange Offer and that, to
the best of the Company's information and belief, each Holder
participating in the Registered Exchange Offer is acquiring the New
Securities in the ordinary course of business and has no arrangement or
understanding with any person to participate in the distribution of the
New Securities; and
(vii) comply in all material respects with all applicable laws.
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<PAGE>
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancelation in accordance with
Section 4(s) all Securities so accepted for exchange; and
(iii) cause the New Securities Trustee promptly to authenticate and
deliver to each Holder of Securities a principal amount of New Securities
equal to the principal amount of the Securities of such Holder so accepted
for exchange.
(e) Each Holder hereby acknowledges and agrees that any such Holder
using the Registered Exchange Offer to participate in a distribution of the New
Securities (x) could not under Commission policy as in effect on the date of
this Agreement rely on the position of the Commission in Morgan Stanley and Co.,
Inc. (pub. avail. June 5, 1991) and Exxon Capital Holdings Corporation (pub.
avail. May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993 and similar no-action letters; and (y) must comply
with the registration and prospectus delivery requirements of the Act in
connection with any secondary resale transaction which must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K under
the Act if the resales are of New Securities obtained by such Holder in exchange
for Securities acquired by such Holder directly from the Company or one of its
Affiliates. Accordingly, each Holder participating in the Registered Exchange
Offer shall be required to represent to the Company that, at the time of the
consummation of the Registered Exchange Offer:
(i) any New Securities received by such Holder will be acquired in
the ordinary course of business;
(ii) such Holder will have no arrangement or understanding with any
person to participate in the distribution of the Securities or the New
Securities within the meaning of the Act; and
(iii) such Holder is not an Affiliate of the Company.
(f) If any Initial Purchaser determines that it is not eligible to
participate in the Registered Exchange Offer with respect to the exchange of
Securities constituting any portion of an unsold allotment, at the request of
such Initial Purchaser, the Company shall issue and deliver to such Initial
Purchaser or the person purchasing New Securities registered under a Shelf
Registration Statement as contemplated by Section 3 hereof from such Initial
Purchaser, in exchange for such Securities, a like principal amount of New
Securities. The Company shall use its best efforts to cause the CUSIP Service
Bureau to issue the same CUSIP number for such New Securities as for New
Securities issued pursuant to the Registered Exchange Offer.
(g) Upon consummation of the Registered Exchange Offer in accordance
with this Agreement, the Company shall have no further obligation to register
the Securities pursuant to Sections 3(a)(i) and 3(a)(ii) of this Agreement.
3. Shelf Registration. (a) If (i) due to any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines after consultation with its outside counsel that it is not permitted
to effect the Registered Exchange Offer as
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contemplated by Section 2 hereof; (ii) for any other reason the Exchange Offer
Registration Statement is not declared effective within 180 days of the date of
original issuance of the Securities or the Registered Exchange Offer is not
consummated within 210 days of the date of original issuance of the Securities;
(iii) any Initial Purchaser so requests with respect to Securities that are not
eligible to be exchanged for New Securities in the Registered Exchange Offer and
that are held by it following consummation of the Registered Exchange Offer;
(iv) any Holder (other than an Initial Purchaser) is not eligible to participate
in the Registered Exchange Offer or does not receive freely tradeable New
Securities in the Registered Exchange Offer other than by reason of such Holder
being an Affiliate of the Company; or (v) in the case of any Initial Purchaser
that participates in the Registered Exchange Offer or acquires New Securities
pursuant to Section 2(f) hereof, such Initial Purchaser does not receive freely
tradeable New Securities in exchange for Securities constituting any portion of
an unsold allotment (it being understood that (x) the requirement that an
Initial Purchaser deliver a Prospectus containing the information required by
Item 507 or 508 of Regulation S-K under the Act in connection with sales of New
Securities acquired in exchange for such Securities shall result in such New
Securities being not "freely tradeable"; and (y) the requirement that an
Exchanging Dealer deliver an Exchange Offer Prospectus in connection with sales
of New Securities acquired in the Registered Exchange Offer in exchange for
Securities acquired as a result of market-making activities or other trading
activities shall not result in such New Securities being not "freely
tradeable"), the Company shall effect a Shelf Registration Statement in
accordance with subsection (b) below.
(b) (i) The Company shall as promptly as practicable (but in no
event more than 30 days after so required or requested pursuant to this Section
3), file with the Commission and thereafter shall use its reasonable best
efforts to cause to be declared effective under the Act a Shelf Registration
Statement relating to the offer and sale of the Securities or the New
Securities, as applicable, by the Holders thereof from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement; provided, however, that no Holder
(other than an Initial Purchaser) shall be entitled to have the Securities held
by it covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all of the provisions of this Agreement applicable to
such Holder; and provided further, that with respect to New Securities received
by an Initial Purchaser in exchange for Securities constituting any portion of
an unsold allotment, the Company may, if permitted by current interpretations by
the Commission's staff, file a post-effective amendment to the Exchange Offer
Registration Statement containing the information required by Item 507 or 508 of
Regulation S-K, as applicable, in satisfaction of its obligations under this
subsection with respect thereto, and any such Exchange Offer Registration
Statement, as so amended, shall be referred to herein as, and governed by the
provisions herein applicable to, a Shelf Registration Statement.
(ii) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective, supplemented and amended as
required by the Act, in order to permit the Prospectus forming part thereof to
be usable by Holders for a period of two years from the date of the original
issuance of the Securities or such shorter period that will terminate when all
the Securities or New Securities, as applicable, covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf Registration
Period"). The Company shall be deemed not to have used its reasonable best
efforts to keep the Shelf Registration Statement effective during the requisite
period if it voluntarily takes any action that would result in Holders of
Securities covered thereby not being able to offer and sell such Securities
during that period, unless (A) such action is required by applicable law; or (B)
such action is taken by the Company in good faith and for valid business reasons
(not including avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 4(k) hereof, if applicable.
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4. Additional Registration Procedures. In connection with any
Shelf Registration Statement and, to the extent applicable, any Exchange
Offer Registration Statement, the following provisions shall apply.
(a) The Company shall:
(i) furnish to you, not less than three Business Days prior to the
filing thereof with the Commission, a copy of any Exchange Offer
Registration Statement and any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein (including all documents incorporated by
reference therein after the initial filing) and shall use its best efforts
to reflect in each such document, when so filed with the Commission, such
comments as you reasonably propose;
(ii) include the information set forth in Annex A hereto on the
facing page of the Exchange Offer Registration Statement, in Annex B
hereto in the forepart of the Exchange Offer Registration Statement in a
section setting forth details of the Exchange Offer, in Annex C hereto in
the underwriting or plan of distribution section of the Prospectus
contained in the Exchange Offer Registration Statement, and in Annex D
hereto in the letter of transmittal delivered pursuant to the Registered
Exchange Offer;
(iii) if requested by an Initial Purchaser, include the information
required by Item 507 or 508 of Regulation S-K, as applicable, in the
Prospectus contained in the Exchange Offer Registration Statement; and
(iv) in the case of a Shelf Registration Statement, include the
names of the Holders that propose to sell Securities pursuant to the Shelf
Registration Statement as selling security holders.
(b) The Company shall ensure that:
(i) any Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto
complies in all material respects with the Act and the rules and
regulations thereunder;
(ii) any Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
(iii) any Prospectus forming part of any Registration Statement, and
any amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) The Company shall advise you, the Holders of Securities covered
by any Shelf Registration Statement and any Exchanging Dealer under any Exchange
Offer Registration Statement that has provided in writing to the Company a
telephone or facsimile number and address for notices, and, if requested by you
or any such Holder or Exchanging Dealer, shall confirm such advice in writing
(which notice pursuant to clauses (ii) through (v) hereof shall be
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<PAGE>
accompanied by an instruction to suspend the use of the Prospectus until the
Company shall have remedied the basis for such suspension):
(i) when a Registration Statement and any amendment thereto has been
filed with the Commission and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for any amendment or
supplement to the Registration Statement or the Prospectus or for
additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the securities included therein
for sale in any jurisdiction or the initiation of any proceeding for such
purpose; and
(v) of the happening of any event that requires any change in the
Registration Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a material
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the circumstances
under which they were made) not misleading.
(d) The Company shall use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement or the qualification of the securities therein for sale in any
jurisdiction at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities covered
by any Shelf Registration Statement, without charge, at least one copy of such
Shelf Registration Statement and any post-effective amendment thereto, including
all material incorporated therein by reference, and, if the Holder so requests
in writing, all exhibits thereto (including exhibits incorporated by reference
therein).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities covered by any Shelf Registration Statement,
without charge, as many copies of the Prospectus (including each preliminary
Prospectus) included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto by each of
the selling Holders of Securities in connection with the offering and sale of
the Securities covered by the Prospectus, or any amendment or supplement
thereto, included in the Shelf Registration Statement.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including all material
incorporated by reference therein, and, if the Exchanging Dealer so requests in
writing, all exhibits thereto (including exhibits incorporated by reference
therein).
(h) The Company shall promptly deliver to each Initial Purchaser,
each Exchanging Dealer and each other person required to deliver a Prospectus
during the Exchange Offer Registration Period, without charge, as many copies of
the Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as any such
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<PAGE>
person may reasonably request. The Company consents to the use of the Prospectus
or any amendment or supplement thereto by any Initial Purchaser, any Exchanging
Dealer and any such other person that may be required to deliver a Prospectus
following the Registered Exchange Offer in connection with the offering and sale
of the New Securities covered by the Prospectus, or any amendment or supplement
thereto, included in the Exchange Offer Registration Statement for a period of
180 days from the issuance of the New Securities.
(i) Prior to the Registered Exchange Offer or any other offering of
Securities pursuant to any Registration Statement, the Company shall use its
best efforts to arrange, if necessary, for the qualification of the Securities
or the New Securities for sale under the laws of such jurisdictions as any
Holder shall reasonably request and will maintain such qualification in effect
so long as required, provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not then so qualified or
to take any action that would subject it to service of process in suits, other
than those arising out of the Initial Placement, the Registered Exchange Offer
or any offering pursuant to a Shelf Registration Statement, or subject it to
material taxation, in any such jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing New
Securities or Securities to be issued or sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request.
(k) Upon the occurrence of any event contemplated by subsections
(c)(ii) through (v) above, the Company shall promptly prepare a post-effective
amendment to the applicable Registration Statement or an amendment or supplement
to the related Prospectus or file any other required document so that, as
thereafter delivered to Initial Purchasers of the securities included therein,
the Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. In such
circumstances, the period of effectiveness of the Exchange Offer Registration
Statement provided for in Section 2 and the Shelf Registration Statement
provided for in Section 3(b) shall each be extended by the number of days from
and including the date of the giving of a notice of suspension pursuant to
Section 4(c) to and including the date when the Initial Purchasers, the Holders
of the Securities and any known Exchanging Dealer shall have received such
amended or supplemented Prospectus pursuant to this Section.
(l) Not later than the effective date of any Registration Statement,
the Company shall provide a CUSIP number for the Securities or the New
Securities, as the case may be, registered under such Registration Statement and
provide the Trustee with printed certificates for such Securities or New
Securities, in a form eligible for deposit with The Depository Trust Company.
(m) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earnings statement satisfying the provisions of
Section 11(a) of the Act.
(n) The Company shall cause the Indenture or the New Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act in
a timely manner.
(o) The Company may require each Holder of Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Securities as the
Company may from time to time reasonably
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require for inclusion in such Registration Statement. The Company may exclude
from such Shelf Registration Statement the Securities of any Holder that
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
(p) In the case of any Shelf Registration Statement, the Company
shall enter into such agreements (including if requested an underwriting
agreement in customary form) and take all other appropriate actions in order to
expedite or facilitate the registration or the disposition of the Securities as
may be reasonably requested by any Holder of Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than those
set forth in Section 6 (or such other provisions and procedures acceptable to
the Majority Holders and the Managing Underwriters, if any) with respect to all
parties to be indemnified pursuant to Section 6.
(q) In the case of any Shelf Registration Statement, the Company
shall:
(i) make reasonably available for inspection by the Holders of
Securities to be registered thereunder, any underwriter participating in
any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by the Holders or any such underwriter
all relevant financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to supply
all relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with any such
Registration Statement as is customary for similar due diligence
examinations; provided, however, that any information that is designated
in writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by the Holders or
any such underwriter, attorney, accountant or agent, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality;
(iii) make such representations and warranties to the Holders of
Securities registered thereunder and the underwriters, if any, in form,
substance and scope as are covered in Section 1 of the Purchase Agreement
and such other matters as may be reasonably requested by such Holders and
underwriters;
(iv) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters, if any) addressed to
each selling Holder and the underwriters, if any, covering matters similar
to those set forth in Section 6(a) through Section 6(e) of the Purchase
Agreement and such other matters as may be reasonably requested by such
Holders and underwriters;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each selling Holder
of Securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
and
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(vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 4(k) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section shall
be performed at (A) the effectiveness of such Registration Statement and each
post-effective amendment thereto; and (B) each closing under any underwriting or
similar agreement as and to the extent required thereunder.
(r) In the case of any Exchange Offer Registration Statement,
the Company shall:
(i) make reasonably available for inspection by such Initial
Purchaser, and any attorney, accountant or other agent retained by such
Initial Purchaser, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to supply
all relevant information reasonably requested by such Initial Purchaser or
any such attorney, accountant or agent in connection with any such
Registration Statement as is customary for similar due diligence
examinations; provided, however, that any information that is designated
in writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by such Initial
Purchaser or any such attorney, accountant or agent, unless such
disclosure is made in connection with a court proceeding or required by
law, or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality;
(iii) make such representations and warranties to such Initial
Purchaser, in form, substance and scope as are covered in Section 1 of the
Purchase Agreement and such other matters as may be reasonably requested
by such Initial Purchaser or its counsel;
(iv) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to such Initial Purchaser and its counsel),
addressed to such Initial Purchaser, covering matters similar to those set
forth in Section 6(a) through Section 6(e) of the Purchase Agreement and
such other matters as may be reasonably requested by such Initial
Purchaser or its counsel;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to such Initial
Purchaser, in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with primary underwritten
offerings, or if requested by such Initial Purchaser or its counsel in
lieu of a "cold comfort" letter, an agreed-upon procedures letter under
Statement on Auditing Standards No. 35, covering matters requested by such
Initial Purchaser or its counsel; and
(vi) deliver such documents and certificates as may be reasonably
requested by such Initial Purchaser or its counsel, including those to
evidence compliance with Section 4(k) and with conditions customarily
contained in underwriting agreements.
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The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this
Section shall be performed at the close of the Registered Exchange Offer and the
effective date of any post-effective amendment to the Exchange Offer
Registration Statement.
(s) If a Registered Exchange Offer is to be consummated, upon
delivery of the Securities by Holders to the Company (or to such other person as
directed by the Company) in exchange for the New Securities, the Company shall
mark, or cause to be marked, on the Securities so exchanged that such Securities
are being canceled in exchange for the New Securities. In no event shall the
Securities be marked as paid or otherwise satisfied.
(t) The Company will use its best efforts (i) if the Securities have
been rated prior to the initial sale of such Securities, to confirm such ratings
will apply to the Securities or the New Securities, as the case may be, covered
by a Registration Statement; or (ii) if the Securities were not previously
rated, to cause the Securities covered by a Registration Statement to be rated
with at least one nationally recognized statistical rating agency, if so
requested by Majority Holders with respect to the related Registration Statement
or by any Managing Underwriters.
(u) In the event that any Broker-Dealer shall underwrite any
Securities or participate as a member of an underwriting syndicate or selling
group or "assist in the distribution" (within the meaning of the Rules of Fair
Practice and the By-Laws of the National Association of Securities Dealers,
Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or otherwise,
assist such Broker-Dealer in complying with the requirements of such Rules and
By-Laws, including, without limitation, by:
(i) if such Rules or By-Laws shall so require, engaging a "qualified
independent underwriter" (as defined in such Rules) to participate in the
preparation of the Registration Statement, to exercise usual standards of
due diligence with respect thereto and, if any portion of the offering
contemplated by such Registration Statement is an underwritten offering or
is made through a placement or sales agent, to recommend the yield of such
Securities;
(ii) indemnifying any such qualified independent underwriter to
the extent of the indemnification of underwriters provided in Section 6
hereof; and
(iii) providing such information to such Broker-Dealer as may be
required in order for such Broker-Dealer to comply with the requirements
of such Rules.
(v) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities or the New Securities, as
the case may be, covered by a Registration Statement.
5. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchasers for the reasonable fees and
disbursements of one counsel acting in connection therewith. Nothing in this
Section 5 shall create an obligation on the part of the Company to pay or
reimburse any Holder for any underwriting commission or discount attributable to
any such Holder's Securities included in an underwritten offering
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pursuant to a Registration Statement filed in accordance with the terms of this
Agreement, or to guarantee Holders any profit or proceeds from the sale of such
Securities.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Holder of Securities or New Securities, as the
case may be, covered by any Registration Statement (including each Initial
Purchaser and, with respect to any Prospectus delivery as contemplated in
Section 4(h) hereof, each Exchanging Dealer), the directors, officers, employees
and agents of each such Holder and each person who controls any such Holder
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed or in
any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any such Holder specifically for inclusion
therein; and provided further, however, that with respect to any untrue
statement or omission of a material fact made in any preliminary Prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage or liability purchased the Securities, to the extent that any such loss,
claim, damage or liability of such Holder occurs under the circumstance where it
shall have been determined by a court of competent jurisdiction by final and
nonappealable judgment that (i) the untrue statement or omission of a material
fact contained in such preliminary Prospectus was corrected in the Prospectus,
(ii) the Company had previously furnished copies of the Prospectus to such
Holder and (iii) such loss, claim, damage or liability results from the fact
that there was not sent or given to such person at or prior to the written
confirmation of the sale of such Securities to such person, a copy of the
Prospectus. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
The Company also agrees to indemnify or contribute as provided in
Section 6(d) to Losses of each underwriter of Securities or New Securities, as
the case may be, registered under a Shelf Registration Statement, their
directors, officers, employees or agents and each person who controls such
underwriter on substantially the same basis as that of the indemnification of
the Initial Purchasers and the selling Holders provided in this Section 6(a) and
shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 4(p) hereof.
(b) Each Holder of securities covered by a Registration Statement
(including each Initial Purchaser and, with respect to any Prospectus delivery
as contemplated in Section 4(h) hereof, each Exchanging Dealer) severally and
not jointly agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs such Registration Statement and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each such Holder, but only with reference to written information relating to
such Holder furnished to the Company by or on behalf of such Holder specifically
for inclusion in the
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<PAGE>
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses; and
(ii) will not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest; (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by such separate counsel that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party; (iii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of the institution of such action; or (iv) the indemnifying party shall
specifically authorize in writing the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party shall
have a joint and several obligation to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which such indemnified party may be subject in such proportion as
is appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from the
Initial Placement and the Registration Statement which resulted in such Losses;
provided, however, that in no case shall any Initial Purchaser or any subsequent
Holder of any Security or New Security be responsible, in the aggregate, for any
amount in excess of the purchase discount or commission applicable to such
Security, or in the case of a New Security, applicable to the Security that was
exchangeable into such New Security, as set forth on the cover page of the Final
Memorandum, nor shall any underwriter be responsible for any amount in excess of
the underwriting discount or commission applicable to the securities purchased
by such underwriter under the Registration Statement which resulted in such
Losses. If the allocation provided by the immediately preceding sentence is
unavailable for
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<PAGE>
any reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Memorandum and
(y) the total amount of additional interest which the Company was not required
to pay as a result of registering the securities covered by the Registration
Statement which resulted in such Losses. Benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions as set forth on the cover page of the Final Memorandum, and benefits
received by any other Holders shall be deemed to be equal to the value of
receiving Securities or New Securities, as applicable, registered under the Act.
Benefits received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. Relative fault shall be determined by reference to, among other things,
whether any alleged untrue statement or omission relates to information provided
by the indemnifying party, on the one hand, or by the indemnified party, on the
other hand, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each person who
controls a Holder within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the directors, officers, employees, agents or controlling
persons referred to in this Section hereof, and will survive the sale by a
Holder of securities covered by a Registration Statement.
7. Underwritten Registrations. (a) If any of the Securities or New
Securities, as the case may be, covered by any Shelf Registration Statement are
to be sold in an underwritten offering, the Managing Underwriters shall be
selected by the Majority Holders and shall be reasonably acceptable to the
Company.
(b) No person may participate in any underwritten offering pursuant
to any Shelf Registration Statement, unless such person (i) agrees to sell such
person's Securities or New Securities, as the case may be, on the basis
reasonably provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements; and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
8. No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its
15
<PAGE>
securities that is inconsistent with the rights granted to the Holders herein or
otherwise conflicts with the provisions hereof.
9. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Holders of at least a majority of the then outstanding aggregate
principal amount of Securities (or, after the consummation of any Registered
Exchange Offer in accordance with Section 2 hereof, of New Securities); provided
that, with respect to any matter that directly or indirectly affects the rights
of any Initial Purchaser hereunder, the Company shall obtain the written consent
of each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Securities or New Securities, as the case may be, are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of Securities or New Securities, as the case
may be, being sold rather than registered under such Registration Statement.
10. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier or air courier guaranteeing overnight delivery:
(a) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section, which address
initially is, with respect to each Holder, the address of such Holder maintained
by the Registrar under the Indenture, with a copy in like manner to Salomon
Smith Barney Inc.
(b) if to you, initially at the respective addresses set forth
in the Purchase Agreement; and
(c) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given when received.
The Initial Purchasers or the Company by notice to the other parties
may designate additional or different addresses for subsequent notices or
communications.
11. Successors. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including,
without the need for an express assignment or any consent by the Company
thereto, subsequent Holders of Securities and the New Securities. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and the New Securities, and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
12. Counterparts. This Agreement may be in signed counterparts, each
of which shall an original and all of which together shall constitute one and
the same agreement.
13. Headings. The headings used herein are for convenience only
and shall not affect the construction hereof.
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14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York.
15. Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
16. Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Company or its Affiliates shall be disregarded and
deemed not to be outstanding in determining whether such consent or approval was
given by the Holders of such required percentage.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your
17
<PAGE>
acceptance shall represent a binding agreement among the Company and the
several Initial Purchasers.
Very truly yours,
INTERNATIONAL GAME TECHNOLOGY,
By:/s/Maureen T. Imus
Name: Maureen T. Imus
Title: Chief Financial Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
SALOMON SMITH BARNEY INC.
BNY CAPITAL MARKETS, INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: SALOMON SMITH BARNEY INC.
By:/s/Wendell M. Brooks
Name: Wendell M. Brooks
Title: Director
For themselves and the other several
Initial Purchasers named in Schedule I
to the Purchase Agreement
18
<PAGE>
ANNEX A
Each Broker-Dealer that receives New Securities for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Broker-Dealer in connection with resales of New
Securities received in exchange for Securities where such Securities were
acquired by such Broker-Dealer as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the Expiration Date
(as defined herein) and ending on the close of business 180 days after the
Expiration Date, it will make this Prospectus available to any Broker-Dealer for
use in connection with any such resale. See "Plan of Distribution".
19
<PAGE>
ANNEX B
Each Broker-Dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such Broker-Dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Securities. See "Plan of Distribution".
20
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ANNEX C
PLAN OF DISTRIBUTION
Each Broker-Dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Broker-Dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business 180
days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any Broker-Dealer for use in connection with any such
resale. In addition, until __________, 1999, all dealers effecting transactions
in the New Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Securities by brokers-dealers. New Securities received by Broker-Dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Broker-Dealer and/or the purchasers of any such New
Securities. Any Broker-Dealer that resells New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit
resulting from any such resale of New Securities and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Broker-Dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Securities (including any
Broker-Dealers) against certain liabilities, including liabilities under the
Securities Act.
[If applicable, add information required by Regulation S-K Items
507 and/or 508.]
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ANNEX D
Rider A
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
Rider B
If the undersigned is not a Broker-Dealer, the undersigned represents that it
acquired the New Securities in the ordinary course of its business, it is not
engaged in, and does not intend to engage in, a distribution of New Securities
and it has no arrangements or understandings with any person to participate in a
distribution of the New Securities. If the undersigned is a Broker- Dealer that
will receive New Securities for its own account in exchange for Securities, it
represents that the Securities to be exchanged for New Securities were acquired
by it as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale of
such New Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
22
June 21, 1999
International Game Technology
9295 Prototype Drive
Reno, Nevada 89511
Ladies and Gentlemen:
We have acted as counsel to International Game Technology, a Nevada
corporation ("Company"), in connection with the exchange of (i) the Company's
outstanding 7.875% Senior Notes Due 2004 (the "Old 2004 Notes") for newly issued
7.875% Senior Exchange Notes Due 2004 (the "New 2004 Notes") which are being
registered under the Securities Act of 1933, as amended, by means of a
Registration Statement on Form S-4 (the "Registration Statement"), as filed with
the Securities and Exchange Commission (the "Commission") and (ii) the Company's
outstanding 8.375% Senior Notes Due 2009 (the "Old 2009 Notes" and, collectively
with the Old 2004 Notes, the "Old Notes") for newly issued 8.375% Senior
Exchange Notes Due 2009 (the "New 2009 Notes" and, collectively with the New
2004 Notes, the "New Notes") which are also being registered under the
Securities Act of 1933, as amended, by means of the Registration Statement.
We have examined such documents and records, and other certificates,
opinions and instruments and have conducted such investigation as we have deemed
necessary as a basis for the opinion expressed below. As to factual matters
relevant to our opinion expressed below, we have relied, without independent
investigation, upon all of the foregoing, upon certificates of the officers of
Company and of public officials, and upon public records.
On the basis of the foregoing, and in reliance thereon, and subject to the
limitations, qualifications and exceptions set forth below, we are of the
opinion that:
Assuming the execution and delivery of the New Notes have been duly
authorized by all necessary action on the part of the Company, when executed and
authenticated in accordance with their terms and the terms of the Indenture,
dated as of May 19, 1999, between the Company and The Bank of New York, as
Trustee, and delivered in exchange for the Old Notes pursuant to the Indenture
and the exchange offers, the New Notes will be legally valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief regardless of whether considered in a
proceeding in equity or at law.
<PAGE>
Our opinion as to the enforceability of the New Notes is subject to the
unenforceability under certain circumstances of provisions expressly or by
implication waiving broadly or vaguely stated rights, defenses to obligations,
rights granted by law or objections to the bringing of an action or proceeding
in a particular jurisdiction, where such waivers are against public policy or
prohibited by law.
We express no opinion concerning federal or state securities laws or
regulations or the gaming laws or regulations of any jurisdiction.
The law covered by this opinion is limited to the present federal laws of
the United States and the present laws of the State of New York. We express no
opinion regarding the statutes, administrative decisions, rules, regulations or
requirements of any county, municipality, subdivision or local authority of any
jurisdiction.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
prospectus.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
O'MELVENY & MYERS LLP
June 21, 1999
International Game Technology
9295 Prototype Drive
Reno, Nevada 89511
Ladies and Gentlemen
I am the General Counsel of International Game Technology, a Nevada
corporation (the "Company") and have made such investigations of fact and law,
reviewed such corporate records of the Company and originals or copies
identified to my satisfaction as true copies of such documents, obtained such
certificates of officers of the Company and public officials, and done such
other things as I have deemed necessary for the purpose of this opinion. I have
assumed the genuineness of all signatures (other than those of officers of the
Company), the authenticity of all documents submitted to me as originals and the
conformity with originals of all documents submitted to me as copies.
On the basis of such examination, my reliance upon the assumptions
in this opinion and my consideration of those questions of law I considered
relevant, and subject to the limitations and qualifications in this opinion, I
am of the opinion that:
(i) the Company has been duly incorporated and is validly existing in good
standing under the laws of its jurisdiction of incorporation; and
(ii) the execution, delivery and issuance of the 7.875% Senior Exchange Notes
due 2004 and 8.375% Senior Exchange Notes due 2009 have been duly authorized by
all necessary corporate action on the part of the Company.
I am a member of the bar of the State of Nevada and do not express
any opinion as to laws other than those of the United States and the State of
Nevada. I express no opinion as to the laws of any other jurisdiction and,
unless otherwise specified, no opinion regarding the statutes, administrative
decisions, rules, regulations or requirements of any county, municipality,
subdivision or local authority of any jurisdiction.
<PAGE>
This opinion is expressly limited to the matters set forth above and
I render no opinion, whether by implication or otherwise, as to any other
matters. I assume no obligation to update or supplement this opinion to reflect
any facts or circumstances which may hereafter come to our attention, or any
changes in laws which may hereafter occur.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name under the caption "Legal
Matters" in the prospectus.
Very truly yours,
/s/ Brian McKay
Brian McKay
Senior Vice President, General Counsel
and Secretary
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
AMENDMENT NO. 1 (this "Amendment"), dated as of August 19, 1997, to the
Credit Agreement (the "Credit Agreement"), dated as of May 22, 1997, by and
among INTERNATIONAL GAME TECHNOLOGY, a Nevada corporation (the "Borrower"), THE
BANK OF NEW YORK, as administrative agent (the "Administrative Agent") and as
the Issuing Bank, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation
Agent, CIBC INC., CREDIT LYONNAIS LOS ANGELES BRANCH, DEUTSCHE BANK AG, NEW YORK
BRANCH AND/OR CAYMAN ISLANDS BRANCH, KEYBANK NATIONAL ASSOCIATION and UNITED
STATES NATIONAL BANK OF OREGON, as CoAgents (in such capacity, the "Co-Agents",
each, a "Co-Agent"), and the lenders party hereto (together with their
respective assigns, the "Lenders", each a "Lender").
RECITALS
A. Capitalized terms used herein which are not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
B. Prior to the effectiveness of this Amendment, the Aggregate Commitment Amount
was to be automatically reduced by $100,000,000 to $150,000,000 if, during the
Reserve Period, the Borrower did not fully repay the Senior Notes and satisfy
the other conditions set forth in Section 5.2.
C. The Borrower has indicated that it does not intend to repay the Senior Notes
and has requested that the Credit Agreement be amended to eliminate such
automatic reduction and to permit the full amount of the Commitments to be used
for the Borrower's general corporate purposes, including the repurchase of the
Capital Stock of the Borrower, and the Administrative Agent, the Issuing Bank
and the Lenders are willing to agree to such amendment subject to the terms and
conditions hereinafter set forth.
Accordingly, in consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. The definition of "Available Commitment Amount" contained in Section 1.1 of
the Credit Agreement is hereby amended to read as follows:
"Available Commitment Amount": as of any date and with respect
to any Lender, the amount set forth adjacent to its name under the
heading "Commitment Amount" in Exhibit A on such date or, in the
event that such Lender is not listed in Exhibit A, the "Commitment
Amount" which such Lender shall have assumed from another Lender in
accordance with Section 11.7 on or prior to such date, as the same
may be adjusted from time to time pursuant to Sections 2.5 or 11.7.
2. The definitions of "Reserve Period" and "Senior Note Reserve Amount"
contained in Section 1.1 of the Credit Agreement are hereby deleted.
3. The first sentence of Section 2.3(a) of the Credit Agreement is hereby
amended by deleting clause (B) thereof and relettering the remaining clauses
thereof accordingly.
4. Section 2.5(a) of the Credit Agreement is hereby amended by deleting the last
sentence thereof.
5. Section 2.5(c) of the Credit Agreement is hereby amended to read as follows:
(c) Intentionally Omitted
6. The first sentence of Section 2.7 of the Credit Agreement is hereby amended
to read as follows:
(i) repay the Existing Bank Debt, pay all of the Fees due hereunder, pay
the reasonable out-of-pocket fees and expenses
incurred by the Borrower in connection with the Loan
Documents and for the Borrower's general corporate
purposes not inconsistent with the provisions hereof,
including the repurchase of the Capital Stock of the
Borrower and the repayment of amounts due in respect
of the Senior Notes or the prepayment thereof.
7. The heading of Section 5 of the Credit Agreement is hereby amended to read as
follows:
5. CONDITIONS TO FIRST LOANS OR THE ISSUANCE OF
FIRST LETTERS OF CREDIT ON THE FIRST BORROWING DATE
8. Section 5.2 of the Credit Agreement is hereby amended to read as follows:
5.2 Intentionally Omitted
9. Section 8.1(v) of the Credit Agreement is hereby amended to read as follows:
(v) Indebtedness in respect of the Senior Notes,
10. Exhibit C-1 in the form annexed hereto is hereby substituted for Exhibit C-1
to the Credit Agreement.
11. The effectiveness of this Amendment is subject to the prior or simultaneous
fulfillment of the following conditions:
(a) The Administrative Agent shall have received this Amendment executed by a
duly authorized officer or officers of the Borrower and the Lenders.
(b) Except for notices required to be given to Gaming Authorities after the
execution and delivery of this Amendment, which notices are for informational
purposes only and the failure to give the same will not affect the validity or
enforceability of the Loan Documents, all consents, authorizations, approvals,
filings and exemptions of all Persons required to be obtained or made in
connection with this Amendment, including, without limitation, any required
consents, authorizations, approvals, filings and exemptions of Gaming
Authorities, shall have been obtained or made, as the case may be, and shall be
in full force and effect, and all required notices have been given and all
required waiting periods shall have expired, and the Administrative Agent shall
have received a certificate, in all respects satisfactory to the Administrative
Agent, of an executive officer of the Borrower to the foregoing effects.
