Exhibit 10.1


 


Execution
Version


 


International Game Technology


 


3.25% Convertible Notes Due
2014


 






 


Purchase Agreement


 


May 5,
2009


 


	
  Goldman, Sachs &
  Co.

  
	
   

  	
  As Representative of the
  several Purchasers

  
	
   

  	
  named in Schedule I hereto
  (the “Representative”)

  
	
  c/o  Goldman, Sachs & Co.

  
	
  85 Broad Street

  
	
  New York, New York 10004

  



 


Ladies and Gentlemen:


 


International
Game Technology, a Nevada corporation (the “Company”), proposes, subject to the
terms and conditions stated herein, to issue and sell to the purchasers named
in Schedule I hereto (the “Purchasers”) an aggregate of $725,000,000 principal
amount of the 3.25% Convertible Notes due May 1, 2014, convertible into
common stock par value $0.00015625 (“Stock”) of the Company, specified above
(the “Firm Securities”) and, at the election of the Purchasers, up to an
aggregate of $125,000,000 additional principal amount of such Notes (the
“Optional Securities”) (the Firm Securities and the Optional Securities which
the Purchasers elect to purchase pursuant to Section 2 hereof are herein
collectively called the “Securities”). 
Goldman, Sachs & Co. will act as the global coordinator for the
offering, and together with Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Wachovia Capital
Markets, LLC, will act as joint book-running managers for the offering and ABN
AMRO Incorporated will act as lead manager.


 


In
connection with the offering of the Securities, the Company is entering into
convertible note hedge and warrant transactions with one or more Purchasers or
affiliates thereof (each, a “Hedge and Warrant Counterparty”) pursuant to
confirmation letters, dated the date hereof, subject to an agreement in the
form of the 1992 ISDA Master Agreement (Multicurrency — Cross Border) (collectively,
the “Hedge and Warrant Documentation,” and the confirmation letters relating to
the convertible note hedge transactions, the “Convertible Note Hedge
Confirmations” and the confirmation letters relating to the warrant
transaction, the “Warrant Confirmations”).


 


1.                                       The Company
represents and warrants as of the Applicable Time and each Time of Delivery
(each as defined below), and agrees with, each of the Purchasers and the Hedge
and Warrant Counterparties that:


 


(a)                                  A preliminary
offering circular, dated May 4, 2009 (the “Preliminary Offering Circular”)
and an offering circular, dated May 5, 2009 (the “Offering Circular”), have
been prepared in connection with the offering of the Securities and the shares
of 


 

















 


Stock issuable upon
conversion thereof.  The Preliminary
Offering Circular, as amended or supplemented at the Applicable Time (as
defined herein), together with the Final Term Sheet (as defined herein) and any
other oral information and/or writings that the parties expressly agree in
writing (as set forth on Schedule II hereto) to treat as part of the Disclosure
Package (“Issuer Written Information”), is hereinafter referred to as the
“Disclosure Package”.  Any reference to
the Preliminary Offering Circular, the Disclosure Package or the Offering
Circular shall be deemed to refer to and include the Company’s Annual Report on
Form 10-K for the year ended September 30, 2008 (the “Form 10-K”),
the Quarterly Report on Form 10-Q for the quarter ended December 31,
2008, as amended by the Form 10-Q/A filed on February 17, 2009 (the “Form 10-Q”),
the definitive Proxy Statement on Schedule 14A, filed with the Commission on January 15,
2008, and all other documents filed subsequent to the Form 10-K with the
United States Securities and Exchange Commission (the “Commission”) pursuant to
Section 13(a), 13(c), 14 or 15(d) of the United States Securities
Exchange Act of 1934, as amended (the “Exchange Act”), on or prior to the date
of the Preliminary Offering Circular, the Disclosure Package or the Offering
Circular, as the case may be, and any reference to the Preliminary Offering
Circular, the Disclosure Package or the Offering Circular, as the case may be,
as amended or supplemented, as of any specified date, shall be deemed to
include (i) any documents filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of the Preliminary
Offering Circular, the Disclosure Package or the Offering Circular, as the case
may be, and prior to such specified date and (ii) any Additional Issuer
Information (as defined in Section 5(f)) furnished by the Company prior to
the completion of the distribution of the Securities; and all documents filed
under the Exchange Act and so deemed to be included in the Preliminary Offering
Circular, the Disclosure Package or the Offering Circular, as the case may be,
or any amendment or supplement thereto are hereinafter called the “Exchange Act
Reports”.  The Exchange Act Reports, when
they were or are filed with the Commission, conformed or will conform in all
material respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder; and no such
documents were filed with the Commission since the Commission’s close of
business on the business day immediately prior to the date of this Agreement
and prior to the execution of this Agreement except for the Company’s Current
Report on Form 8-K filed with the Commission on the date of this
Agreement.  The Preliminary Offering
Circular and the Offering Circular and any amendments or supplements thereto
and the Exchange Act Reports did not and will not, as of their respective
dates, contain 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; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by any Purchaser through the Representative expressly
for use therein;


 


(b)                                 The Disclosure
Package as of 5:00 p.m. (Eastern time) on the date hereof (the “Applicable
Time”) will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by any Purchaser through the Representative expressly
for use therein;


 


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(c)                                  (i) Neither (X) any Issuer
Written Information nor (Y) the electronic road show posted on Net
Roadshow on May 4, 2009 to the extent that it is a “written communication”
(within the meaning of Rule 433(d)(8)(i) under the Act), conflicts
with the information contained in the Preliminary Offering Circular, as amended
or supplemented at the Applicable Time, or the Offering Circular and (ii) neither
(X) any such Issuer Written Information, as supplemented by and taken
together with the Disclosure Package as of the Applicable Time nor (Y) the
road show referred to in clause (i)(Y) above, as supplemented by and taken
together with the Disclosure Package as of the Applicable Time (such road show,
taken together with the Disclosure Package, the “Road Show”), includes any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by any Purchaser through the Representative expressly
for use therein;


