Exhibit 4.5
JPMorgan Chase Bank, National Association
X.X. Xxx 000
60 Victoria Embankment
Xxxxxx XX0X 0XX
England
December 23, 2004
To: Scientific Games Corporation
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Re: Warrants Amendment
The purpose of this letter agreement amendment (the "Amendment") is to
amend the terms and conditions of the Transaction (the "Transaction") entered
into between JPMorgan Chase Bank, N.A., London Branch ("JPMorgan") and
Scientific Games Corporation ("Counterparty") pursuant to a letter agreement
(the "Confirmation") dated December 23, 2004 pursuant to which JPMorgan is
purchasing from Counterparty a Number of Warrants equal to 4,295,532. This
Amendment relates to, and sets forth the terms of, the purchase by JPMorgan from
Counterparty of an additional Number of Warrants (the "Additional Number of
Warrants"). Upon the effectiveness of this Amendment to the Confirmation, all
references to "Number of Warrants" and "Transaction" in the Confirmation, as
amended, will include the Additional Number of Warrants purchased by JPMorgan
pursuant to the terms set forth below, and all references to "Daily Number of
Warrants" in the Confirmation, as amended, will include the "Additional Daily
Number of Warrants" specified below. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Confirmation.
The terms relating to the purchase of the Additional Number of Warrants are as
follows:
1. The "Trade Date" will be December 27, 2004.
2. The "Additional Number of Warrants" will equal a Number of Warrants
determined by JPMorgan not to exceed 429,553; provided that if the Additional
Number of Options under the amendment, dated December 23, 2004, to the letter
agreement dated December 23, 2004 between JPMorgan and Counterparty is less than
12,500, the Additional Number of Warrants shall bear the same proportion to
429,553 as the Additional Number of Options bears to 12,500.
3. The "Premium" for the Additional Number of Warrants will be determined by the
Calculation Agent on the Exchange Business Day following the last day of the
Initial Execution Period based on the pricing grid attached hereto as Annex A.
If the Execution Price is between two stock price amounts in the pricing grid,
the Premium will be determined by a straight-line interpolation between the
stock prices. If the Execution Price is not set forth in the pricing grid
because it is greater than the highest stock price amount in the pricing grid or
less than the lowest stock price in the pricing grid, the Calculation Agent will
determine the Premium using the same methodology that was used to create the
pricing grid. The Calculation Agent will notify Counterparty on the date on
which the Premium is determined of the Premium, the Additional Number of
Warrants, the Additional Daily Number of Warrants and the Execution Price. For
the avoidance of doubt, the "Additional Daily Number of Warrants" will equal the
Additional Number of Warrants divided by 60.
4. The "Premium Payment Date" for the Additional Number of Warrants will be the
second Exchange Business Day following the last day of the Initial Execution
Period.
5. The "Execution Price" for the Additional Number of Warrants will equal the
volume-weighted average price per Share, as determined by the Calculation Agent,
at which JPMorgan or its affiliates effects certain purchases of Shares for its
own account during the Initial Execution Period.
6. The "Initial Execution Period" means each of the days, beginning on and
including the Trade Date and ending no later than December 31, 2004, on which
JPMorgan or an affiliate of JPMorgan effects certain purchases of Shares for its
own account in connection with this Amendment.
7. Counterparty represents and warrants to JPMorgan that each of it and its
affiliates is not, on the date hereof, in possession of material non-public
information with respect to Counterparty. If at any time during the Initial
Execution Period Counterparty or any of its affiliates becomes aware of any
material non-public information with respect to Counterparty, Counterparty shall
notify JPMorgan of such occurrence (but not the nature of such information),
JPMorgan (or its affiliates) as promptly as practicable shall cease effecting
any further transactions in the Shares, and the Initial Execution Period will
end at the time of such cessation.
8. Early Unwind. In the event the sale by Counterparty to the initial purchasers
of an additional USD 25,000,000 principal amount of Convertible Senior
Subordinated Debentures due 2024 (the "Additional Convertible Notes") as a
result of the exercise of the right granted with respect to such Additional
Convertible Notes is not consummated with the initial purchasers for any reason
by the Premium Payment Date (the "Early Unwind Date"), this Amendment shall
automatically terminate (the "Early Unwind") on the Early Unwind Date and (i)
this Amendment and all of the respective rights and obligations of JPMorgan and
Counterparty under this Amendment shall be cancelled and terminated and (ii)
each party shall be released and discharged by the other party from and agrees
not to make any claim against the other party with respect to any obligations or
liabilities of the other party arising out of and to be performed in connection
with this Amendment either prior to or after the Early Unwind Date.
9. Counterparty hereby repeats the representations, warranties and agreements
contained in the Confirmation with respect to the Amendment or with respect to
the Confirmation, as amended by the Amendment, as the context requires.
10. Except as amended hereby, all the terms of the Transaction and provisions in
the Confirmation shall remain and continue in full force and effect and are
hereby confirmed in all respects.
11. This Amendment may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if all of the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Amendment and returning it to EDG Confirmation
Group, X.X. Xxxxxx Securities Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000-0000, or by fax on 000 000 0000.
Very truly yours,
X.X. Xxxxxx Securities Inc., as
agent for JPMorgan Chase Bank,
National Association
By: _________________________
Authorized Signatory
Name:
Accepted and confirmed as of the date hereof:
Scientific Games Corporation
By:____________________________
Authorized Signatory
Name:
ANNEX A
PRICING GRID
Execution Price Premium Execution Price Premium
--------------- ------- --------------- -------
$22.00 $1,407,265.00 $24.00 $1,810,504.50
$22.10 $1,426,331.00 $24.10 $1,831,846.00
$22.20 $1,445,515.00 $24.20 $1,853,296.50
$22.30 $1,464,816.50 $24.30 $1,874,856.00
$22.40 $1,484,235.50 $24.40 $1,896,523.50
$22.50 $1,503,771.00 $24.50 $1,918,298.00
$22.60 $1,523,423.00 $24.60 $1,940,180.50
$22.70 $1,543,190.50 $24.70 $1,962,169.00
$22.80 $1,563,073.50 $24.80 $1,984,264.00
$22.90 $1,583,071.50 $24.90 $2,006,465.00
$23.00 $1,603,183.50 $25.00 $2,028,771.00
$23.10 $1,623,410.00 $25.10 $2,051,182.00
$23.20 $1,643,750.00 $25.20 $2,073,697.50
$23.30 $1,664,203.00 $25.30 $2,096,317.00
$23.40 $1,684,769.00 $25.40 $2,119,039.50
$23.50 $1,705,447.00 $25.50 $2,141,865.50
$23.60 $1,726,236.50 $25.60 $2,164,793.50
$23.70 $1,747,138.00 $25.70 $2,187,824.00
$23.80 $1,768,149.50 $25.80 $2,210,956.00
$23.90 $1,789,274.00 $25.90 $2,234,189.00