12. The Borrower hereby (i) reaffirms and admits the validity and enforceability
of the Credit Agreement and the other Loan Documents and all of its obligations
thereunder, (ii) agrees and admits that it has no defenses to or offsets against
any of its obligations to the Lenders under the Loan Documents, (iii) represents
and warrants that there exists no Default or Event of Default, and (iv)
represents and warrants that each of the representations and warranties
contained in the Credit Agreement is true and correct, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties were true and correct on and as of such
earlier date and for consents, authorizations, approvals, filings and exemptions
of all Persons which are required to be obtained or made in connection with this
Amendment, including Gaming Authorities, which consents, authorizations,
approvals, filings and exemptions will have been obtained or made prior to the
effectiveness of this Amendment.
13. This Amendment may be executed in any number of counterparts, each of which
shall be an original and all of which shall constitute one amendment. It shall
not be necessary in making proof of this Amendment to produce or account for
more than one counterpart signed by the party to be charged.
14. This Amendment is being delivered in and is intended to be performed in the
State of New York and shall be construed and enforceable in accordance with, and
be governed by, the internal laws of the State of New York without regard to
principles of conflict of laws.
15. Except as amended hereby, the Credit Agreement shall in all other respects
remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
INTERNATIONAL GAME TECHNOLOGY
By:
Name:
Title:
By:
Name:
Title:
THE BANK OF NEW YORK,
individually, as Issuing Bank
and as Administrative Agent
By:
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually and as Documentation Agent
By:
Name:
Title:
CIBC INC., individually and as a Co-Agent
By:
Name:
Title:
CREDIT LYONNAIS LOS ANGELES BRANCH,
individually and as a Co-Agent
By:
Name:
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH, individually and
as a Co-Agent
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION,
individually and as a Co-Agent
By:
Name:
Title:
UNITED STATES NATIONAL BANK OF OREGON,
individually and as a Co-Agent
By:
Name:
Title:
THE ASAHI BANK, LTD., LOS ANGELES AGENCY
By:
Name:
Title:
BANCA DI ROMA, SAN FRANCISCO BRANCH
By:
Name:
Title:
BANK OF MONTREAL
By:
Name:
Title:
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD., LOS
ANGELES AGENCY
By:
Name:
Title:
FLEET BANK N.A.
By:
Name:
Title:
MICHIGAN NATIONAL BANK
By:
Name:
Title:
THE SANWA BANK, LIMITED, LOS ANGELES
BRANCH
By:
Name:
Title:
<PAGE>
THE SUMITOMO BANK, LIMITED
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
AMENDMENT NO. 2
TO
CREDIT AGREEMENT
AMENDMENT NO. 2 (this "Amendment"), dated as of January 16, 1998, to the
Credit Agreement, dated as of May 22, 1997, by and among INTERNATIONAL GAME
TECHNOLOGY, a Nevada corporation (the "Borrower"), THE BANK OF NEW YORK, as
administrative agent (the "Administrative Agent") and as the Issuing Bank, WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agent, CIBC INC., CREDIT
LYONNAIS LOS ANGELES BRANCH, DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN
ISLANDS BRANCH, KEYBANK NATIONAL ASSOCIATION and UNITED STATES NATIONAL BANK OF
OREGON, as Co-Agents (in such capacity, the "Co-Agents", each, a "Co-Agent"),
and the lenders party hereto (together with their respective assigns, the
"Lenders", each a "Lender"), as amended by Amendment No. 1, dated as of August
19, 1997 (as so amended, the "Credit Agreement").
RECITALS
A. Capitalized terms used herein which are not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
B. The Borrower has requested that the Credit Agreement be amended to the extent
and in the manner set forth herein and the Administrative Agent, the Issuing
Bank and the Lenders are willing to agree to such amendment subject to the terms
and conditions hereinafter set forth.
Accordingly, in consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Section 8.1 of the Credit Agreement is hereby amended in its entirety to read
as follows:
Create, incur, assume or suffer to exist any liability for
Indebtedness, or permit any of its Subsidiaries so to do, except:
(i) Indebtedness due under the Loan Documents,
(ii) Indebtedness of the Borrower or any of its Subsidiaries existing on the
Effective Date as set forth on Schedule 8.1 (other than the Existing Bank Debt
which is to be repaid on the Effective Date), excluding increases thereof, but,
in the case of (A) such Indebtedness of the Subsidiaries of the Borrower, and
(B) Indebtedness of the Borrower under the Senior Notes, including renewals,
extensions and refinancings thereof, provided, however, any such renewal,
extension or refinancing of the Senior Notes shall not have a maturity earlier
than one year after the Maturity Date,
(iii) Intercompany Indebtedness to the extent permitted by Section 8.5,
(iv) Indebtedness in an aggregate principal amount not in excess of $25,000,000
at any one time outstanding in respect of capital leases, secured by Liens on
Property (including, in the event such Property constitutes Capital Stock of a
newly acquired Subsidiary, Liens on the Property of such Subsidiary) acquired by
the Borrower or any of its Subsidiaries after the Effective Date, provided that
such Liens are in existence on the date of such acquisition and were not placed
on such Property in contemplation of such acquisition, and other purchase money
Indebtedness, provided that, in each case under this clause (iv), the Lien
securing such Indebtedness is permitted by Section 8.2,
(v) Indebtedness in respect of the Senior Notes,
(vi) unsecured Indebtedness of I.G.T. (Australia) Pty. Ltd. ("IGT-Australia")
not in excess of 205,000,000 Australian Dollars incurred in connection with its
acquisition of Olympic Amusements Pty. Limited and related entities, including,
without limitation, Indebtedness of Olympic assumed by IGT-Australia in
connection therewith, and, without duplication, the Contingent Obligations of
the Borrower under its guaranty thereof, provided that no Default or Event of
Default shall exist or be continuing at the time of the incurrence thereof, such
acquisition is a Permitted Acquisition, the interest rate on such Indebtedness
is not in excess of the rate available for similar borrowings by similar
borrowers at the time of the incurrence thereof, the maturity of such
Indebtedness is no earlier than one year after the Maturity Date, and such
guaranty by the Borrower shall be in form and substance satisfactory to the
Administrative Agent and the Borrower's obligations thereunder shall be pari
passu with its obligations under the Loan Documents,
(vii) in addition the Indebtedness of IGT-Australia referred to in clause (vi)
above, unsecured Indebtedness of a Subsidiary of the Borrower, provided that
immediately before and after giving effect thereto, no Default or Event of
Default shall exist, and the aggregate outstanding principal amount of all such
Indebtedness incurred by the Subsidiaries of the Borrower after the Effective
Date shall not exceed $50,000,000 at any time,
(viii) other unsecured Indebtedness of the Borrower, provided that no Default or
Event of Default shall exist or be continuing at the time of the incurrence
thereof, the interest rate on any such Indebtedness is not in excess of the rate
available for similar borrowings by similar borrowers at the time of the
incurrence thereof, and the maturity of such Indebtedness is no earlier than one
year after the Maturity Date, and
(ix) Indebtedness (other than Indebtedness of IGT or any Subsidiary of IGT)
acquired as part of a Permitted Acquisition, provided that such Indebtedness
existed immediately prior to such Permitted Acquisition and was not incurred in
anticipation thereof.
2. The reference in Section 8.2(xiv) to "Section 8.1(viii)" is amended to read
"Section 8.1(ix)".
3. The effectiveness of this Amendment is subject to the prior or simultaneous
fulfillment of the following conditions:
(a) The Administrative Agent shall have received this Amendment executed by a
duly authorized officer or officers of the Borrower and Required Lenders.
(b) Except for notices required to be given to Gaming Authorities after the
execution and delivery of this Amendment, which notices are for informational
purposes only and the failure to give the same will not affect the validity or
enforceability of the Loan Documents, all consents, authorizations, approvals,
filings and exemptions of all Persons required to be obtained or made in
connection with this Amendment, including, without limitation, any required
consents, authorizations, approvals, filings and exemptions of Gaming
Authorities, shall have been obtained or made, as the case may be, and shall be
in full force and effect, and all required notices have been given and all
required waiting periods shall have expired, and the Administrative Agent shall
have received a certificate, in all respects satisfactory to the Administrative
Agent, of an executive officer of the Borrower to the foregoing effects.
4. The Borrower hereby (i) reaffirms and admits the validity and enforceability
of the Credit Agreement and the other Loan Documents and all of its obligations
thereunder, (ii) agrees and admits that it has no defenses to or offsets against
any of its obligations to the Lenders under the Loan Documents, (iii) represents
and warrants that there exists no Default or Event of Default, and (iv)
represents and warrants that each of the representations and warranties
contained in the Credit Agreement is true and correct, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties were true and correct on and as of such
earlier date and for consents, authorizations, approvals, filings and exemptions
of all Persons which are required to be obtained or made in connection with this
Amendment, including Gaming Authorities, which consents, authorizations,
approvals, filings and exemptions will have been obtained or made prior to the
effectiveness of this Amendment.
5. This Amendment may be executed in any number of counterparts, each of which
shall be an original and all of which shall constitute one amendment. It shall
not be necessary in making proof of this Amendment to produce or account for
more than one counterpart signed by the party to be charged.
6. This Amendment is being delivered in and is intended to be performed in the
State of New York and shall be construed and enforceable in accordance with, and
be governed by, the internal laws of the State of New York without regard to
principles of conflict of laws.
7. Except as amended hereby, the Credit Agreement shall in all other respects
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
INTERNATIONAL GAME TECHNOLOGY
By:
Name:
Title:
By:
Name:
Title:
THE BANK OF NEW YORK,
individually, as Issuing Bank and as
Administrative Agent
By:
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually and as Documentation Agent
By:
Name:
Title:
CIBC INC., individually and as a Co-Agent
By:
Name:
Title:
CREDIT LYONNAIS LOS ANGELES BRANCH,
individually and as a Co-Agent
By:
Name:
Title:
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH, individually and
as a Co-Agent
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION,
individually and as a Co-Agent
By:
Name:
Title:
UNITED STATES NATIONAL BANK OF OREGON,
individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
THE ASAHI BANK, LTD., LOS ANGELES AGENCY
By:
Name:
Title:
BANCA DI ROMA, SAN FRANCISCO BRANCH
By:
Name:
Title:
BANK OF MONTREAL
By:
Name:
Title:
THE DAI-ICHI KANGYO BANK, LTD., LOS
ANGELES AGENCY
By:
Name:
Title:
<PAGE>
FLEET BANK N.A.
By:
Name:
Title:
MICHIGAN NATIONAL BANK
By:
Name:
Title:
THE SANWA BANK, LIMITED, LOS ANGELES
BRANCH
By:
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
AMENDMENT NO. 3
TO
CREDIT AGREEMENT
AMENDMENT NO. 3 (this "Amendment"), dated as of April 20, 1999, to the
Credit Agreement, dated as of May 22, 1997, by and among INTERNATIONAL GAME
TECHNOLOGY, a Nevada corporation (the "Borrower"), THE BANK OF NEW YORK, as
administrative agent (the "Administrative Agent") and as the Issuing Bank, WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agent, CIBC INC., CREDIT
LYONNAIS LOS ANGELES BRANCH, DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN
ISLANDS BRANCH, KEYBANK NATIONAL ASSOCIATION and UNITED STATES NATIONAL BANK OF
OREGON, as Co-Agents (in such capacity, the "Co-Agents", each, a "Co-Agent"),
and the lenders party hereto (together with their respective assigns, the
"Lenders", each a "Lender"), as amended by Amendment No. 1, dated as of August
19, 1997, and Amendment No. 2, dated as of January 16, 1998 (as so amended, the
"Credit Agreement").
RECITALS
A. Capitalized terms used herein which are not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
B. The Borrower has requested that the Credit Agreement be amended to the extent
and in the manner set forth herein and the Administrative Agent, the Issuing
Bank and the Lenders are willing to agree to such amendment subject to the terms
and conditions hereinafter set forth.
Accordingly, in consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. The definition of "Special Counsel" contained in Section 1.1 of the Agreement
is amended in its entirety to read as follows:
"Special Counsel": Bryan Cave LLP, special counsel to
the Administrative Agent.
2. The following Section is added to Article 4 of the Agreement:
4.21 Year 2000
Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Borrower's
and its Subsidiaries' computer systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by
others or, to the extent within the Borrower's control, with which
the Borrower's or its Subsidiaries' systems interact) and the
testing of all such systems and equipment, as so reprogrammed, is
expected to be completed by November 30, 1999. The cost to the
Borrower and its Subsidiaries of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000 to the
Borrower and its Subsidiaries (including reprogramming errors and
the failure of others' systems or equipment) is not reasonably
expected to result in a Default or a Material Adverse Effect. To the
knowledge of the Borrower, except for such of the reprogramming
referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower and its
Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be,
sufficient to permit the Borrower and its Subsidiaries to conduct
their business without Material Adverse Effect.
3. Section 8.1(vi) of the Credit Agreement is amended by adding the following
proviso to the end thereof:
provided that in the event that the foregoing Indebtedness of
IGT-Australia is repaid in full and the Contingent Obligations of
the Borrower in respect of its guaranty thereof is released, IGT
Australia may incur unsecured Indebtedness under a line of credit
not in excess of 30,000,000 Australian Dollars and the Borrower may
incur Contingent Obligations in respect of a guaranty thereof,
4. Section 8.1 of the Credit Agreement is further amended to delete the word
"and" appearing at the end of clause (viii), to substitute "and" for the period
at the end of clause (ix) and to add a new clause (x) to read as follows:
(x) other unsecured Indebtedness of the Borrower (including
Indebtedness consisting of short-term notes issued by the Borrower
in the commercial paper market ("Commercial Paper")) regardless of
the maturity thereof, provided that (i) immediately before and after
giving effect to any such issuance, no Default or Event of Default
shall exist and (ii) the aggregate principal amount of all such
Indebtedness outstanding at any one time shall not exceed an amount
equal to $300,000,000 and provided further that any such
Indebtedness constituting Commercial Paper shall not exceed the sum
of (A) the difference at such time between $300,000,000 and the
aggregate principal balance of all Indebtedness outstanding under
this clause (x) and (B) the difference at such time between the
Aggregate Commitment Amount and the Aggregate Credit Exposure.
5. Section 8.3 of the Credit Agreement is amended by restating clause (d)
thereof in its entirety to read as follows:
(d) The Borrower and its Subsidiaries may make Acquisitions,
provided that:
(i) no Default or Event of Default shall exist immediately before or
after giving effect to such Acquisition;
(ii) the Borrower will be in compliance with each of the financial
covenants contained in Section 7.11 on a pro-forma basis after
giving effect to such Acquisition and any Indebtedness incurred or
assumed in connection therewith which is permitted by Section 8.1;
(iii) immediately after giving effect to each such Acquisition, all of the
representations and warranties contained in Section 4 shall be true
and correct as if then made;
(iv) the Person, business or assets acquired in connection with such
Acquisition are in the same or a related line of business to the
Borrower or any of its Subsidiaries; and
(v) the Administrative Agent shall have received such information or
documents as the Administrative Agent shall have reasonably
requested.
6. Section 8.4 of the Credit Agreement is amended to replace the word "and"
appearing at the end of subsection (c) with a semi-colon, to substitute a
semi-colon for the period at the end of subsection (d) and to add a new
subsection (e) to read as follows:
(e) on and after the consummation of the acquisition of Sodak
Gaming, Inc. ("Sodak"), Dispositions of assets of Sodak which are reasonably
determined by the Borrower not to be necessary to the conduct of the businesses
of Sodak to be continued by the Borrower, including, without limitation, the
sale of the riverboat casino owned by Sodak and related assets if acquired by
the Borrower.
7. Section 8.5 of the Credit Agreement is amended by restating subsections (d)
and (o) thereof in their entirety to read as follows:
(d) Investments (i) by the Borrower, IGT or any of IGT's
Subsidiaries in IGT or any of IGT's wholly-owned Subsidiaries,
including Investments in Intercompany Indebtedness, (ii) by any
Subsidiary in the Borrower, and (iii) by the Borrower or any of its
Subsidiaries in any wholly-owned Subsidiary of the Borrower,
including Investments in Intercompany Indebtedness, provided that
such Investments under this clause (iii) shall not exceed in the
aggregate 25% of the Borrower's Consolidated Total Assets at any
time;
(o) other Investments (including, without limitation,
Investments in joint ventures to the extent not described in
subsections (m) or (n) above and Investments described in subsection
(q) below to the extent in excess of the amounts permitted therein)
in an aggregate amount not to exceed $100,000,000, provided that no
Default or Event of Default shall exist before or after giving
effect thereto;
8. Section 8.5 of the Credit Agreement is further amended to substitute ";and"
for the period at the end of subsection (p) and to add new subsection (q) to
read as follows:
(q) the purchase by the Borrower of promissory notes of Silver
Club Inc. and CMS El Capitan from Wells Fargo Bank for an amount not
in excess of $15,500,000 plus accrued and unpaid interest thereon.
9. Section 8.12 of the Credit Agreement is amended in its entirety to read
"Intentionally Omitted".