 


(d)                                 Neither the
Company nor any of its subsidiaries has sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Disclosure Package and the Offering Circular any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Disclosure Package and the Offering Circular; and, since the respective dates as
of which information is given in the Disclosure Package and the Offering
Circular, there has not been any change in the capital stock (other than
issuances of Common Stock pursuant to existing employment agreements, stock
option and other employee benefit plans and repurchases of Common Stock
pursuant to the Company’s stock repurchase program) or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or affecting
the general affairs, management, financial position, stockholders’ equity or
results of operations of the Company and its subsidiaries, taken as whole,
otherwise than as set forth or contemplated in the Disclosure Package and the
Offering Circular;


 


(e)                                  The Company and
its subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them,
in each case free and clear of all liens, encumbrances and defects except such as
are described in the Disclosure Package and the Offering Circular or such as do
not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and its
subsidiaries; and any real property, equipment and buildings held under lease
by the Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such real property,
equipment and buildings by the Company and its subsidiaries;


 


(f)                                    The Company has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the state of Nevada, with power and authority (corporate
and other) to own its properties and conduct its business as described in the
Disclosure Package and the Offering Circular, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or 


 


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conducts any business so as
to require such qualification, except where the failure to be so qualified
would not reasonably be expected to have a material adverse effect on the
business, financial condition, prospects or results of operations of the
Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”);
and each subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, except where the failure to be so qualified
would not reasonably be expected to have a Material Adverse Effect;


 


(g)                                 The Company has
an authorized capitalization as set forth in the Disclosure Package and the
Offering Circular, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; the shares of Stock initially issuable upon conversion of the
Securities have been duly and validly authorized and reserved for issuance and,
when issued and delivered in accordance with the provisions of the Securities
and the Indenture referred to below, will be duly and validly issued, fully
paid and non-assessable, will conform to the description of the Stock contained
in the Disclosure Package and the Offering Circular; the issuance of the Stock
issuable upon conversion of the Securities will not be subject to any
preemptive or similar rights; and all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable (except that with respect to foreign
subsidiaries, this representation is limited to the extent the concepts of
fully paid and non-assessable are not recognized under the laws of their
respective jurisdiction of incorporation) and (except for directors’ qualifying
shares and that with respect to the Company’s subsidiaries in Argentina and
Iceland, a nominal number of shares are held by citizens of such jurisdictions
as required by the laws of such jurisdictions) are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities or claims;


 


(h)                                 The Securities
have been duly authorized and, when issued and delivered pursuant to this
Agreement, will have been duly executed, authenticated, issued and delivered
and will constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the indenture to be dated as of May 11,
2009 (the “Indenture”) between the Company and Wells Fargo Bank, National
Association, as Trustee (the “Trustee”), under which they are to be issued and
will be convertible into Stock in accordance with their terms and the
Indenture; the Securities will rank equal in right of payment with all of the
Company’s other unsecured and unsubordinated indebtedness; the Indenture has
been duly authorized and, when executed and delivered by the Company and the Trustee,
the Indenture will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles;
and the Securities and the Indenture will conform in all material respects to
the descriptions thereof in the Disclosure Package and the Offering Circular;


 


(i)                                     This Agreement
has been duly authorized, executed and delivered by the Company;


 


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(j)                                     The Hedge and
Warrant Documentation has been duly authorized, executed and delivered by, and
is a valid and binding agreement of, the Company, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors’ rights and to general equity principles; the Hedge and Warrant
Documentation will conform in all material respects to the descriptions thereof
in the Disclosure Package and the Offering Circular;


 


(k)                                  None of the
transactions contemplated by this Agreement (including, without limitation, the
use of the proceeds from the sale of the Securities) or the Hedge and Warrant
Documentation will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including without
limitation Regulations T, U and X of the Board of Governors of the Federal
Reserve System;


 


(l)                                     Except as
described in the Disclosure Package and the Offering Circular, each of the
Company and its subsidiaries possesses such licenses, certificates,
authorizations, approvals, franchises, permits or other rights and all
authorizations from all Federal, state or other governmental entities or
agencies (including, without limitation, any agency established by a federally
recognized Indian tribe to regulate gaming on such tribe’s reservation) which
have, or may at any time have, jurisdiction over the activities of the Company
or any of its subsidiaries or any successor to such authority, including
without limitation any such governmental entities or agencies, which has, or
may at any time have, jurisdiction over the gaming activities of the Company or
any of its subsidiaries (the “Gaming Authorities”), as are currently necessary (i) to
own its property and conduct in all material respects the business now operated
by it, (ii) for the Company to execute, deliver and perform this
Agreement, the Indenture and the Hedge and Warrant Documentation and (iii) to
consummate the transactions contemplated hereby and thereby; except as
described in the Disclosure Package and the Offering Circular, neither the
Company nor any of its subsidiaries has received any notice of proceedings or
has knowledge that any proceedings are pending or threatened, relating to the
revocation or modification of any such license, certificate, authorization,
approval, franchise, permit or other right which, individually or in the aggregate,
would be reasonably expected to have a Material Adverse Effect; except as
described in the Disclosure Package and the Offering Circular, to the best
knowledge of the Company, no Gaming Authority is investigating the Company, its
subsidiaries or its affiliates, officers, directors, stockholders or other
related parties, other than in ordinary course administrative reviews; all of
the officers and directors of the Company have complied with all necessary
suitability and qualification requirements of all Gaming Authorities and the
Company has not received any notice of any pending revocation of, or
investigation with respect to, any such qualification or suitability finding;