10. The effectiveness of this Amendment is subject to the prior or simultaneous
fulfillment of the following conditions:
(a) The Administrative Agent shall have received this Amendment executed by a
duly authorized officer or officers of the Borrower and Required Lenders.
(b) The Administrative Agent shall have received for the account of each Lender
executing this Amendment and delivering its signature page hereto (or a
facsimile thereof) to Special Counsel prior to 5:00 p.m. (New York City time) on
April 20, 1999, a fee equal to 0.075% of such Lender's Commitment.
(c) Except for notices required to be given to Gaming Authorities after the
execution and delivery of this Amendment, which notices are for informational
purposes only and the failure to give the same will not affect the validity or
enforceability of the Loan Documents, all consents, authorizations, approvals,
filings and exemptions of all Persons required to be obtained or made in
connection with this Amendment, including, without limitation, any required
consents, authorizations, approvals, filings and exemptions of Gaming
Authorities, shall have been obtained or made, as the case may be, and shall be
in full force and effect, and all required notices have been given and all
required waiting periods shall have expired, and the Administrative Agent shall
have received a certificate, in all respects satisfactory to the Administrative
Agent, of an executive officer of the Borrower to the foregoing effects.
11. The Borrower hereby (i) reaffirms and admits the validity and enforceability
of the Credit Agreement and the other Loan Documents and all of its obligations
thereunder, (ii) agrees and admits that it has no defenses to or offsets against
any of its obligations to the Lenders under the Loan Documents, (iii) represents
and warrants that there exists no Default or Event of Default, and (iv)
represents and warrants that each of the representations and warranties
contained in the Credit Agreement is true and correct, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties were true and correct on and as of such
earlier date and for consents, authorizations, approvals, filings and exemptions
of all Persons which are required to be obtained or made in connection with this
Amendment, including Gaming Authorities, which consents, authorizations,
approvals, filings and exemptions will have been obtained or made prior to the
effectiveness of this Amendment.
12. This Amendment may be executed in any number of counterparts, each of which
shall be an original and all of which shall constitute one amendment. It shall
not be necessary in making proof of this Amendment to produce or account for
more than one counterpart signed by the party to be charged.
13. This Amendment is being delivered in and is intended to be performed in the
State of New York and shall be construed and enforceable in accordance with, and
be governed by, the internal laws of the State of New York without regard to
principles of conflict of laws.
14. Except as amended hereby, the Credit Agreement shall in all other respects
remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
INTERNATIONAL GAME TECHNOLOGY
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
THE BANK OF NEW YORK, individually, as
Issuing Bank and as Administrative Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually and as Documentation Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
CIBC INC., individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
CREDIT LYONNAIS LOS ANGELES BRANCH,
individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH, individually and
as a Co-Agent
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
CONSENTED TO BY:
KEYBANK NATIONAL ASSOCIATION,
individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
U. S. BANK NATIONAL ASSOCIATION,
individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
BANCA DI ROMA, SAN FRANCISCO BRANCH
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
BANK OF MONTREAL
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK
BRANCH
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
FLEET BANK N.A.
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
MICHIGAN NATIONAL BANK
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
THE SANWA BANK, LIMITED, LOS ANGELES
BRANCH
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT NO. 3 TO CREDIT AGREEMENT
CONSENTED TO BY:
THE SUMITOMO BANK, LIMITED
By:
Name:
Title:
AMENDMENT AND RESTATEMENT
dated as of April 30, 1999
of
CREDIT AGREEMENT
dated as of May 22, 1997, as amended
by and among
INTERNATIONAL GAME TECHNOLOGY
THE LENDERS PARTY THERETO
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Documentation Agent
CIBC INC.
CREDIT LYONNAIS LOS ANGELES BRANCH
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
KEYBANK NATIONAL ASSOCIATION
and
U. S. BANK NATIONAL ASSOCIATION
as Co-Agents
and
THE BANK OF NEW YORK
as Administrative Agent and Issuing Bank
BNY CAPITAL MARKETS, INC.
as Lead Arranger and Book Manager
<PAGE>
2
AMENDMENT AND RESTATEMENT (this "Amendment"), dated as of April 30, 1999,
of the Credit Agreement, dated as of May 22, 1997, by and among INTERNATIONAL
GAME TECHNOLOGY, a Nevada corporation (the "Borrower"), the Lenders party
thereto, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agent, CIBC
INC., CREDIT LYONNAIS LOS ANGELES BRANCH, DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH, KEYBANK NATIONAL ASSOCIATION and U. S. BANK
NATIONAL ASSOCIATION, as Co-Agents, and THE BANK OF NEW YORK, as Administrative
Agent (the "Administrative Agent") and as the Issuing Bank, as amended by
Amendment No. 1, dated as of August 19, 1997, Amendment No. 2, dated as of
January 16, 1998, and Amendment No. 3, dated as of April 20, 1999 (as so
amended, the "Credit Agreement").
I. Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
II. The parties desire to amend and restate the Credit Agreement to the
extent set forth herein subject to the terms and conditions hereof.
Accordingly, in consideration of the terms and conditions hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree that the Credit
Agreement be, and the same hereby is, amended and restated in its entirety so as
to read as presently set forth therein with the following exceptions:
1. Section 1.1 of the Credit Agreement is amended by amending and restating the
following definitions to read as follows:
"Applicable Fee Percentage":
(a) With respect to the Facility Fee and the Letter of Credit
Commissions, at all times during which the applicable Pricing Level set
forth below is in effect, the percentage set forth below next to such
Pricing Level and under the applicable column:
Applicable Fee Percentage
Letter of
Facility Credit
Pricing Level Fee Commissions
Pricing Level I 0.150% 0.350%
Pricing Level II 0.180% 0.570%
Pricing Level III 0.225% 0.775%
Pricing Level IV 0.275% 0.975%
Pricing Level V 0.300% 1.200%.
(b) The Applicable Fee Percentage with respect to the Letter
of Credit Commissions shall be increased by an amount equal to 0.150%
during any period when the Leverage Ratio is greater than or equal to
4.00:1.00.
(c) Changes in the Applicable Fee Percentage resulting from a
change (i) in any rating established or deemed to have been established by
Standard & Poor's or Moody's (other than as a result of a change in the
rating system of either Standard & Poor's or Moody's) shall be effective
as of the date on which such change is first announced publicly by the
rating agency making such change or (ii) in the Leverage Ratio shall
become effective upon the date of the delivery by the Borrower to the
Administrative Agent of a Compliance Certificate pursuant to Section
7.1(c) evidencing a change in the Leverage Ratio, provided, however, that
if the Borrower shall fail to deliver a Compliance Certificate within 45
days after the end of each of the first three fiscal quarters (or 90 days
after the end of the last fiscal quarter) as required by Section 7.1(c),
the Leverage Ratio shall be deemed to be greater than 4.00:1.00 from and
including the 46th day (the 91st day in the case of the last quarter)
after the end of such fiscal quarter to the date of the delivery by the
Borrower to the Administrative Agent of a Compliance Certificate
demonstrating that the Leverage Ratio is less than 4.00:1.00.
Notwithstanding the foregoing, no reduction in the Applicable Fee
Percentage shall be effective if any Default or Event of Default shall
have occurred and be continuing.
"Applicable Margin":
(a) With respect to the unpaid principal balance of Eurodollar
Advances, in each case at all times during which the applicable Pricing
Level set forth below is in effect, the percentage set forth below next to
such Pricing Level and under the applicable column, subject to the
provisos set forth below:
Pricing Level Applicable Margin
Pricing Level I 0.350% Pricing Level II 0.570% Pricing Level III
0.775% Pricing Level IV 0.975% Pricing Level V 1.200%.
(b) The Applicable Margin shall be increased by an amount
equal to 0.150% during any period when the Leverage Ratio is greater than
or equal to 4.00:1.00.
(c) Changes in the Applicable Margin resulting from a change
(i) in any rating established or deemed to have been established by
Standard & Poor's or Moody's (other than as a result of a change in the
rating system of either Standard & Poor's or Moody's) shall be effective
as of the date on which such change is first announced publicly by the
rating agency making such change or (ii) in the Leverage Ratio shall
become effective upon the date of the delivery by the Borrower to the
Administrative Agent of a Compliance Certificate pursuant to Section
7.1(c) evidencing a change in the Leverage Ratio, provided, however, that
if the Borrower shall fail to deliver a Compliance Certificate within 45
days after the end of each of the first three fiscal quarters (or 90 days
after the end of the last fiscal quarter) as required by Section 7.1(c),
the Leverage Ratio shall be deemed to be greater than 4.00:1.00 from and
including the 46th day (the 91st day in the case of the last quarter)
after the end of such fiscal quarter to the date of the delivery by the
Borrower to the Administrative Agent of a Compliance Certificate
demonstrating that the Leverage Ratio is less than 4.00:1.00.
Notwithstanding the foregoing, no reduction in the Applicable Margin shall
be effective if any Default or Event of Default shall have occurred and be
continuing.
"Pricing Level": Pricing Level I, Pricing Level II, Pricing
Level III, Pricing Level IV or Pricing Level V, as applicable. In
determining the appropriate Pricing Level, in the event that the Senior
Debt Rating by Standard & Poor's and Moody's (i) is split-rated by one
level, the higher of such Senior Debt Ratings shall be used and (ii) is
split-rated by more than one level, then the average of such Senior Debt
Ratings (rounded to the nearest higher Senior Debt Rating) shall be used.
"Pricing Level I": the applicable Pricing Level any time when
the Borrower's Senior Debt Rating is equal to BBB or higher by Standard
and Poor's or Baa2 or higher by Moody's.
"Pricing Level II": the applicable Pricing Level any time when
the Borrower's Senior Debt Rating is equal to BBB- or higher by Standard
and Poor's or Baa3 or higher by Moody's and Pricing Level I is not
applicable.
"Pricing Level III": the applicable Pricing Level any time
when the Borrower's Senior Debt Rating is equal to BB+ or higher by
Standard and Poor's or Ba1 or higher by Moody's and neither Pricing Level
I nor Pricing Level II is applicable.
"Pricing Level IV": the applicable Pricing Level any time when
the Borrower's Senior Debt Rating is equal to BB or higher by Standard and
Poor's or Ba2 or higher by Moody's and none of Pricing Level I, Pricing
Level II or Pricing Level III are applicable.
"Pricing Level V": the applicable Pricing Level any time when
(i) the Borrower's Senior Debt Rating is equal to BB- or lower by Standard
and Poor's or Ba3 or lower by Moody's and none of Pricing Level I, Pricing
Level II, Pricing Level III or Pricing Level IV are applicable or (ii) if
the Borrower ceases to have a Senior Debt Rating.
2. The definition "Leverage Ratio" contained in Section 1.1 of the Credit
Agreement is amended by adding to the end of such definition the following
sentence:
For purposes of this defined term, Consolidated Total Debt shall be
adjusted so as to subtract from Consolidated Total Debt all cash and Cash
Equivalents of the Borrower and its Subsidiaries (other than cash and Cash
Equivalents in respect of Jackpot Assets), determined on a Consolidated
basis in accordance with GAAP, on such date in excess of $10,000,000.
3. Section 1.1 of the Credit Agreement is amended by adding the following new
definitions in their respective alphabetical order:
"Amendment Effective Date": as defined in the Amendment and
Restatement, dated as of April 30, 1999, of this Agreement.
"Applicable Utilization Fee Percentage": with respect to the
Utilization Fee, a percentage equal to (i) during any period when Total
Facility Usage is less than or equal to 0.3333, 0.000%, (ii) during any
period when Total Facility Usage is greater than 0.3333 but less than or
equal to 0.6667, 0.050%, and (iii) during any period when Total Facility
Usage is greater than 0.6667, 0.125%.
"Excess Cash Flow": for any period, Consolidated EBITDA minus,
without duplication, the sum of each of the following with respect to the
Borrower and its Subsidiaries, determined on a Consolidated basis in
accordance with GAAP, (i) Consolidated Interest Expense during such period
(other than with respect to all interest paid or accrued during such
period in respect of Jackpot Liabilities), (ii) provision for taxes during
such period, (iii) all scheduled payments of principal on Consolidated
Total Debt (other than the Loans on the Maturity Date) during such period,
and (iv) Capital Expenditures made during such period.
"Interest Coverage Ratio": at any date of determination, the
ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense
minus all interest paid or accrued during such period in respect of
Jackpot Liabilities, for the four fiscal quarter period ending on such
date or, if such date is not the last day of a fiscal quarter, for the
immediately preceding four fiscal quarter period.
"Total Facility Usage": as of any date, a fraction
(expressed as a decimal) the numerator of which is the Aggregate Credit
Exposure, and the denominator of which is the Aggregate Available
Commitment Amount.
"Utilization Fee": as defined in Section 3.2(d).
4. Section 2.11(a) of the Credit Agreement is amended by (i) inserting after the
phrase "of the Facility Fee," appearing on the second line therein the phrase
"the Utilization Fee,", and (ii) inserting after the phrase "the Facility Fee"
appearing on the fourth line therein the phrase ", the Utilization Fee".
5. Section 3.2 of the Credit Agreement is amended by adding to the end thereof
the following new subsection (d):
(d) Utilization Fee. The Borrower agrees to pay to the
Administrative Agent, for the account of (i) in respect of Revolving
Credit Loans and Letter of Credit Exposure, the Lenders in accordance with
each Lender's Commitment Percentage, and (ii) in respect of Competitive
Bid Loans, each Lender making a Competitive Bid Loan during such period
pro rata among all such Lenders, a fee (the "Utilization Fee"), during the
period from the Amendment Effective Date through the Maturity Date, at a
rate per annum equal to the Applicable Utilization Fee Percentage on the
average daily amount during the relevant calculation period of the
Aggregate Credit Exposure. The Utilization Fee shall be payable (A)
quarterly in arrears on the last day of each March, June, September and
December during such period commencing on the first such day following the
Amendment Effective Date, and (B) on the Maturity Date. The Utilization
Fee shall be calculated on the basis of a 360-day year for the actual
number of days elapsed. The Administrative Agent shall bill the Borrower
for the amount due at least two days prior to the date on which such
Utilization Fees are due, provided that any failure of the Administrative
Agent to render such bill shall in no way affect the Borrower's obligation
to pay such Utilization Fees at such specified times.
6. Section 7.11(a) of the Credit Agreement is amended and restated in its
entirety to read as follows:
(a) Leverage Ratio. Maintain at all times a Leverage Ratio of
not greater than the applicable ratio set forth below opposite the
applicable period set forth below:
Period Ratio
Amendment Effective Date
through December 31, 1999 4.25:1.00
January 1, 2000 through
March 31, 2001 4.00:1.00
April 1, 2001 through
December 31, 2001 3.75:1.00
January 1, 2002 and
thereafter 3.50:1.00
7. Section 7.11 of the Credit Agreement is amended by adding to the end thereof
the following new subsection (d):
(d) Interest Coverage Ratio. Maintain at all times an Interest
Coverage Ratio of not less than the applicable ratio set forth below
opposite the applicable period set forth below:
Period Ratio
Amendment Effective Date
through September 30, 2000 2.50:1.00
October 1, 2000 through
September 30, 2001 2.75:1.00
October 1, 2001 and
thereafter 3.00:1.00
8. Section 8.6(ii) of the Credit Agreement is amended by inserting immediately
prior to the period located at the end thereof the following phrase:
, provided further that, if at any time the Borrower's Senior Debt Rating
shall equal BB- or lower by Standard and Poor's and Ba3 or lower by
Moody's, any such Restricted Payment, together with all other Restricted
Payments made pursuant to this clause (ii), shall not exceed 50% of
cumulative Excess Cash Flow calculated for the period from the Effective
Date through the last fiscal quarter preceding such Restricted Payment.
9. Exhibit E to the Credit Agreement is amended, restated and replaced with
Exhibit E attached hereto.
10. Paragraphs 1 - 9 of this Amendment shall not be effective until such date
(the "Amendment Effective Date") as each of the following conditions shall have
been fulfilled:
(a) The Administrative Agent shall have received this Amendment
executed by a duly authorized officer or officers of the Administrative Agent,
the Issuing Bank, the Required Lenders, and the Borrower.
(b) Standard and Poor's and Moody's shall have publicly announced
the Borrower's Senior Debt Rating to equal (i) BB+ or higher by Standard and
Poor's, and (ii) Ba1 or higher by Moody's, and the Administrative Agent shall
have received a certificate, in all respects satisfactory to the Administrative
Agent, of an executive officer of the Borrower to the foregoing effect.
(c) The consummation of the Borrower's Rule 144A debt offering that
is the subject of the press release of the Borrower dated April 28, 1999 (in
such principal amount as is approved by the Borrower) shall have occurred.