 


(m)                               Prior to the
date hereof, neither the Company nor any of its affiliates has taken any action
which is designed to or which has constituted or which might have been expected
to cause or result in stabilization or manipulation of the price of any
security of the Company in connection with the offering of the Securities;


 


(n)                                 Subject to the
accuracy of the representations and warranties of the Purchasers in Section 3
hereof, the issue and sale of the Securities and the compliance by the Company
with all of the provisions of the Securities, the Indenture, the Hedge and
Warrant Documentation and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or result
in a breach or 


 


5

















 


violation of any of the
terms or provisions of, or constitute a default under, (i) any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, or (ii) the
provisions of the Certificate of Incorporation or By-laws of the Company or (iii) any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties (including, without limitation, any laws, rules or
regulations of any Gaming Authority), except, with respect to clauses (i) and
(iii), to the extent such breach, conflict, violation or default would not
reasonably be expected to have a Material Adverse Effect;


 


(o)                                 No consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body, including Gaming Authorities, is
required for the issue and sale of the Securities or the consummation by the
Company of the transactions contemplated by this Agreement, the Indenture or
the Hedge and Warrant Documentation, except for such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Securities by the Purchasers, and such other approvals as have been duly
obtained and are in full force and effect;


 


(p)                                 Neither the
Company nor any of its subsidiaries is in violation of (i) its Certificate
of Incorporation or By-laws or (ii) in default in the performance or
observance of any obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be bound,
except with respect to clause (ii) to the extent such default would not
reasonably be expected to have a Material Adverse Effect;


 


(q)                                 The statements
set forth in the Disclosure Package and the Offering Circular (i) under
the captions “Description of Notes”, “Description of Common Stock” and “Plan of
Distribution”, insofar as they purport to constitute a summary of the terms of
the Securities, the Stock and this Agreement, respectively, and (ii) under
the caption “Certain United States Federal Income Tax Consequences”, insofar as
they purport to describe the provisions of the tax laws referred to therein,
are accurate and complete in all material respects;


 


(r)                                    Other than as
set forth in the Disclosure Package and the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which would individually or in the aggregate
reasonably be expected to have a Material Adverse Effect; to the Company’s
knowledge, no Gaming Authority or any other governmental agencies are
investigating the Company or any related party, other than in ordinary course
administrative reviews or in any ordinary course review of the transactions
contemplated hereby; and, to the best of the Company’s knowledge, no such legal
or governmental or Gaming Authority proceedings are threatened;


 


(s)                                  When the
Securities are issued and delivered pursuant to this Agreement, the Securities
will not be of the same class (within the meaning of Rule 144A under the
United States Securities Act of 1933, as amended (the “Act”)) as securities
which are listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;


 


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(t)                                    The Company is
subject to and in compliance in all material respects with the requirements of Section 13
or 15(d) of the Exchange Act; and the Company has made all filings
required by the Commission in a timely manner to ensure the availability of Form S-3;


 


(u)                                 The Company is
not, and after giving effect to the offering and sale of the Securities and the
application of the net proceeds thereof as contemplated in the Disclosure
Package and the Offering Circular, will not be an “investment company”, as such
term is defined in the United States Investment Company Act of 1940, as amended
(the “Investment Company Act”);


 


(v)                                 Neither the
Company or any affiliate of the Company, nor any person acting on its or their
behalf, has offered or sold the Securities by means of any general solicitation
or general advertising within the meaning of Rule 

502(c) under the Act;


 


(w)                               It is not
necessary in connection with the offer, sale and delivery of the Securities to
the Purchasers in the manner contemplated by this Agreement to register the
Securities under the Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended;


 


(x)                                   Within the
preceding six months, neither the Company nor any other person acting on behalf
of the Company has offered or sold to any person any Securities, or any
securities of the same or a similar class as the Securities, other than
Securities offered or sold to the Purchasers hereunder.  The Company will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in the United
States or to any U.S. person (as defined in Rule 902 under the Act) of any
Securities or any substantially similar security issued by the Company, within
six months subsequent to the date on which the distribution of the Securities
has been completed (as notified to the Company by the Representative), is made
under restrictions and other circumstances reasonably designed not to affect
the status of the offer and sale of the Securities in the United States and to
U.S. persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Act;


 


(y)                                 Deloitte &
Touche LLP, which has audited certain financial statements of the Company and
its subsidiaries and has audited the Company’s internal control over financial
reporting, is an independent registered public accounting firm as required by
the Act and the rules and regulations of the Commission thereunder;


 


(z)                                   Except as
disclosed in the Disclosure Package and the Offering Circular, and except as
would not reasonably be expected to have a Material Adverse Effect, the Company
and its subsidiaries own, or have valid, binding and enforceable licenses or
other rights to use, free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects and other like restrictions,
all Intellectual Property (as defined below) necessary to conduct the business
of the Company and its subsidiaries in the manner presently conducted, without
any conflict with the rights of others; “Intellectual Property” means all
patents, patent applications, trademarks, trademark applications, trade names,
service marks, service names, copyrights, trade secrets, know how (including
all unpatented or unpatentable proprietary or confidential information, systems
or procedures), technology, inventions, designs, processes, methods, technical
data and information or other intangible asset, other proprietary intellectual
property right or any license or other right to use any of the foregoing;


 


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(aa)                            The Company and
each of its subsidiaries maintain (i) effective internal control over
financial reporting (as defined in Rule 13a-15 under the Exchange Act) as
described in the Form 10-K and (ii) a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions
are executed in accordance with management’s general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (C) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences;


 


(bb)                          Since the end
of the Company’s most recent audited fiscal year, there has been (i) no
material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and (ii) no change in the Company’s internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting;


 


(cc)                            The Company and
its subsidiaries maintain an effective system of “disclosure controls and
procedures” (as defined in Rule 13a-15 under the Exchange Act) that is
effective at the reasonable assurance level as described in the Form 10-K
and that is designed to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Commission’s rules and forms, including controls and procedures designed
to ensure that such information is accumulated and communicated to the
Company’s management as appropriate to allow timely decisions regarding
required disclosure.  The Company and its
subsidiaries have carried out evaluations of the effectiveness of their
disclosure controls and procedures of the end of the Company’s last completed
fiscal quarter;


 


(dd)                          There is and
has been no material failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such, to comply with
any provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith;


 


(ee)                            Neither the
Company nor any of its subsidiaries or affiliates, nor any director, officer, or
employee, nor, to the Company’s knowledge, any agent or representative of the
Company or of any of its subsidiaries or affiliates, has taken or will take any
action in furtherance of an offer, payment, promise to pay, or authorization or
approval of the payment or giving of money, property, gifts or anything else of
value, directly or indirectly, to any “government official” (including any
officer or employee of a government or government-owned or controlled entity or
of a public international organization, or any person acting in an official
capacity for or on behalf of any of the foregoing, or any political party or
party official or candidate for political office) to influence official action
or secure an improper advantage; and the Company and its subsidiaries and
affiliates have conducted their businesses in compliance with applicable
anti-corruption laws and have instituted and maintain and will continue to
maintain policies and procedures designed to promote and achieve compliance
with such laws and with the representation and warranty contained herein;


 


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(ff)                                The operations
of the Company and its subsidiaries are and have been conducted at all times in
material compliance with all applicable financial recordkeeping and reporting
requirements, including those of the Bank Secrecy Act, as amended by Title III
of the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”),
and the applicable anti-money laundering statutes of jurisdictions where the
Company and its subsidiaries conduct business, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
“Anti-Money Laundering Laws”), and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries with respect to the Anti-Money
Laundering Laws is pending or, to the best knowledge of the Company,
threatened; and


 


(gg)                          (i) Neither
the Company nor any of its subsidiaries (collectively, the “Entity”) is an
individual or entity (“Person”) that is, or is owned or controlled by a Person
that is (A) the subject of any sanctions administered or enforced by the
U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the
United Nations Security Council (“UNSC”), the European Union (“EU”) or Her
Majesty’s Treasury (“HMT”) (collectively, “Sanctions”), nor (B) located,
organized or resident in a country or territory that is the subject of
Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North
Korea, Sudan and Syria); (ii) the Entity represents and covenants that it
will not, directly or indirectly, use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other Person:  (A) to
fund or facilitate any activities or business of or with any Person or in any
country or territory that, at the time of such funding or facilitation, is the
subject of Sanctions; or (B) in any other manner that will result in a
violation of Sanctions by any Person (including any Person participating in the
offering, whether as underwriter, advisor, investor or otherwise); and (iii) the
Entity represents and covenants that it has not knowingly engaged in, is not
now knowingly engaged in, and will not knowingly engage prior to the completion
of the offering in, any dealings or transactions with any Person, or in any
country or territory, in violation of Sanctions.


 


2.                                       Subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
each of the Purchasers, and each of the Purchasers agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 97.0% of the
principal amount thereof, the principal amount of Securities set forth opposite
the name of such Purchaser in Schedule I hereto.


 


The Company hereby grants an option to the
several Purchasers to purchase, severally and not jointly, at their election
(exercised jointly through the Representative) up to $125,000,000 aggregate
principal amount of Optional Securities, at the purchase price set forth in the
first paragraph of this Section 2. 
Any such election to purchase Optional Securities may be exercised in
whole or from time to time in part by written notice from you through the
Representative to the Company, setting forth the aggregate principal amount of
Optional Securities to be purchased and the date on which such Optional
Securities are to be delivered, as determined by you, but in no event earlier
than three business days after the date of such notice (unless otherwise agreed
between the Company and the Representative) or prior to the First Time of
Delivery (as defined below) and in any event no later than the last day in the
13-day period commencing on and including the First Time of Delivery (as
defined below).


 


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3.                                       Upon the
authorization by you of the release of the Securities, the several Purchasers
agree to offer the Securities for sale upon the terms and conditions set forth
in this Agreement, the Disclosure Package and the Offering Circular, and each
Purchaser hereby represents and warrants to, and agrees with, the Company,
severally and not jointly, that:


 


(a)                                  It will offer
and sell the Securities only to persons who it reasonably believes are
“qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A
under the Act in transactions meeting the requirements of Rule 144A;


 


(b)                                 It will not
offer or sell the Securities by any form of general solicitation or general
advertising, including but not limited to the methods described in Rule 502(c) under
the Act; and


 


(c)                                  Without the
prior written consent of the Company, it will not use, authorize use of, refer
to or participate in the planning for use of, any material that would be deemed
to be a “free writing prospectus” under the Act if the offer or sale of the
Securities or Stock were registered under the Act; provided that
such material shall not include the Disclosure Package, the Offering Circular
and any other offering materials prepared by or with the prior consent of the
Company; and, provided, further, that the Purchasers may
send customary notices in respect of the offering of the Securities through the
Bloomberg system.