(d) Except for notices required to be given to Gaming Authorities
after the execution and delivery of this Amendment, which notices are for
informational purposes only and the failure to give the same will not affect the
validity or enforceability of the Loan Documents, all consents, authorizations,
approvals, filings and exemptions of all Persons required to be obtained or made
in connection with this Amendment, including, without limitation, any required
consents, authorizations, approvals, filings and exemptions of Gaming
Authorities, shall have been obtained or made, as the case may be, and shall be
in full force and effect, and all required notices have been given and all
required waiting periods shall have expired, and the Administrative Agent shall
have received a certificate, in all respects satisfactory to the Administrative
Agent, of an executive officer of the Borrower to the foregoing effects.
(e) The Administrative Agent shall have received for the account of
each Lender executing this Amendment and delivering its signature page hereto
(or a facsimile thereof) to Special Counsel prior to 5:00 p.m. (New York City
time) on April 30, 1999, a fee equal to 0.075% of such Lender's Commitment.
(f) The Administrative Agent shall have received an opinion of
counsel to the Borrower, in form and substance satisfactory to the
Administrative Agent.
(g) The Borrower shall pay (i) all costs and expenses of the
Administrative Agent (including the reasonable fees and disbursements of Special
Counsel) incurred in connection with the preparation, negotiation and closing of
this Amendment and (ii) all fees which it has agreed in writing to pay in
connection with this Amendment.
(h) All legal matters incident to the execution and delivery of this
Amendment shall be reasonably satisfactory to Special Counsel.
11. The Borrower hereby (i) reaffirms and admits the validity and enforceability
of the Credit Agreement and the other Loan Documents and all of its obligations
thereunder, (ii) agrees and admits that it has no defenses to or offsets against
any of its obligations to the Lenders under the Loan Documents, (iii) represents
and warrants that there exists no Default or Event of Default, and (iv)
represents and warrants that each of the representations and warranties
contained in the Credit Agreement is true and correct, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties were true and correct on and as of such
earlier date and for consents, authorizations, approvals, filings and exemptions
of all Persons which are required to be obtained or made in connection with this
Amendment, including Gaming Authorities, which consents, authorizations,
approvals, filings and exemptions will have been obtained or made prior to the
effectiveness of this Amendment.
12. This Amendment may be executed in any number of counterparts, each of which
shall be an original and all of which shall constitute one amendment. It shall
not be necessary in making proof of this Amendment to produce or account for
more than one counterpart signed by the party to be charged.
13. This Amendment is being delivered in and is intended to be performed in the
State of New York and shall be construed and enforceable in accordance with, and
be governed by, the internal laws of the State of New York without regard to
principles of conflict of laws.
14. Except as amended hereby, the Credit Agreement shall in all other respects
remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
INTERNATIONAL GAME TECHNOLOGY
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
THE BANK OF NEW YORK, individually, as
Issuing Bank and as Administrative Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually and as Documentation Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
CIBC INC., individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
CREDIT LYONNAIS LOS ANGELES BRANCH,
individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH, individually and
as a Co-Agent
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
KEYBANK NATIONAL ASSOCIATION,
individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
U. S. BANK NATIONAL ASSOCIATION,
individually and as a Co-Agent
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
BANCA DI ROMA, SAN FRANCISCO BRANCH
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
BANK OF MONTREAL
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK
BRANCH
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
FLEET BANK N.A.
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
MICHIGAN NATIONAL BANK
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
THE SANWA BANK, LIMITED, LOS ANGELES
BRANCH
By:
Name:
Title:
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
CONSENTED TO BY:
THE SUMITOMO BANK, LIMITED
By:
Name:
Title:
EXHIBIT 12
INTERNATIONAL GAME TECHNOLOGY
STATEMENT OF COMPUTATION OF UNAUDITED RATIO OF EARNINGS TO FIXED CHARGES
AND
PROFORMA RATIO OF EARNINGS TO FIXED CHARGES
(in thousands except
ratio information)
<TABLE>
<CAPTION>
Six months ended Years ended
September 30,
------------------- ------------------------------------------------
April 3, March 31, 1998 1997 1996 1995 1994
1999 1998
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before taxes
$105,068 $83,902 $220,302 $199,074 $181,694 $143,830 $214,760
Add fixed charges, from
below 12,525 6,407 17,203 10,877 12,508 11,449 5,271
------ ----- ------ ------ ------ ------- -----
$117,593 90,309 $237,505 $209,951 $194,203 $155,279 $220,031
========= ====== ======== ======== ======== ======== ========
Fixed Charges:
Interest expense on debt $ 11,593 $ 5,557 $ 15,503 $ 9,677 $ 10,375 $ 9,182 $ 3,404
Interest expense within
rental expense 932 850 1,700 1,200 2,133 2,267 1,867
--- --- ----- ----- ----- ----- -----
Total fixed charges $ 12,525 $ 6,407 $ 17,203 $ 10,877 $ 12,508 $ 11,449 $ 5,271
========= ======= ======== ======== ======== ======== ========
Ratio of earnings to
fixed charges 9.4 14.1 13.8 19.3 15.5 13.6 41.7
========= ======= ======== ======== ======== ======== ========
Proforma earnings:
Income before taxes $ 75,786 $154,055
Add fixed charges, from
below 42,507 84,850
--------- -------
$ 118,293 $238,905
========= ========
Proforma fixed charges:
Interest expense on debt $ 41,575 $ 83,150
Interest expense within
rental expense 932 1,700
--- -----
Total fixed charges $ 42,507 $ 84,850
========= ========
Proforma ratio of
earnings to fixed charges 2.8 2.8
======== ========
</TABLE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
International Game Technology on Form S-4 of our report dated November 2, 1998,
appearing in the Annual Report on Form 10-K of International Game Technology for
the year ended September 30, 1998 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Reno, Nevada
June 18, 1999
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
INTERNATIONAL GAME TECHNOLOGY
(Exact name of obligor as specified in its charter)
Nevada 88-0173041
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
9295 Prototype Drive
Reno, Nevada 89511
(Address of principal executive offices) (Zip code)
---------------------------
7.875% Senior Notes due 2004
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- ---------------------------------------------------------------------------
Name Address
- ---------------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street, New York,
State of New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Washington, D.C. 20429
Corporation
New York Clearing House New York, New York 10005
Association
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 16th day of June, 1999.
THE BANK OF NEW YORK
By: /s/MARY LAGUMINA
Name MARY LAGUMINA
Title ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7 to Form T-1
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
ASSETS Dollar Amounts
In Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin $ 4,508,742
Interest-bearing balances 4,425,071
Securities:
Held-to-maturity securities 836,304
Available-for-sale securities 4,047,851
Federal funds sold and Securities purchased under
agreements to resell 1,743,269
Loans and lease financing receivables:
Loans and leases, net of unearned income39,349,679
LESS: Allowance for loan and lease losses603,025
LESS: Allocated transfer risk reserve15,906
Loans and leases, net of unearned income,
allowance, and reserve 38,730,748
Trading Assets 1,571,372
Premises and fixed assets (including capitalized
leases) 685,674
Other real estate owned 10,331
Investments in unconsolidated subsidiaries and
associated companies 182,449
Customers' liability to this bank on acceptances
Outstanding 1,184,822
Intangible assets 1,129,636
Other assets 2,632,309
Total assets $61,688,578
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C>
In domestic offices $ 25,731,036
Noninterest-bearing 10,252,589
Interest-bearing 15,478,447
In foreign offices, Edge and Agreement subsidiaries,
and IBFs 18,756,302
Noninterest-bearing 111,386
Interest-bearing 18,644,916
Federal funds purchased and Securities sold under
agreements to repurchase 3,276,362
Demand notes issued to the U.S.Treasury 230,671
Trading liabilities 1,554,493
Other borrowed money:
With remaining maturity of one year or less 1,154,502
With remaining maturity of more than one year
through three years 465
With remaining maturity of more than three years 31,080
Bank's liability on acceptances executed and
outstanding 1,185,364
Subordinated notes and debentures 1,308,000
Other liabilities 2,743,590
Total liabilities 55,971,865
EQUITY CAPITAL
Common stock 1,135,284
Surplus 764,443
Undivided profits and capital reserves 3,807,697
Net unrealized holding gains (losses) on available-
for-sale securities 44,106
Cumulative foreign currency translation adjustments (34,817)
Total equity capital 5,716,713
Total liabilities and equity capital $ 61,688,578
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni
Alan R. Griffith
Gerald L. Hassell Directors
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
INTERNATIONAL GAME TECHNOLOGY
(Exact name of obligor as specified in its charter)
Nevada 88-0173041
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
9295 Prototype Drive
Reno, Nevada 89511
(Address of principal executive offices) (Zip code)
---------------------------
8.375% Senior Notes due 2009
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- ---------------------------------------------------------------------------
Name Address
- ---------------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street, New York,
State of New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Washington, D.C. 20429
Corporation
New York Clearing House New York, New York 10005
Association
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 16th day of June, 1999.
THE BANK OF NEW YORK
By: /s/MARY LAGUMINA
Name MARY LAGUMINA
Title ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7 to Form T-1
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
ASSETS Dollar Amounts
In Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin $ 4,508,742
Interest-bearing balances 4,425,071
Securities:
Held-to-maturity securities 836,304
Available-for-sale securities 4,047,851
Federal funds sold and Securities purchased under
agreements to resell 1,743,269
Loans and lease financing receivables:
Loans and leases, net of unearned income39,349,679
LESS: Allowance for loan and lease losses603,025
LESS: Allocated transfer risk reserve15,906
Loans and leases, net of unearned income,
allowance, and reserve 38,730,748
Trading Assets 1,571,372
Premises and fixed assets (including capitalized
leases) 685,674
Other real estate owned 10,331
Investments in unconsolidated subsidiaries and
associated companies 182,449
Customers' liability to this bank on acceptances
Outstanding 1,184,822
Intangible assets 1,129,636
Other assets 2,632,309
Total assets $61,688,578
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C>
In domestic offices $ 25,731,036
Noninterest-bearing 10,252,589
Interest-bearing 15,478,447
In foreign offices, Edge and Agreement subsidiaries,
and IBFs 18,756,302
Noninterest-bearing 111,386
Interest-bearing 18,644,916
Federal funds purchased and Securities sold under
agreements to repurchase 3,276,362
Demand notes issued to the U.S.Treasury 230,671
Trading liabilities 1,554,493
Other borrowed money:
With remaining maturity of one year or less 1,154,502
With remaining maturity of more than one year
through three years 465
With remaining maturity of more than three years 31,080
Bank's liability on acceptances executed and
outstanding 1,185,364
Subordinated notes and debentures 1,308,000
Other liabilities 2,743,590
Total liabilities 55,971,865
EQUITY CAPITAL
Common stock 1,135,284
Surplus 764,443
Undivided profits and capital reserves 3,807,697
Net unrealized holding gains (losses) on available-
for-sale securities 44,106
Cumulative foreign currency translation adjustments (34,817)
Total equity capital 5,716,713
Total liabilities and equity capital $ 61,688,578
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni
Alan R. Griffith
Gerald L. Hassell Directors
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999,
UNLESS EXTENDED (THE "EXPIRATION DATE").
- ------------------------------------------------------------------------------
INTERNATIONAL GAME TECHNOLOGY
LETTER OF TRANSMITTAL
Offer To Exchange Its 7.875% Senior Exchange Notes Due May 15, 2004
Which Have Been Registered Under The Securities Act of 1933
For Any And All Of Its Outstanding
7.875% Senior Notes Due May 15, 2004
Pursuant To The Prospectus Dated , 1999
The Exchange Agent
for the Exchange Offer is:
The Bank of New York
By Facsimile: By Registered or Certified Mail:
(Eligible Institutions only)
The Bank of New York
(212) 815-6339 101 Barclay Street (7 East)
Attention: Customer Service New York, New York 10286
Confirm by Telephone: (212) 815-3738 Attention: Diane Amorso
By Hand or Overnight Courier:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Services Window
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Outstanding Notes
(as defined below) either if Outstanding Notes are to be forwarded herewith or
if tenders of Outstanding Notes are to be made by book-entry transfer to an
account maintained by The Bank of New York (the "Exchange Agent") at The
Depository Trust Company ("DTC") pursuant to the procedures set forth in "The
Exchange Offers - Procedures for Tendering Outstanding Notes" in the Prospectus.
Holders of Outstanding Notes whose certificates (the "Certificates") for such
Outstanding Notes are not immediately available or who cannot deliver their
Certificates, this Letter of Transmittal and all other required documents to the
Exchange Agent on or prior to the Expiration Date or who cannot complete the
procedures for book-entry transfer on a timely basis, may tender their
Outstanding Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offers - Procedures for Tendering Outstanding Notes" in the
Prospectus.
<PAGE>
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
List below the Outstanding Notes of which you are a holder. If the space
provided below is inadequate, list the certificate numbers and principal amount
on a separate signed schedule and attach that schedule to this Letter of
Transmittal. See Instruction 3.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
Description of Outstanding Notes Tendered ____________________________________
- --------------------------------------------------------------------------------
Name(s) and Addresses(es) of
Registered Holder(s)
(Fill in, if blank) Outstanding Notes Tendered
- --------------------------------------------------------------------------------
Certificate
Number(s)* Principal Amount Principal
(Attach (Attach Amount
additional additional list Tendered (if
list if if necessary) less than
necessary) all)**
$
Total Amount Tendered: $ $
- --------------------------------------------------------------------------------
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all Outstanding Notes held.
Outstanding Notes may be tendered in whole or in part in integral multiples
of $1,000 principal amount. All Outstanding Notes held shall be deemed
tendered unless a lesser number is specified in this column. See Instruction
4.
(Boxes Below To Be Checked by Eligible Institutions Only. See Instruction 1)
[__] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
[__] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
<PAGE>
Date of Notice of Guaranteed Delivery:
Institution Which Guaranteed Delivery:
If Guaranteed Delivery is to be made by book-entry transfer:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
[__] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
Telephone Number and Contact Person:
Ladies and Gentlemen:
The undersigned hereby tenders to International Game Technology ( "IGT") the
above described principal amount of IGT's 7.875% Senior Notes due May 15, 2004
(the "Outstanding Notes") in exchange for a like principal amount of IGT's
7.875% Senior Exchange Notes due May 15, 2004 (the "Exchange Notes"), which have
been registered under the Securities Act of 1933 (the "Securities Act"), upon
the terms and subject to the conditions set forth in the Prospectus dated , 1999
(as the same may be amended or supplemented from time to time, the
"Prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of the Outstanding
Notes tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of IGT all right, title and interest in and to such
Outstanding Notes as are being tendered herewith. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent as its agent and
attorney-in-fact (with full knowledge that the Exchange Agent is also acting as
agent of IGT in connection with the Exchange Offer and as Trustee under the
Indenture for the Outstanding Notes and the Exchange Notes) with respect to the
tendered Outstanding Notes, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), subject only to
the right of withdrawal described in the Prospectus, to: (i) deliver such
Outstanding Notes to IGT together with all accompanying evidences of transfer
and authenticity to, or upon the order of, IGT upon receipt by the Exchange
Agent, as the undersigned's agent, of the Exchange Notes to be issued in
exchange for such Outstanding Notes; (ii) present Certificates for such
Outstanding Notes for transfer, and to transfer such Outstanding Notes on the
account books maintained by DTC; and (iii) receive for the account of IGT all
benefits and otherwise exercise all rights of beneficial ownership of such
Outstanding Notes, all in accordance with the terms and conditions of the
Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, IGT WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE
AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE
OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR
PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL
<PAGE>
DOCUMENTS DEEMED BY IGT OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER OF THE OUTSTANDING NOTES
TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Outstanding Notes.
The Certificate number(s) and the Outstanding Notes that the undersigned wishes
to tender should be indicated in the appropriate boxes above.
If any tendered Outstanding Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Outstanding Notes will be returned (or, in the case
of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes
will be credited to an account maintained at DTC), without expense to the
tendering holder promptly following the expiration or termination of the
Exchange Offer.
The undersigned understands that tenders of Outstanding Notes pursuant to any
one of the procedures described in "The Exchange Offers - Procedures for
Tendering Outstanding Notes" in the Prospectus and in the instructions herein
will, upon IGT's acceptance for exchange of such tendered Outstanding Notes,
constitute a binding agreement between the undersigned and IGT upon the terms
and subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, IGT may not be
required to accept for exchange any of the Outstanding Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
Certificates representing Outstanding Notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please deliver Exchange Notes to the undersigned at the address
shown below the undersigned's signature.
BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT: (i) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF IGT (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT), OR
IF THE UNDERSIGNED IS AN AFFILIATE, THE UNDERSIGNED WILL COMPLY WITH THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT TO THE
EXTENT APPLICABLE; (ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE
BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS; AND (iii) THE UNDERSIGNED
HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE
RECEIVED IN THE EXCHANGE OFFER. IF THE UNDERSIGNED IS NOT A BROKER-DEALER, BY
TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED REPRESENTS AND AGREES THAT IT IS NOT ENGAGED IN, AND DOES NOT INTEND
TO ENGAGE IN, A DISTRIBUTION OF EXCHANGE NOTES. IF THE UNDERSIGNED IS A
BROKER-DEALER THAT WILL RECEIVE EXCHANGE NOTES FOR ITS OWN ACCOUNT IN EXCHANGE
FOR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER, BY TENDERING OUTSTANDING
NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND
AGREES THAT SUCH OUTSTANDING NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES
AND IT WILL DELIVER A PROSPECTUS MEETING THE REQUIREMENTS OF THE SECURITIES ACT
IN CONNECTION WITH ANY RESALE OF EXCHANGE NOTES (PROVIDED THAT, BY SO
ACKNOWLEDGING AND BY DELIVERY A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE
DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES
ACT). IGT HAS AGREED THAT STARTING ON THE EXPIRATION DATE AND ENDING ON THE
<PAGE>
CLOSE OF BUSINESS 180 DAYS AFTER OF THE EXPIRATION DATE, IT WILL MAKE THE
PROSPECTUS AVAILABLE TO ANY PARTICIPATING BROKER-DEALER IN CONNECTION WITH ANY
SUCH RESALE.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus and in the Instructions contained in this Letter of
Transmittal, this tender is irrevocable.
PLEASE SIGN HERE PLEASE SIGN HERE
Authorized Signature Authorized Signature
Name: Name:
Title: Title:
Address: Address:
Telephone Number: Telephone Number:
Dated: Dated:
Taxpayer Identification or Social Taxpayer Identification or Social
Security Number Security Number
(NOTE: Signature(s) must be guaranteed if required by Instructions 2 and 5.
This Letter of Transmittal must be signed by the registered holder(s) exactly as
the name(s) appear(s) on Certificate(s) for the Outstanding Notes hereby
tendered or on a security position listing, or by any person(s) authorized to
become the registered holder(s) by endorsements and documents transmitted
herewith, including such opinions of counsel, certifications and other
information as may be required by IGT or the Trustee for the Outstanding Notes
to comply with the restrictions on transfer applicable to the Outstanding Notes.
If signature is by an attorney-in-fact, executor, administrator, trustee,
guardian, officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title. See
Instructions 2 and 5. Please complete substitute Form W-9 below.)
Signature(s) Guaranteed by an
Eligible Institution: Date:
Authorized Signature
Name of Eligible Institution Guaranteeing Signature:
Address:
Capacity (full title):
Telephone Number:
<PAGE>
- --------------------------------------- ---------------------------------------
SPECIAL DELIVERY INSTRUCTIONS SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 2, 5 and 6) (See Instructions 2, 5 and 6)
To be completed ONLY if Exchange To be completed ONLY if the
Notes or any Outstanding Notes Exchange Notes or any Outstanding
that are not tendered are to be Notes that are not tendered are to
sent to someone other than the be issued in the name of someone
registered holder(s) of the other than the registered
Outstanding Notes whose name(s) holder(s) of the Outstanding Notes
appear(s) above, or to such whose name(s) appear(s) above.
registered holder(s) at an address
other than that shown above.
Mail: Issue:
[__] Outstanding Notes not [__] Outstanding Notes not
tendered, to: tendered, to:
[__] Exchange Notes, to: [__] Exchange Notes, to:
Address Name(s)
------------------------ ------------------------
Name(s) Address
------------------------ ------------------------
Telephone Number: Telephone Number:
(Tax Identification or Social Security (Tax Identification or Social Security
Number) Number)
- --------------------------------------- ---------------------------------------
INSTRUCTIONS
(Forming part of the terms and conditions of the Exchange Offer)
1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offers - Procedures for Tendering Outstanding Notes" in the Prospectus.
Certificates, or timely confirmation of a book-entry transfer of such
Outstanding Notes into the Exchange Agent's account at DTC, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date. The term
"book-entry confirmation" means a timely confirmation of book-entry transfer of
Outstanding Notes into the Exchange Agent's account at DTC. Outstanding Notes
may be tendered in whole or in part in integral multiples of $1,000 principal
amount.
Holders who wish to tender their Outstanding Notes and: (i) whose
Certificates for such Outstanding Notes are not immediately available; (ii) who
cannot deliver their Certificates, this Letter of Transmittal and all other
required documents to the Exchange Agent prior to the Expiration Date; or (iii)
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis, may tender their Outstanding Notes by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offers - Procedures for Tendering
Outstanding Notes" in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying this Letter of Transmittal, must be
received by the Exchange Agent prior to the Expiration Date; and (iii) the
Certificates (or a book-entry confirmation) representing all tendered
Outstanding Notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents required by this
<PAGE>
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offers - Procedures for
Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed Delivery.
For Outstanding Notes to be properly tendered pursuant to the guaranteed
delivery procedure, the Exchange Agent must receive a Notice of Guaranteed
Delivery prior to the Expiration Date. As used herein and in the Prospectus,
"Eligible Institution" means a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as "an eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO
LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO IGT. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
IGT will not accept any alternative, conditional or contingent tenders. Each
tendering holder, by execution of a Letter of Transmittal (or facsimile
thereof), waives any right to receive any notice of the acceptance of such
tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal
is required if: (i) this Letter of Transmittal is signed by the registered
holder (which shall include any participant in DTC whose name appears on a
security position listing as the owner of the Outstanding Notes) of Outstanding
Notes tendered herewith, unless such holder has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" above; or (ii) such Outstanding Notes are tendered for the account
of a firm that is an Eligible Institution. In all other cases, an Eligible
Institution must guarantee the signature(s) on this Letter of Transmittal. See
Instruction 5.
3. Inadequate Space. If the space provided in the box captioned "Description of
Outstanding Notes Tendered" is inadequate, the Certificate number(s) and/or the
principal amount of Outstanding Notes and any other required information should
be listed on a separate signed schedule and attached to this Letter of
Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of Outstanding Notes will be
accepted only in integral multiples of $1,000 principal amount. If less than all
the Outstanding Notes evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Outstanding Notes which are to be tendered in
the box entitled "Principal Amount Tendered (if less than all)." In such case,
new Certificate(s) for the remainder of the Outstanding Notes that were
evidenced by the old Certificate(s) will be sent to the tendering holder, unless
the appropriate boxes on this Letter of Transmittal are completed, promptly
after the Expiration Date. All Outstanding Notes represented by Certificates
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to the Expiration Date. In order for a withdrawal to
be effective, a written, telegraphic or facsimile transmission of such notice of
withdrawal must be timely received by the Exchange Agent at its address set
forth above prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person who tendered the Outstanding Notes to be
withdrawn, the aggregate principal amount of Outstanding Notes to be withdrawn,
and (if Certificates for such Outstanding Notes have been tendered) the name of
the registered holder of the Outstanding Notes as set forth on the
Certificate(s), if different from that of the person who tendered such
Outstanding Notes. If Certificates for Outstanding Notes have been delivered or
otherwise identified to the Exchange Agent, the notice of withdrawal must
specify the serial numbers on the particular Certificates for the Outstanding
Notes to be withdrawn and the signature on the notice of withdrawal must be
<PAGE>
guaranteed by an Eligible Institution, except in the case of Outstanding Notes
tendered for the account of an Eligible Institution. If Outstanding Notes have
been tendered pursuant to the procedures for book-entry transfer set forth in
"The Exchange Offers - Procedures for Tendering Outstanding Notes," the notice
of withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Outstanding Notes and must otherwise comply with
the procedures of DTC. Withdrawals of tenders of Outstanding Notes may not be
rescinded. Outstanding Notes properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any
subsequent time prior to the Expiration Date by following any of the procedures
described in the Prospectus under "The Exchange Offers - Procedures for
Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by IGT, in its sole
discretion, which determination shall be final an binding on all parties.
Neither IGT, any affiliates of IGT, the Exchange Agent or any other person shall
be under any duty to give any notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Any Outstanding Notes which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this
Letter of Transmittal is signed by the registered holder(s) of the Outstanding
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) or on a security position listing,
without alteration, enlargement or any change whatsoever.
If any of the Outstanding Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different names on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are names in
which Certificates are registered.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to IGT, in its sole discretion, of such persons' authority to so
act.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Outstanding Notes listed and transmitted hereby, the
Certificate(s) must be endorsed or accompanied by appropriate bond power(s),
signed exactly as the name(s) of the registered owner appear(s) on the
Certificate(s), and also must be accompanied by such opinions of counsel,
certifications and other information as IGT or the Trustee for the Outstanding
Notes may require in accordance with the restrictions on transfer applicable to
the Outstanding Notes. Signature(s) on such Certificate(s) or bond power(s) must
be guaranteed by an Eligible Institution.
6. Special Issuance and Delivery Instructions. If Exchange Notes or Certificates
for Outstanding Notes not exchanged are to be issued in the name of a person
other than the signer of this Letter of Transmittal, or are to be sent to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. In the case of issuance in a different name, the taxpayer
identification number of the person named must also be indicated. Holders
tendering Outstanding Notes by book-entry transfer may request that Outstanding
Notes not exchanged be credited to such account maintained at DTC as such holder
may designate. If no such instructions are given, Outstanding Notes not
exchanged will be returned by mail or, if tendered by book-entry transfer, by
crediting the account indicated above maintained at DTC.
7. Irregularities. IGT will determine, in its sole discretion, all questions as
to the form of documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Outstanding Notes, which determination
shall be final and binding on all parties. IGT reserves the absolute right, in
its sole and absolute discretion, to reject any and all tenders determined by it
not to be in proper form or the acceptance for exchange of which may, in the
view of counsel to IGT, be unlawful. IGT also reserves the absolute right,
<PAGE>
subject to applicable law, to waive any of the conditions of the Exchange Offer
set forth in the Prospectus under "The Exchange Offers - Conditions to the
Exchange Offer" or any defect or irregularity in any tender of Outstanding Notes
of any particular holder whether or not similar defects or irregularities are
waived in the case of other holders. IGT's interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) will be final and binding. No tender of Outstanding Notes
will be deemed to have been validly made until all defects or irregularities
with respect to such tender have been cured or waived. Neither IGT, any
affiliates of IGT, the Exchange Agent, or any other person shall be under any
duty to give any notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification.
8. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth above. Additional copies of the Prospectus, the
Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from
the Exchange Agent or from your broker, dealer, commercial bank, trust company
or other nominee.
9. Backup Withholding; Substitute Form W-9. Under U.S. Federal income tax law, a
holder whose tendered Outstanding Notes are accepted for exchange is required to
provide the Exchange Agent with such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If the Exchange Agent is not
provided with the correct TIN, the Internal Revenue Service (the "IRS") may
subject the holder or other payee to a $50 penalty. In addition, payments to
such holders or other payees with respect to Outstanding Notes exchanged
pursuant to the Exchange Offer may be subject to 31% backup withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes are
registered in more than one name or are not in the name of the actual owner,
consult the Instructions to Form W-9 (Request for Identification Number and
Certification) for additional guidance on which number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the Instructions to Form W-9 (Request for Identification Number
and Certification) for additional guidance on which holders are exempt from
backup withholding.
Backup withholding is not an additional U.S. federal income tax. Rather,
the U.S. federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. Mutilated, Lost, Destroyed or Stolen Certificates. If any Certificate
representing Outstanding Notes has been mutilated, lost, destroyed or stolen,
the holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
<PAGE>
Certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing mutilated, lost, destroyed or
stolen Certificates have been followed.
11. Security Transfer Taxes. Holders who tender their Outstanding Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith, except that if Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
Outstanding Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Outstanding Notes in connection with the Exchange Offer,
then the amount of any such transfer tax (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such transfer tax or exemption therefrom is
not submitted with the Letter of Transmittal, the amount of such transfer tax
will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING TENDERED OUTSTANDING NOTES OR A BOOK ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS:
(See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE Part 1 - PLEASE PROVIDE YOUR Social security number or
TIN ON THE LINE AT RIGHT AND Employer identification number
Form W-9 CERTIFY BY SIGNING AND DATING
BELOW
Department of Part 2 - CERTIFICATION - Under penalties of perjury, I
the Treasury certify that:
Internal Revenue
Service (1) The number shown on this form is my correct taxpayer
identification number (or I am waiting for a number to be
issued to me);
Payer's Request (2) I am not subject to backup withholding either because: for
Taxpayer's (a) I am exempt from backup withholding; (b) I have not been
Identification notified by the Internal Revenue Service ("IRS") that I am
Number (TIN) subject to backup withholding as a result of a failure to
report all interest or dividends; or (c) the IRS has notified
me that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true and
correct.
Certification Instructions - You must cross out item (2)
above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to
backup withholding.
--------------------------------------------------------------
SIGNATURE Part 3 - Awaiting TIN [__]
DATE
--------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN
CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
--------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF
AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under
penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or
delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or
Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by
the time of payment, 31% of all payments made to me on account
of the Exchange Notes shall be retained until I provide a
taxpayer identification number to the Exchange Agent and that,
if I do not provide my taxpayer identification number within
60 days, such retained amounts shall be remitted to the
<PAGE>
Internal Revenue Service as backup withholding and 31% of all
reportable payments made to me thereafter will be withheld and
remitted to the Internal Revenue Service until I provide a
taxpayer identification number.
SIGNATURE: DATE:
Notice of Guaranteed Delivery
for Tender of
7.875% Senior Notes Due May 15, 2004
(the "Outstanding Notes")
of
INTERNATIONAL GAME TECHNOLOGY
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to tender Outstanding Notes pursuant to the Exchange Offer
described in the Prospectus dated , 1999 (as the same may be amended or
supplemented from time to time, the "Prospectus") of International Game
Technology ("IGT"), if certificates for the Outstanding Notes are not
immediately available, or time will not permit the Outstanding Notes, the Letter
of Transmittal and all other required documents to be delivered to The Bank of
New York (the "Exchange Agent") prior to 5:00 p.m., New York City time, on ,
1999 or such later date and time to which the Exchange Offer may be extended
(the "Expiration Date"), or the procedures for delivery by book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery, or
one substantially equivalent to this form, must be delivered by hand or sent by
facsimile transmission or mail to the Exchange Agent, and must be received by
the Exchange Agent prior to the Expiration Date. See "The Exchange Offers -
Procedures for Tendering Outstanding Notes" in the Prospectus. Capitalized terms
used but not defined herein shall have the same meaning given them in the
Prospectus.
The Exchange Agent
for the Exchange Offer is:
The Bank of New York
By Facsimile: By Registered or Certified Mail:
(Eligible Institutions only)
The Bank of New York
(212) 815-6339 101 Barclay Street (7 East)
Attention: Customer Service New York, New York 10286
Confirm by Telephone: (212) 815-3738 Attention: Diane Amorso
By Hand or Overnight Courier:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Services Window
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to IGT, upon the terms and subject to the
conditions set forth in the Prospectus and the related Letter of Transmittal,
the Outstanding Notes indicated below pursuant to the guaranteed delivery
<PAGE>
procedures set forth in the Prospectus under the caption "The Exchange Offers -
Procedures for Tendering Outstanding Notes."
Name(s) of Registered Holder(s):
(Please Print or Type)
Signature(s):
Address(es):
Area Code(s) and Telephone Number(s):
Account Number:
Date:
Certificate No(s). Principal Amount of Outstanding
(if available) Notes Tendered*
* Must be in integral multiples of $1,000 principal amount.
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or a correspondent in the United States or an
"eligible guarantor institution: within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees that the
undersigned will deliver to the Exchange Agent the certificates representing the
Outstanding Notes being tendered hereby in proper form for transfer (or a
confirmation of book-entry transfer of such Outstanding Notes, into the Exchange
Agent's account at the book-entry transfer facility of The Depository Trust
Company ("DTC")) with delivery of a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees
and any other required documents, all within three New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed Delivery.
Name of Firm:
Authorized Signature
Address:
Zip Code
Name:
Please Print or Type
Title:
Telephone No.:
Dated:
<PAGE>
The institution that completes this form must communicate the guarantee to
the Exchange Agent and must deliver the certificates representing any
Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding
Notes into the Exchange Agent's account at DTC) and the Letter of Transmittal to
the Exchange Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
INTERNATIONAL GAME TECHNOLOGY
Offer to Exchange its
7.875% Senior Exchange Notes Due May 15, 2004
Which Have Been Registered Under the Securities Act of 1933
For Any and All of its Outstanding
7.875% Senior Notes Due May 15, 2004
Pursuant to the Prospectus Dated , 1999
TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES:
International Game Technology ("IGT") is offering to exchange (the "Exchange
Offer"), upon and subject to the terms and conditions set forth in the enclosed
Prospectus, dated , 1999 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), its 7.875% Senior Exchange Notes due
May 15, 2004 which have been registered under the Securities Act of 1933 (the
"Exchange Notes") for any and all of its outstanding 7.875% Senior Notes due May
1, 2004 (the "Outstanding Notes"). The Exchange Offer is being made in order to
satisfy certain obligations of IGT contained in the Registration Rights
Agreement, dated as of May 11, 1999, among IGT, Salomon Smith Barney Inc., BNY
Capital Markets, Inc., Goldman, Sachs & Co., Lehman Brothers Inc. and Merrill
Lynch, Pierce, Fenner & Smith, Incorporated.