 


4.                                       (a)                                  The Securities
to be purchased by each Purchaser hereunder will be represented by one or more
definitive global Securities in book-entry form which will be deposited by or
on behalf of the Company to the Representative, through the facilities of The
Depository Trust Company (“DTC”) or its designated custodian.  The Company will deliver the Securities for
the account of each Purchaser, against payment by or on behalf of such
Purchaser of the purchase price therefor by wire transfer of Federal (same-day)
funds, by causing DTC to credit the Securities to the account of such
Purchaser.  The Company will cause the
certificates representing the Securities to be made available for checking and
packaging at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the “Designated
Office”).  The time and date of such
delivery and payment shall be, with respect to the Firm Securities, 9:30 a.m.,
New York City time, on May 11, 2009 or such other time and date as the
Representative and the Company may agree upon in writing, and, with respect to
the Optional Securities, 9:30 a.m., New York City time, on the date
specified by the Representative in the written notice given by the
Representative of the election to purchase such Optional Securities, or such
other time and date as the Representative and the Company may agree upon in
writing, provided that the Second Time of Delivery (as defined below),
if any, shall be within the 13-day period commencing on and including the First
Time of Delivery.  The time and date for
delivery of the Firm Securities is herein called the “First Time of Delivery”,
the time and date for delivery of the Optional Securities, if not the First
Time of Delivery, is herein called the “Second Time of Delivery”, and each such
time and date for delivery is herein called a “Time of Delivery”.


 


(b)                                 The documents
to be delivered at the Time of Delivery by or on behalf of the parties hereto
pursuant to Section 7 hereof, including the cross-receipt for the
Securities and any additional documents requested by the Representative
pursuant to Section 7(k) hereof, will be delivered at such time and
date at the offices of Cleary


 


10
















 


Gottlieb Steen &
Hamilton LLP, One Liberty Plaza, New York, New York (the “Closing Location”),
and the Securities will be delivered at the Designated Office, all at the Time
of Delivery.  A meeting will be held at
the Closing Location at 2:00 p.m., New York City time, on the business day
next preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto.


 


5.                                       The Company
agrees with each of the Purchasers:


 


(a)                                  To prepare the
Preliminary Offering Circular, the Disclosure Package and the Offering Circular
in a form approved by you; to make no amendment or any supplement to any of the
foregoing which shall be disapproved by you promptly after reasonable notice
thereof; and to furnish you with copies thereof;


 


(b)                                 Promptly from
time to time to take such action as you may reasonably request to qualify the
Securities and the shares of Stock issuable upon conversion of the Securities
for offering and sale under the securities laws of such jurisdictions as you
may request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Securities, provided that
in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction;


 


(c)                                  To furnish the
Purchasers with copies of the Preliminary Offering Circular, the Disclosure
Package and the Offering Circular and each amendment or supplement thereto and
additional written and electronic copies thereof in such quantities as you may
from time to time reasonably request, and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any event
shall have occurred as a result of which the Offering Circular as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Offering
Circular is delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement the
Offering Circular, to notify you and upon your request to prepare and furnish
without charge to you and to any dealer in securities as many written and
electronic copies as you may from time to time reasonably request of an amended
Offering Circular or a supplement to the Offering Circular which will correct
such statement or omission or effect such compliance;


 


(d)                                 During the
period beginning from the date hereof and continuing until the date 90 days
after the Time of Delivery, not to offer, sell, contract to sell or otherwise
dispose of, or file (or participate in the filing of) a registration statement
with the Commission with respect to, except as provided hereunder, any
securities of the Company that are substantially similar to the Securities or
the Stock, including but not limited to any securities that are convertible
into or exchangeable for, or that represent the right to receive, Stock or any
such substantially similar securities, without your prior written consent,
except (i) the Company may issue Stock pursuant to existing employment
agreements, stock option and other employee benefit plans consistent with past
practices and (ii) the Company may contract to issue Stock in connection
with an acquisition, provided that (A) no actual issuance of Stock
shall take place within such 90-day period and (B) such contract does not
relate to a number of shares of Stock in excess of 10% of the Company’s market
capitalization at that time.


 


11

















 


(e)                                  Not to be or
become, at any time prior to the expiration of the earlier to occur of (i) the
date on which none of the Securities are restricted securities within the
meaning of Rule 144 under the Act and (ii) one year after the last
Time of Delivery, an open-end investment company, unit investment trust,
closed-end investment company or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act;


 


(f)                                    At any time
when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, for the benefit of holders from time to time of Securities, to
furnish at its expense, upon request, to holders of Securities and prospective
purchasers of securities information (the “Additional Issuer Information”)
satisfying the requirements of subsection 

(d)(4)(i) of Rule 144A under the Act;


 


(g)                                 To furnish to
the holders of the Securities as soon as practicable after the end of each
fiscal year an annual report (including a balance sheet and statements of
income, stockholders’ equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal year
(beginning with the fiscal quarter ending after the date of the Offering
Circular), to make available to its stockholders consolidated summary financial
information of the Company and its subsidiaries for such quarter in reasonable
detail; provided that the Company shall have satisfied this obligation
to the extent its annual reports on Form 10-K and quarterly reports on Form 10-Q
are timely filed on EDGAR;


 


(h)                                 (i) During
a period of three years from the date of the Offering Circular, to furnish to
you copies of all reports or other communications (financial or other)
furnished to stockholders of the Company, and to deliver to you as soon as they
are available, copies of any reports and financial statements furnished to or
filed with the Commission or any securities exchange on which the Securities or
any class of securities of the Company is listed (or, if the Securities are not
subject to filing requirements, such information as is required by Rule 144A
under the Act), provided that any document filed on EDGAR shall be
deemed delivered; and (ii) prior to the completion of the distribution of
the Securities by the Purchasers, to furnish to you from time to time as you
may reasonably request, any additional information to update or confirm the
information previously provided to you concerning the business and financial
condition of the Company;


 


(i)                                     During the
period of twelve months after the Time of Delivery, the Company will not, and
will not permit any of its “affiliates” (as defined in Rule 144 under the
Act) to, resell any of the Securities which constitute “restricted securities”
under Rule 144 that have been reacquired by any of them;


 


(j)                                     To use the net
proceeds received by it from the sale of the Securities pursuant to this
Agreement in the manner specified in the Disclosure Package and the Offering
Circular under the caption “Use of Proceeds”;


 


(k)                                  To reserve and
keep available at all times, free of preemptive rights, shares of Stock (which
shares shall be on the same terms as the Company’s authorized and issued common
stock) for the purpose of enabling the Company to satisfy any obligations to
issue shares of its Stock upon conversion of the Securities;


 


12

















 


(l)                                     To use its best
efforts to list, subject to notice of issuance, the shares of Stock issuable
upon conversion of the Securities on the New York Stock Exchange;


 


(m)                               Without the
prior written consent of the Representative, the Company will not use,
authorize use of, refer to or participate in the planning for use of, any
material that would be deemed to be a “free writing prospectus” under the Act
if the offer or sale of the Securities or Common Stock were registered under
the Act; provided that such material shall not include the Disclosure
Package, the Offering Circular and any other offering materials prepared by or
with the prior consent of the Representative;


 


(n)                                 That any Issuer
Written Information the use of which has been consented to by the Company and
the Representative is listed on Schedule II hereto; and


 


(o)                                 To prepare a
final term sheet, containing solely a description of the Securities and the
offering thereof, in the form approved by you and attached as Annex I hereto
(the “Final Term Sheet”).


 


6.                                       The Company
covenants and agrees with the several Purchasers that the Company will pay or
cause to be paid the following:  (i) the
fees, disbursements and expenses of the Company’s counsel and accountants in
connection with the issue of the Securities and the shares of Stock issuable
upon conversion of the Securities and all other expenses in connection with the
preparation, printing and (if required) filing of the Preliminary Offering
Circular, the materials contained in the Disclosure Package and the Offering
Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost
of printing or producing this Agreement, the Indenture, the Hedge and Warrant
Documentation, the Blue Sky and Legal Investment Memoranda, if any, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities and the shares
of Stock issuable upon conversion of the Securities for offering and sale under
state securities laws as provided in Section 5(b) hereof, including
the reasonable fees and disbursements of counsel for the Purchasers in
connection with such qualification and in connection with the Blue Sky and
legal investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing the
Securities; (vi) all costs and expenses incident to the Road Show; (vii) the
fees and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; (viii) any cost incurred in connection with the listing of
the shares of Stock issuable upon conversion of the Securities; and (ix) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this
Section.  It is understood, however,
that, except as provided in this Section, and Sections 8 and 11 hereof, each
Purchaser will pay all of its own costs and expenses, including the fees of its
counsel, transfer taxes on resale of any of the Securities by it, and any
advertising expenses connected with any offers it may make.


 


13

















 


7.                                       The obligations
of each Purchaser hereunder shall be subject, in its discretion, to the
condition that all representations and warranties and other statements of the
Company herein are, at and as of each Time of Delivery, true and correct, the
condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:


 


(a)                                  Cleary Gottlieb
Steen & Hamilton LLP, counsel for the Purchasers, shall have furnished
to you such opinion or opinions, dated the Time of Delivery, with respect to
the matters as you may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them to
pass upon such matters;


 


(b)                                 O’Melveny &
Myers LLP, counsel for the Company, shall have furnished to the Purchasers and
the Hedge and Warrant Counterparties their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, in the form of Annex II;


 


(c)                                  David D.
Johnson, the General Counsel of the Company, shall have furnished to the
Purchasers and the Hedge and Warrant Counterparties a written opinion, dated
the Time of Delivery, in form and substance satisfactory to you, in the form of
Annex III;


 


(d)                                 On the date of
the Offering Circular prior to the execution of this Agreement and also at the
Time of Delivery, Deloitte & Touche LLP shall have furnished to you a
letter or letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex IV hereto.


 


(e)                                  (i) Neither
the Company nor any of its subsidiaries shall have sustained since the date of
the latest audited financial statements included or incorporated by reference
in the Disclosure Package and the Offering Circular any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Disclosure Package and the Offering Circular, and (ii) since the
respective dates as of which information is given in the Disclosure Package and
the Offering Circular, there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders’ equity or results
of operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Disclosure Package and the Offering Circular, the effect
of which, in any such case described in clause (i) or (ii), is in the
judgment of the Representative so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery of
the Securities on the terms and in the manner contemplated in this Agreement,
in the Disclosure Package and in the Offering Circular;


 


(f)                                    On or after the
date hereof (i) no downgrading shall have occurred in the rating accorded
the Company’s debt securities by any “nationally recognized statistical rating
organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Company’s debt securities;


 


14

















 


(g)                                 On or after the
date hereof there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange; (ii) a suspension or material limitation in trading
in the Company’s securities on the New York Stock Exchange; (iii) a
general moratorium on commercial banking activities declared by either Federal
or New York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war or (v) the
occurrence of any other calamity or crisis or any change in financial,
political or economic conditions in the United States or elsewhere, if, in the
case of any such event specified in clause (iv) or (v), the effect in the
judgment of the Representative makes it impracticable or inadvisable to proceed
with the offering or the delivery of the Securities on the terms and in the
manner contemplated in the Disclosure Package and the Offering Circular;


 


(h)                                 The shares of
Stock issuable upon conversion of the Securities shall have been duly listed,
subject to notice of issuance, on the New York Stock Exchange; and


 


(i)                                     The Company
shall have furnished or caused to be furnished to you at the Time of Delivery
certificates of officers of the Company satisfactory to you as to the accuracy
of the representations and warranties of the Company herein at and as of such
Time of Delivery, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Time of Delivery, as
to the matters set forth in subsection (e) of this Section and as to
such other matters as you may reasonably request.