In connection with the Exchange Offer, we are requesting that you contact
your clients for whom you hold Outstanding Notes registered in your name or in
the name of your nominee, or who hold Outstanding Notes registered in their own
names. IGT will not pay any fees or commissions to any broker, dealer or other
person in connection with the solicitation of tenders pursuant to the Exchange
Offer. However, you will, upon request, be reimbursed for reasonable
out-of-pocket expenses incurred in connection with soliciting acceptances of the
Exchange Offer. IGT will pay or cause to be paid all transfer taxes applicable
to the exchange of Outstanding Notes pursuant to the Exchange Offer, except as
set forth in the Prospectus and the Letter of Transmittal.
For your information and for forwarding to your clients, we are enclosing the
following documents:
1. Prospectus dated , 1999;
2. A Letter of Transmittal for your use and for the information of your
clients;
3. A form of Notice of Guaranteed Delivery; and
4. A form of letter which may be sent to your clients for whose account you
hold Outstanding Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON 1999 (THE "EXPIRATION DATE"), UNLESS EXTENDED BY IGT (IN
WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST DATE AND TIME TO
WHICH THE EXCHANGE OFFER IS EXTENDED). THE OUTSTANDING NOTES TENDERED PURSUANT
TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN
THE PROSPECTUS AND THE LETTER OF TRANSMITTAL, AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly completed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, should be sent to the Exchange
Agent and certificates representing the Outstanding Notes should be delivered to
the Exchange Agent, all in accordance with the instructions set forth in the
Prospectus and the Letter of Transmittal.
<PAGE>
If holders of Outstanding Notes wish to tender, but it is impracticable for
them to forward their certificates for Outstanding Notes prior to the expiration
of the Exchange Offer or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus and the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to the
Exchange Agent for the Outstanding Notes, at its address and telephone number
set forth on the front of the Letter of Transmittal.
Very truly yours,
International Game Technology
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER
PERSON AS AN AGENT OF IGT OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM
WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS OR THE LETTER OF TRANSMITTAL.
INTERNATIONAL GAME TECHNOLOGY
Offer to Exchange its
7.875% Senior Exchange Notes Due May 15, 2004
Which Have Been Registered Under the Securities Act of 1933
For Any and All of its Outstanding
7.875% Senior Notes Due May 15, 2004
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated , 1999 (the
"Prospectus"), and a form of Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of International
Game Technology ("IGT") to exchange its 7.875% Senior Exchange Notes due May 15,
2004, which have been registered under the Securities Act of 1933 (the "Exchange
Notes"), for any and all of its outstanding 7.875% Senior Notes due May 1, 2004
(the "Outstanding Notes"), upon the terms and subject to the conditions
described in the Prospectus and the Letter of Transmittal. The Exchange Offer is
being made in order to satisfy certain obligations of IGT contained in the
Registration Statement, dated as of May 11, 1999, among IGT, Salomon Smith
Barney Inc., BNY Capital Markets, Inc., Goldman, Sachs & Co., Lehman Brothers
Inc. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated.
This material is being forwarded to you as the beneficial owner of the
Outstanding Notes carried by us in your account but not registered in your name.
A TENDER OF SUCH OUTSTANDING NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Outstanding Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the Outstanding Notes on your behalf in accordance with
the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00
p.m., New York City time, on , 1999, unless extended by IGT (the "Expiration
Date"). Any Outstanding Notes tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Prospectus and the Letter
of Transmittal, at any time prior to the Expiration Date.
If you wish to have us tender your Outstanding Notes, please so instruct us
by completing, executing and returning to us the instruction form included with
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OUTSTANDING NOTES.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein, including the Prospectus and the accompanying form
of Letter of Transmittal, relating to the Exchange Offer made by International
Game Technology with respect to its Outstanding Notes.
This will instruct you as to the action to be taken by you relating to the
Exchange Offer with respect to the Outstanding Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the Letter of Transmittal.
<PAGE>
The aggregate principal amount of the Outstanding Notes held by you for the
account of the undersigned is (fill in amount):
$ ----------------
of the 7.875% Senior Notes due May 15, 2004
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[__] To TENDER the following Outstanding Notes held by you for the account of
the undersigned (insert aggregate principal amount at maturity of
Outstanding Notes to be tendered, in integral multiples of $1,000):
$ ----------------
of the 7.875% Senior Notes due May 15, 2004
[__] NOT to tender any Outstanding Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations, warranties and agreements contained
din the Letter of Transmittal that are to be made with respect to the
undersigned as beneficial owner.
SIGN HERE
Name of beneficial owner(s):
Signature(s):
Name(s) (please print):
Address:
Telephone Number:
Taxpayer Identification or Social Security Number(s):
Date:
None of the Outstanding Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Outstanding Notes held
by us for your account.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON , 1999,
UNLESS EXTENDED (THE "EXPIRATION DATE").
- ------------------------------------------------------------------------------
INTERNATIONAL GAME TECHNOLOGY
LETTER OF TRANSMITTAL
Offer To Exchange Its 8.375% Senior Exchange Notes Due May 15, 2009
Which Have Been Registered Under The Securities Act of 1933
For Any And All Of Its Outstanding
8.375% Senior Notes Due May 15, 2009
Pursuant To The Prospectus Dated , 1999
The Exchange Agent
for the Exchange Offer is:
The Bank of New York
By Facsimile: By Registered or Certified Mail:
(Eligible Institutions only)
The Bank of New York
(212) 815-6339 101 Barclay Street
Attention: Customer Service New York, New York 10286
Confirm by Telephone: (212) 815-3738 Attention: Diane Amorso
By Hand or Overnight Courier:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Services Window
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Outstanding Notes
(as defined below) either if Outstanding Notes are to be forwarded herewith or
if tenders of Outstanding Notes are to be made by book-entry transfer to an
account maintained by The Bank of New York (the "Exchange Agent") at The
Depository Trust Company ("DTC") pursuant to the procedures set forth in "The
Exchange Offers - Procedures for Tendering Outstanding Notes" in the Prospectus.
Holders of Outstanding Notes whose certificates (the "Certificates") for such
Outstanding Notes are not immediately available or who cannot deliver their
Certificates, this Letter of Transmittal and all other required documents to the
Exchange Agent on or prior to the Expiration Date or who cannot complete the
procedures for book-entry transfer on a timely basis, may tender their
Outstanding Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offers - Procedures for Tendering Outstanding Notes" in the
Prospectus.
<PAGE>
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
List below the Outstanding Notes of which you are a holder. If the space
provided below is inadequate, list the certificate numbers and principal amount
on a separate signed schedule and attach that schedule to this Letter of
Transmittal. See Instruction 3.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
Description of Outstanding Notes Tendered ____________________________________
- --------------------------------------------------------------------------------
Name(s) and Addresses(es) of
Registered Holder(s)
(Fill in, if blank) Outstanding Notes Tendered
- --------------------------------------------------------------------------------
Certificate
Number(s)* Principal Amount Principal
(Attach (Attach Amount
additional additional list Tendered (if
list if if necessary) less than
necessary) all)**
$
Total Amount Tendered: $ $
- --------------------------------------------------------------------------------
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Need not be completed if tendering for exchange all Outstanding Notes held.
Outstanding Notes may be tendered in whole or in part in integral multiples
of $1,000 principal amount. All Outstanding Notes held shall be deemed
tendered unless a lesser number is specified in this column. See Instruction
4.
(Boxes Below To Be Checked by Eligible Institutions Only. See Instruction 1)
[__] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE
AGENT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
[__] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
<PAGE>
Date of Notice of Guaranteed Delivery:
Institution Which Guaranteed Delivery:
If Guaranteed Delivery is to be made by book-entry transfer:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
[__] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
Telephone Number and Contact Person:
Ladies and Gentlemen:
The undersigned hereby tenders to International Game Technology ( "IGT") the
above described principal amount of IGT's 8.375% Senior Notes due May 15, 2009
(the "Outstanding Notes") in exchange for a like principal amount of IGT's
8.375% Senior Exchange Notes due May 15, 2009 (the "Exchange Notes"), which have
been registered under the Securities Act of 1933 (the "Securities Act"), upon
the terms and subject to the conditions set forth in the Prospectus dated , 1999
(as the same may be amended or supplemented from time to time, the
"Prospectus"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer").
Subject to and effective upon the acceptance for exchange of the Outstanding
Notes tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of IGT all right, title and interest in and to such
Outstanding Notes as are being tendered herewith. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent as its agent and
attorney-in-fact (with full knowledge that the Exchange Agent is also acting as
agent of IGT in connection with the Exchange Offer and as Trustee under the
Indenture for the Outstanding Notes and the Exchange Notes) with respect to the
tendered Outstanding Notes, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest), subject only to
the right of withdrawal described in the Prospectus, to: (i) deliver such
Outstanding Notes to IGT together with all accompanying evidences of transfer
and authenticity to, or upon the order of, IGT upon receipt by the Exchange
Agent, as the undersigned's agent, of the Exchange Notes to be issued in
exchange for such Outstanding Notes; (ii) present Certificates for such
Outstanding Notes for transfer, and to transfer such Outstanding Notes on the
account books maintained by DTC; and (iii) receive for the account of IGT all
benefits and otherwise exercise all rights of beneficial ownership of such
Outstanding Notes, all in accordance with the terms and conditions of the
Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OUTSTANDING NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, IGT WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE
AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE
OUTSTANDING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR
PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL
<PAGE>
DOCUMENTS DEEMED BY IGT OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER OF THE OUTSTANDING NOTES
TENDERED HEREBY. THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE
EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Outstanding Notes.
The Certificate number(s) and the Outstanding Notes that the undersigned wishes
to tender should be indicated in the appropriate boxes above.
If any tendered Outstanding Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Outstanding Notes will be returned (or, in the case
of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes
will be credited to an account maintained at DTC), without expense to the
tendering holder promptly following the expiration or termination of the
Exchange Offer.
The undersigned understands that tenders of Outstanding Notes pursuant to any
one of the procedures described in "The Exchange Offers - Procedures for
Tendering Outstanding Notes" in the Prospectus and in the instructions herein
will, upon IGT's acceptance for exchange of such tendered Outstanding Notes,
constitute a binding agreement between the undersigned and IGT upon the terms
and subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, IGT may not be
required to accept for exchange any of the Outstanding Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
Certificates representing Outstanding Notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please deliver Exchange Notes to the undersigned at the address
shown below the undersigned's signature.
BY TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT: (i) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF IGT (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT), OR
IF THE UNDERSIGNED IS AN AFFILIATE, THE UNDERSIGNED WILL COMPLY WITH THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT TO THE
EXTENT APPLICABLE; (ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE
BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS; AND (iii) THE UNDERSIGNED
HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A
DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE
RECEIVED IN THE EXCHANGE OFFER. IF THE UNDERSIGNED IS NOT A BROKER-DEALER, BY
TENDERING OUTSTANDING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED REPRESENTS AND AGREES THAT IT IS NOT ENGAGED IN, AND DOES NOT INTEND
TO ENGAGE IN, A DISTRIBUTION OF EXCHANGE NOTES. IF THE UNDERSIGNED IS A
BROKER-DEALER THAT WILL RECEIVE EXCHANGE NOTES FOR ITS OWN ACCOUNT IN EXCHANGE
FOR OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER, BY TENDERING OUTSTANDING
NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED REPRESENTS AND
AGREES THAT SUCH OUTSTANDING NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES
AND IT WILL DELIVER A PROSPECTUS MEETING THE REQUIREMENTS OF THE SECURITIES ACT
IN CONNECTION WITH ANY RESALE OF EXCHANGE NOTES (PROVIDED THAT, BY SO
ACKNOWLEDGING AND BY DELIVERY A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE
DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES
ACT). IGT HAS AGREED THAT STARTING ON THE EXPIRATION DATE AND ENDING ON THE
<PAGE>
CLOSE OF BUSINESS 180 DAYS AFTER OF THE EXPIRATION DATE, IT WILL MAKE THE
PROSPECTUS AVAILABLE TO ANY PARTICIPATING BROKER-DEALER IN CONNECTION WITH ANY
SUCH RESALE.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus and in the Instructions contained in this Letter of
Transmittal, this tender is irrevocable.
PLEASE SIGN HERE PLEASE SIGN HERE
Authorized Signature Authorized Signature
Name: Name:
Title: Title:
Address: Address:
Telephone Number: Telephone Number:
Dated: Dated:
Taxpayer Identification or Social Taxpayer Identification or Social
Security Number Security Number
(NOTE: Signature(s) must be guaranteed if required by Instructions 2 and 5.
This Letter of Transmittal must be signed by the registered holder(s) exactly as
the name(s) appear(s) on Certificate(s) for the Outstanding Notes hereby
tendered or on a security position listing, or by any person(s) authorized to
become the registered holder(s) by endorsements and documents transmitted
herewith, including such opinions of counsel, certifications and other
information as may be required by IGT or the Trustee for the Outstanding Notes
to comply with the restrictions on transfer applicable to the Outstanding Notes.
If signature is by an attorney-in-fact, executor, administrator, trustee,
guardian, officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title. See
Instructions 2 and 5. Please complete substitute Form W-9 below.)
Signature(s) Guaranteed by an
Eligible Institution: Date:
Authorized Signature
Name of Eligible Institution Guaranteeing Signature:
Address:
Capacity (full title):
Telephone Number:
<PAGE>
- --------------------------------------- --------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 2, 5 and 6) (See Instructions 2, 5 and 6)
To be completed ONLY if the To be completed ONLY if Exchange
Exchange Notes or any Outstanding Notes or any Outstanding Notes
Notes that are not tendered are to that are not tendered are to be
be issued in the name of someone sent to someone other than the
other than the registered registered holder(s) of the
holder(s) of the Outstanding Notes Outstanding Notes whose name(s)
whose name(s) appear(s) above. appear(s) above, or to such
registered holder(s) at an address
other than that shown above.
Issue: Mail:
[__] Outstanding Notes not [__] Outstanding Notes not
tendered, to: tendered, to:
[__] Exchange Notes, to: [__] Exchange Notes, to:
Name(s) Address
Address Name(s)
Telephone Number: Telephone Number:
(Tax Identification or Social (Tax Identification or Social
Security Number) Security Number)
- --------------------------------------- --------------------------------------
INSTRUCTIONS
(Forming part of the terms and conditions of the Exchange Offer)
1. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offers - Procedures for Tendering Outstanding Notes" in the Prospectus.
Certificates, or timely confirmation of a book-entry transfer of such
Outstanding Notes into the Exchange Agent's account at DTC, as well as this
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date. The term
"book-entry confirmation" means a timely confirmation of book-entry transfer of
Outstanding Notes into the Exchange Agent's account at DTC. Outstanding Notes
may be tendered in whole or in part in integral multiples of $1,000 principal
amount.
Holders who wish to tender their Outstanding Notes and: (i) whose
Certificates for such Outstanding Notes are not immediately available; (ii) who
cannot deliver their Certificates, this Letter of Transmittal and all other
required documents to the Exchange Agent prior to the Expiration Date; or (iii)
who cannot complete the procedures for delivery by book-entry transfer on a
timely basis, may tender their Outstanding Notes by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offers - Procedures for Tendering
Outstanding Notes" in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution (as defined below);
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying this Letter of Transmittal, must be
received by the Exchange Agent prior to the Expiration Date; and (iii) the
Certificates (or a book-entry confirmation) representing all tendered
Outstanding Notes, in proper form for transfer, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
<PAGE>
any required signature guarantees and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offers - Procedures for
Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed Delivery.
For Outstanding Notes to be properly tendered pursuant to the guaranteed
delivery procedure, the Exchange Agent must receive a Notice of Guaranteed
Delivery prior to the Expiration Date. As used herein and in the Prospectus,
"Eligible Institution" means a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as "an eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY AND PROPER INSURANCE SHOULD BE OBTAINED. NO
LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO IGT. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
IGT will not accept any alternative, conditional or contingent tenders. Each
tendering holder, by execution of a Letter of Transmittal (or facsimile
thereof), waives any right to receive any notice of the acceptance of such
tender.
2. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal
is required if: (i) this Letter of Transmittal is signed by the registered
holder (which shall include any participant in DTC whose name appears on a
security position listing as the owner of the Outstanding Notes) of Outstanding
Notes tendered herewith, unless such holder has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" above; or (ii) such Outstanding Notes are tendered for the account
of a firm that is an Eligible Institution. In all other cases, an Eligible
Institution must guarantee the signature(s) on this Letter of Transmittal. See
Instruction 5.
3. Inadequate Space. If the space provided in the box captioned "Description of
Outstanding Notes Tendered" is inadequate, the Certificate number(s) and/or the
principal amount of Outstanding Notes and any other required information should
be listed on a separate signed schedule and attached to this Letter of
Transmittal.