 


8.                                       (a)                                  The Company
will indemnify and hold harmless each Purchaser against any losses, claims,
damages or liabilities, joint or several, to which such Purchaser may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Offering Circular, the Offering Circular, the Final Term Sheet,
any Issuer Written Information, the Road Show or any other written information
that the Company has authorized to be used by or on behalf of the Company in
connection with the offer or sale of the Securities, or any amendment or supplement
to any of the foregoing, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and will reimburse each Purchaser for any legal or other
expenses reasonably incurred by such Purchaser in connection with investigating
or defending any such action or claim as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Offering Circular, the Offering Circular, the Final Term Sheet,
any Issuer Written Information, the Road Show or any other written information
that the Company has authorized to be used by or on behalf of the Company in
connection with the offer or sale of the Securities, or any amendment or supplement
to any of the foregoing, in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through the
Representative expressly for use therein. 
The Company acknowledges that the information set forth on Schedule III
hereto constitutes the only information furnished in writing by or on behalf of
the Purchasers for inclusion in the Preliminary Offering Circular or the
Offering Circular or in any amendment or supplement thereto or the Road Show.


 


15

















 


(b)                                 Each Purchaser
will indemnify and hold harmless the Company, severally and not jointly,
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Circular, the Offering Circular, the
Final Term Sheet, any Issuer Written Information, the Road Show or any other
written information that the Company has authorized to be used by or on behalf
of the Company in connection with the offer or sale of the Securities, or any
amendment or supplement to any of the foregoing, or arise out of or are based
upon the omission or alleged omission to state therein a material fact or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary Offering
Circular, the Offering Circular, the Final Term Sheet, any Issuer Written
Information, the Road Show or any other written information that the Company
has authorized to be used by or on behalf of the Company in connection with the
offer or sale of the Securities, or any amendment or supplement to any of the
foregoing, in reliance upon and in conformity with written information
furnished to the Company by such Purchaser through the Representative expressly
for use therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.


 


(c)                                  Promptly after
receipt by an indemnified party under subsection (a) or (b) above of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under
such subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection.  In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.  No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim and (ii) does not
include a statement as to, or an admission of, fault, culpability or a failure
to act, by or on behalf of any indemnified party.


 


(d)                                 If the
indemnification provided for in this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the 


 


16

















 


one
hand and the Purchasers on the other from the offering of the Securities.  If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then, each indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on the
one hand and the Purchasers on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations (including any failure by the indemnified party to provide any
notice specified above).  The relative
benefits received by the Company on the one hand and the Purchasers on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Purchasers, in
each case as set forth in the Disclosure Package and the Offering
Circular.  The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or the Purchasers on the other and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The Company and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d).  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim.  Notwithstanding the provisions of
this subsection (d), no Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to investors were offered to investors
exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.


 


(e)                                  The obligations
of the Company under this Section 8 shall be in addition to any liability
which the Company may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls each Purchaser or to any
affiliate of each Purchaser within the meaning of the Act; and the obligations
of the Purchasers under this Section 8 shall be in addition to any
liability which the Purchasers may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning of the Act or
the Exchange Act.


 


9.                                       If, at the
First Time of Delivery or the Second Time of Delivery, as the case may be, any
one or more of the several Purchasers shall fail or refuse to purchase
Securities that it or they have agreed to purchase hereunder on such date, and
the aggregate principal amount of Securities which such defaulting Purchaser or
Purchasers agreed but failed or refused to purchase does not exceed 10% of the
aggregate principal amount of the Securities to be purchased on such date, the
other Purchasers shall be obligated, severally, in the proportions that the
principal amount of Firm Securities set forth opposite their respective names
on Schedule I bears to the aggregate principal amount of Firm Securities
set forth opposite the names of all such non-defaulting Purchasers, or in such
other proportions as may be specified by the Representative with the consent of
the non-defaulting Purchasers, to purchase the Securities which such defaulting
Purchaser or Purchasers agreed but failed or refused to 


 


17

















 


purchase
on such date.  If, at the First Time of
Delivery or the Second Time of Delivery, as the case may be, any one or more of
the Purchasers shall fail or refuse to purchase Securities and the aggregate
principal amount of Securities with respect to which such default occurs
exceeds 10% of the aggregate principal amount of Securities to be purchased on
such date, and arrangements satisfactory to the Representative and the Company
for the purchase of such Securities are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party (other
than a defaulting Purchaser) to any other party except that the provisions of Section 6,
Section 8 and this Section 9 shall at all times be effective and
shall survive such termination.  In any
such case either the Representative or the Company shall have the right to
postpone the First Time of Delivery or any other Time of Delivery, as the case
may be, but in no event for longer than seven days in order that the required
changes, if any, to the Offering Circular or any other documents or
arrangements may be effected.  As used in
this Agreement, the term “Purchaser” shall be deemed to include any person
substituted for a defaulting Purchaser under this Section 9.  Any action taken under this Section 9
shall not relieve any defaulting Purchaser from liability in respect of any
default of such Purchaser under this Agreement.