4. Partial Tenders and Withdrawal Rights. Tenders of Outstanding Notes will be
accepted only in integral multiples of $1,000 principal amount. If less than all
the Outstanding Notes evidenced by any Certificate submitted are to be tendered,
fill in the principal amount of Outstanding Notes which are to be tendered in
the box entitled "Principal Amount Tendered (if less than all)." In such case,
new Certificate(s) for the remainder of the Outstanding Notes that were
evidenced by the old Certificate(s) will be sent to the tendering holder, unless
the appropriate boxes on this Letter of Transmittal are completed, promptly
after the Expiration Date. All Outstanding Notes represented by Certificates
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to the Expiration Date. In order for a withdrawal to
be effective, a written, telegraphic or facsimile transmission of such notice of
withdrawal must be timely received by the Exchange Agent at its address set
forth above prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person who tendered the Outstanding Notes to be
withdrawn, the aggregate principal amount of Outstanding Notes to be withdrawn,
and (if Certificates for such Outstanding Notes have been tendered) the name of
the registered holder of the Outstanding Notes as set forth on the
Certificate(s), if different from that of the person who tendered such
Outstanding Notes. If Certificates for Outstanding Notes have been delivered or
otherwise identified to the Exchange Agent, the notice of withdrawal must
specify the serial numbers on the particular Certificates for the Outstanding
<PAGE>
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Outstanding Notes
tendered for the account of an Eligible Institution. If Outstanding Notes have
been tendered pursuant to the procedures for book-entry transfer set forth in
"The Exchange Offers - Procedures for Tendering Outstanding Notes," the notice
of withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Outstanding Notes and must otherwise comply with
the procedures of DTC. Withdrawals of tenders of Outstanding Notes may not be
rescinded. Outstanding Notes properly withdrawn will not be deemed validly
tendered for purposes of the Exchange Offer, but may be retendered at any
subsequent time prior to the Expiration Date by following any of the procedures
described in the Prospectus under "The Exchange Offers - Procedures for
Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by IGT, in its sole
discretion, which determination shall be final an binding on all parties.
Neither IGT, any affiliates of IGT, the Exchange Agent or any other person shall
be under any duty to give any notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Any Outstanding Notes which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after withdrawal.
5. Signatures on Letter of Transmittal, Assignments and Endorsements. If this
Letter of Transmittal is signed by the registered holder(s) of the Outstanding
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) or on a security position listing,
without alteration, enlargement or any change whatsoever.
If any of the Outstanding Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different names on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are names in
which Certificates are registered.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to IGT, in its sole discretion, of such persons' authority to so
act.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Outstanding Notes listed and transmitted hereby, the
Certificate(s) must be endorsed or accompanied by appropriate bond power(s),
signed exactly as the name(s) of the registered owner appear(s) on the
Certificate(s), and also must be accompanied by such opinions of counsel,
certifications and other information as IGT or the Trustee for the Outstanding
Notes may require in accordance with the restrictions on transfer applicable to
the Outstanding Notes. Signature(s) on such Certificate(s) or bond power(s) must
be guaranteed by an Eligible Institution.
6. Special Issuance and Delivery Instructions. If Exchange Notes or Certificates
for Outstanding Notes not exchanged are to be issued in the name of a person
other than the signer of this Letter of Transmittal, or are to be sent to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. In the case of issuance in a different name, the taxpayer
identification number of the person named must also be indicated. Holders
tendering Outstanding Notes by book-entry transfer may request that Outstanding
Notes not exchanged be credited to such account maintained at DTC as such holder
may designate. If no such instructions are given, Outstanding Notes not
exchanged will be returned by mail or, if tendered by book-entry transfer, by
crediting the account indicated above maintained at DTC.
7. Irregularities. IGT will determine, in its sole discretion, all questions as
to the form of documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Outstanding Notes, which determination
shall be final and binding on all parties. IGT reserves the absolute right, in
its sole and absolute discretion, to reject any and all tenders determined by it
not to be in proper form or the acceptance for exchange of which may, in the
view of counsel to IGT, be unlawful. IGT also reserves the absolute right,
<PAGE>
subject to applicable law, to waive any of the conditions of the Exchange Offer
set forth in the Prospectus under "The Exchange Offers - Conditions to the
Exchange Offer" or any defect or irregularity in any tender of Outstanding Notes
of any particular holder whether or not similar defects or irregularities are
waived in the case of other holders. IGT's interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) will be final and binding. No tender of Outstanding Notes
will be deemed to have been validly made until all defects or irregularities
with respect to such tender have been cured or waived. Neither IGT, any
affiliates of IGT, the Exchange Agent, or any other person shall be under any
duty to give any notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification.
8. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth above. Additional copies of the Prospectus, the
Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from
the Exchange Agent or from your broker, dealer, commercial bank, trust company
or other nominee.
9. Backup Withholding; Substitute Form W-9. Under U.S. Federal income tax law, a
holder whose tendered Outstanding Notes are accepted for exchange is required to
provide the Exchange Agent with such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If the Exchange Agent is not
provided with the correct TIN, the Internal Revenue Service (the "IRS") may
subject the holder or other payee to a $50 penalty. In addition, payments to
such holders or other payees with respect to Outstanding Notes exchanged
pursuant to the Exchange Offer may be subject to 31% backup withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes are
registered in more than one name or are not in the name of the actual owner,
consult the Instructions to Form W-9 (Request for Identification Number and
Certification) for additional guidance on which number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the Instructions to Form W-9 (Request for Identification Number
and Certification) for additional guidance on which holders are exempt from
backup withholding.
Backup withholding is not an additional U.S. federal income tax. Rather,
the U.S. federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. Mutilated, Lost, Destroyed or Stolen Certificates. If any Certificate
representing Outstanding Notes has been mutilated, lost, destroyed or stolen,
the holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate. This Letter of Transmittal and related documents cannot be
<PAGE>
processed until the procedures for replacing mutilated, lost, destroyed or
stolen Certificates have been followed.
11. Security Transfer Taxes. Holders who tender their Outstanding Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith, except that if Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of the
Outstanding Notes tendered, or if a transfer tax is imposed for any reason other
than the exchange of Outstanding Notes in connection with the Exchange Offer,
then the amount of any such transfer tax (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such transfer tax or exemption therefrom is
not submitted with the Letter of Transmittal, the amount of such transfer tax
will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING TENDERED OUTSTANDING NOTES OR A BOOK ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
<PAGE>
TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS:
(See Instruction 9)
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE Part 1 - PLEASE PROVIDE YOUR Social security number or
TIN ON THE LINE AT RIGHT AND Employer identification number
Form W-9 CERTIFY BY SIGNING AND DATING
BELOW
Department of Part 2 - CERTIFICATION - Under penalties of perjury, I
the Treasury certify that:
Internal Revenue
Service (1) The number shown on this form is my correct taxpayer
identification number (or I am waiting for a number to be
issued to me);
Payer's Request (2) I am not subject to backup withholding either because: for
Taxpayer's (a) I am exempt from backup withholding; (b) I have not been
Identification notified by the Internal Revenue Service ("IRS") that I am
Number(TIN) subject to backup withholding as a result of a failure to
report all interest or dividends; or (c) the IRS has notified
me that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true and
correct.
Certification Instructions - You must cross out item (2)
above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting
interest or dividends on your tax return and you have not
been notified by the IRS that you are no longer subject to
backup withholding.
--------------------------------------------------------------
SIGNATURE Part 3 - Awaiting TIN [__]
DATE
--------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN
CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF
ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
--------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and either
(1) I have mailed or delivered an application to receive a
taxpayer identification number to the appropriate Internal
Revenue Service Center or Social Security Administration
Office or (2) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a
taxpayer identification number by the time of payment, 31%
of all payments made to me on account of the Exchange Notes
shall be retained until I provide a taxpayer identification
number to the Exchange Agent and that, if I do not provide
my taxpayer identification number within 60 days, such
retained amounts shall be remitted to the Internal Revenue
Service as backup withholding and 31% of all reportable
payments made to me thereafter will be withheld and remitted
to the Internal Revenue Service until I provide a taxpayer
identification number.
<PAGE>
SIGNATURE: DATE:
Notice of Guaranteed Delivery
for Tender of
8.375% Senior Notes Due May 15, 2009
(the "Outstanding Notes")
of
INTERNATIONAL GAME TECHNOLOGY
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to tender Outstanding Notes pursuant to the Exchange Offer
described in the Prospectus dated , 1999 (as the same may be amended or
supplemented from time to time, the "Prospectus") of International Game
Technology ("IGT"), if certificates for the Outstanding Notes are not
immediately available, or time will not permit the Outstanding Notes, the Letter
of Transmittal and all other required documents to be delivered to The Bank of
New York (the "Exchange Agent") prior to 5:00 p.m., New York City time, on ,
1999 or such later date and time to which the Exchange Offer may be extended
(the "Expiration Date"), or the procedures for delivery by book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery, or
one substantially equivalent to this form, must be delivered by hand or sent by
facsimile transmission or mail to the Exchange Agent, and must be received by
the Exchange Agent prior to the Expiration Date. See "The Exchange Offers -
Procedures for Tendering Outstanding Notes" in the Prospectus. Capitalized terms
used but not defined herein shall have the same meaning given them in the
Prospectus.
The Exchange Agent
for the Exchange Offer is:
The Bank of New York
By Facsimile: By Registered or Certified Mail:
(Eligible Institutions only)
The Bank of New York
(212) 815-6339 101 Barclay Street
Attention: Customer Service New York, New York 10286
Confirm by Telephone: (212) 815-3738 Attention: Diane Amorso
By Hand or Overnight Courier:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Services Window
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to IGT, upon the terms and subject to the
conditions set forth in the Prospectus and the related Letter of Transmittal,
the Outstanding Notes indicated below pursuant to the guaranteed delivery
<PAGE>
procedures set forth in the Prospectus under the caption "The Exchange Offers -
Procedures for Tendering Outstanding Notes."
Name(s) of Registered Holder(s):
(Please Print or Type)
Signature(s):
Address(es):
Area Code(s) and Telephone Number(s):
Account Number:
Date:
Certificate No(s). Principal Amount of Outstanding
(if available) Notes Tendered*
* Must be in integral multiples of $1,000 principal amount.
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or a correspondent in the United States or an
"eligible guarantor institution: within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees that the
undersigned will deliver to the Exchange Agent the certificates representing the
Outstanding Notes being tendered hereby in proper form for transfer (or a
confirmation of book-entry transfer of such Outstanding Notes, into the Exchange
Agent's account at the book-entry transfer facility of The Depository Trust
Company ("DTC")) with delivery of a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees
and any other required documents, all within three New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed Delivery.
Name of Firm:
Authorized Signature
Address:
Zip Code
Name:
Please Print or Type
Title:
Telephone No.:
Dated:
<PAGE>
The institution that completes this form must communicate the guarantee to
the Exchange Agent and must deliver the certificates representing any
Outstanding Notes (or a confirmation of book-entry transfer of such Outstanding
Notes into the Exchange Agent's account at DTC) and the Letter of Transmittal to
the Exchange Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
INTERNATIONAL GAME TECHNOLOGY
Offer to Exchange its
8.375% Senior Exchange Notes Due May 15, 2009
Which Have Been Registered Under the Securities Act of 1933
For Any and All of its Outstanding
8.375% Senior Notes Due May 15, 2009
Pursuant to the Prospectus Dated , 1999
TO: BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES:
International Game Technology ("IGT") is offering to exchange (the "Exchange
Offer"), upon and subject to the terms and conditions set forth in the enclosed
Prospectus, dated , 1999 (the "Prospectus"), and the enclosed Letter of
Transmittal (the "Letter of Transmittal"), its 8.375% Senior Exchange Notes due
May 15, 2009 which have been registered under the Securities Act of 1933 (the
"Exchange Notes") for any and all of its outstanding 8.375% Senior Notes due May
1, 2009 (the "Outstanding Notes"). The Exchange Offer is being made in order to
satisfy certain obligations of IGT contained in the Registration Rights
Agreement, dated as of May 11, 1999, among IGT, Salomon Smith Barney Inc., BNY
Capital Markets, Inc., Goldman, Sachs & Co., Lehman Brothers Inc. and Merrill
Lynch, Pierce, Fenner & Smith, Incorporated.
In connection with the Exchange Offer, we are requesting that you contact
your clients for whom you hold Outstanding Notes registered in your name or in
the name of your nominee, or who hold Outstanding Notes registered in their own
names. IGT will not pay any fees or commissions to any broker, dealer or other
person in connection with the solicitation of tenders pursuant to the Exchange
Offer. However, you will, upon request, be reimbursed for reasonable
out-of-pocket expenses incurred in connection with soliciting acceptances of the
Exchange Offer. IGT will pay or cause to be paid all transfer taxes applicable
to the exchange of Outstanding Notes pursuant to the Exchange Offer, except as
set forth in the Prospectus and the Letter of Transmittal.
For your information and for forwarding to your clients, we are enclosing the
following documents:
1. Prospectus dated , 1999;
2. A Letter of Transmittal for your use and for the information of your
clients;
3. A form of Notice of Guaranteed Delivery; and
4. A form of letter which may be sent to your clients for whose account you
hold Outstanding Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON 1999 (THE "EXPIRATION DATE"), UNLESS EXTENDED BY IGT (IN
WHICH CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST DATE AND TIME TO
WHICH THE EXCHANGE OFFER IS EXTENDED). THE OUTSTANDING NOTES TENDERED PURSUANT
TO THE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN
THE PROSPECTUS AND THE LETTER OF TRANSMITTAL, AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly completed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, should be sent to the Exchange
Agent and certificates representing the Outstanding Notes should be delivered to
the Exchange Agent, all in accordance with the instructions set forth in the
Prospectus and the Letter of Transmittal.
<PAGE>
If holders of Outstanding Notes wish to tender, but it is impracticable for
them to forward their certificates for Outstanding Notes prior to the expiration
of the Exchange Offer or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus and the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to the
Exchange Agent for the Outstanding Notes, at its address and telephone number
set forth on the front of the Letter of Transmittal.
Very truly yours,
International Game Technology
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER
PERSON AS AN AGENT OF IGT OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM
WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS OR THE LETTER OF TRANSMITTAL.
INTERNATIONAL GAME TECHNOLOGY
Offer to Exchange its
8.375% Senior Exchange Notes Due May 15, 2009
Which Have Been Registered Under the Securities Act of 1933
For Any and All of its Outstanding
8.375% Senior Notes Due May 15, 2009
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated , 1999 (the
"Prospectus"), and a form of Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of International
Game Technology ("IGT") to exchange its 8.375% Senior Exchange Notes due May 15,
2009, which have been registered under the Securities Act of 1933 (the "Exchange
Notes"), for any and all of its outstanding 8.375% Senior Notes due May 1, 2009
(the "Outstanding Notes"), upon the terms and subject to the conditions
described in the Prospectus and the Letter of Transmittal. The Exchange Offer is
being made in order to satisfy certain obligations of IGT contained in the
Registration Rights Agreement, dated as of May 11, 1999, among IGT, Salomon
Smith Barney Inc., BNY Capital Markets, Inc., Goldman, Sachs & Co., Lehman
Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated.
This material is being forwarded to you as the beneficial owner of the
Outstanding Notes carried by us in your account but not registered in your name.
A TENDER OF SUCH OUTSTANDING NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Outstanding Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the Outstanding Notes on your behalf in accordance with
the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00
p.m., New York City time, on , 1999, unless extended by IGT (the "Expiration
Date"). Any Outstanding Notes tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Prospectus and the Letter
of Transmittal, at any time prior to the Expiration Date.
If you wish to have us tender your Outstanding Notes, please so instruct us
by completing, executing and returning to us the instruction form included with
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OUTSTANDING NOTES.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein, including the Prospectus and the accompanying form
of Letter of Transmittal, relating to the Exchange Offer made by International
Game Technology with respect to its Outstanding Notes.
This will instruct you as to the action to be taken by you relating to the
Exchange Offer with respect to the Outstanding Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the Letter of Transmittal.
<PAGE>
The aggregate principal amount of the Outstanding Notes held by you for the
account of the undersigned is (fill in amount):
$ ----------------
of the 8.375% Senior Notes due May 15, 2009
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[__] To TENDER the following Outstanding Notes held by you for the account of
the undersigned (insert aggregate principal amount at maturity of
Outstanding Notes to be tendered, in integral multiples of $1,000):
$ ----------------
of the 8.375% Senior Notes due May 15, 2009
[__] NOT to tender any Outstanding Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations, warranties and agreements contained
din the Letter of Transmittal that are to be made with respect to the
undersigned as beneficial owner.
SIGN HERE
Name of beneficial owner(s):
Signature(s):
Name(s) (please print):
Address:
Telephone Number:
Taxpayer Identification or Social Security Number(s):
Date:
None of the Outstanding Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Outstanding Notes held
by us for your account.