 


10.                                 The respective
indemnities, agreements, representations, warranties and other statements of
the Company and the Purchasers, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of the Purchasers or any controlling
person of the Purchasers, or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and payment
for the Securities.


 


11.                                 If for any
reason the Securities are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Purchasers for all of their
out-of-pocket expenses, including fees and disbursements of counsel, reasonably
incurred by the Purchasers in making preparations for the purchase, sale and
delivery of the Securities, but the Company shall then be under no further
liability to the Purchasers except as provided in Sections 6 and 8 hereof.


 


12.                                 The Company
acknowledges and agrees that:  (i) the
purchase and sale of the Securities pursuant to this Agreement, including the
determination of the offering price of the Securities and any related discounts
and commissions, is an arm’s-length commercial transaction between the Company,
on the one hand, and the Purchasers, on the other hand, and the Company is
capable of evaluating and understanding and understands and accepts the terms,
risks and conditions of the transactions contemplated by this Agreement; (ii) in
connection with each transaction contemplated hereby and the process leading to
such transaction, each Purchaser is and has been acting solely as a principal
and is not the financial advisor, agent or fiduciary of the Company or its
affiliates, stockholders, creditors or employees or any other party; (iii) no
Purchaser has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Company with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether
such Purchaser has advised or is currently advising the Company on other
matters) and no Purchaser has any obligation to the Company with respect to the
offering contemplated hereby except the obligations expressly set forth in this
Agreement; (iv) each Purchaser and its affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of
the Company and no Purchaser has any obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and (v) no
Purchaser has provided any legal, accounting, regulatory or tax advice with
respect to the offering contemplated hereby and the 


 


18

















 


Company
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it deemed appropriate.  The
Company agrees that it will not claim that the Purchasers, or any of them, has
rendered advisory services of any nature or respect, or owes a fiduciary or
similar duty to the Company, in connection with such transaction or the process
leading thereto.


 


13.                                 All statements,
requests, notices and agreements hereunder shall be in writing, and if to the
Purchasers shall be delivered or sent by mail, telex or facsimile transmission
c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004,
facsimile:  (212) 902-3000, Attention:
Registration Department; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth
in the Offering Circular, Attention: Secretary; provided, however,
that any notice to a Purchaser pursuant to Section 8 hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Purchaser at
its address set forth in its Purchasers’ Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company by you upon
request.  Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.


 


In
accordance with the requirements of the USA PATRIOT Act, the Purchasers are
required to obtain, verify and record information that identifies their
clients, including the Company, which information may include the name and
address of their clients, as well as other information that will allow the
Purchasers to properly identify their clients.


 


14.                                 This Agreement
shall be binding upon, and inure solely to the benefit of, the Purchasers, the
Company and, to the extent provided in Sections 8 and 10 hereof, the officers
and directors of the Company and each person who controls the Company or any
Purchaser, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement.  No purchaser
of any of the Securities from any Purchaser shall be deemed a successor or
assign by reason merely of such purchase.


 


15.                                 Time shall be
of the essence of this Agreement.


 


16.                                 This Agreement
supersedes all prior agreements and understandings (whether written or oral)
between the Company and the Purchasers, or any of them, with respect to the
subject matter hereof.


 


17.                                 THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.


 


18.                                 The Company and
the Purchasers hereby irrevocably waive, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby.


 


19.                                 This Agreement
may be executed by any one or more of the parties hereto in any number of
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.


 


20.                                 Notwithstanding
anything herein to the contrary, the Company is (and the Company’s employees,
representatives and other agents are) authorized, subject to applicable law, to
disclose to any and all persons, those aspects of this potential transaction
that are necessary to support any U.S. federal or state income tax benefits
expected to be claimed with respect to such transaction, and all materials of
any kind (including tax opinions and other tax analyses) related to those
benefits, without any Purchaser imposing any limitation of any kind.  However, any information relating to the tax
treatment and tax structure shall remain confidential (and the foregoing
sentence shall not apply) to the extent necessary to enable any person to
comply with securities laws.  For this
purpose, “tax treatment” means U.S. federal and state income tax treatment, and
“tax structure” is limited to any facts that may be relevant to that treatment.


 


19

















 


If
the foregoing is in accordance with your understanding, please sign and return
to us five counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  International Game
  Technology

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick W. Cavanaugh

  
	
   

  	
   

  	
  Name: Patrick W. Cavanaugh

  
	
   

  	
   

  	
  Title: Executive Vice
  President and Chief Financial Officer

  



 


 


	
  Accepted as of the date
  hereof

  	
   

  
	
  on behalf of each of the
  Purchasers:

  	
   

  
	
   

  	
   

  
	
   

  	
  Goldman, Sachs & Co.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Goldman, Sachs & Co.

  	
   

  
	
   

  	
  Goldman, Sachs & Co.

  	
   

  



 


20
















 


Schedule I


 


	
  Purchasers

  	
   

  	
  Aggregate Principal

  Amount of Firm Securities

  to be Purchased

  	
   

  
	
  Goldman, Sachs & Co.

  	
   

  	
  $

  	
  241,667,000

  	
   

  
	
  Merrill Lynch, Pierce, Fenner & Smith Incorporated

  	
   

  	
  90,625,000

  	
   

  
	
  Morgan Stanley & Co. Incorporated

  	
   

  	
  90,625,000

  	
   

  
	
  Wachovia Capital Markets, LLC

  	
   

  	
  90,625,000

  	
   

  
	
  ABN AMRO Incorporated

  	
   

  	
  90,625,000

  	
   

  
	
  Mitsubishi UFJ Securities (USA), Inc.

  	
   

  	
  30,209,000

  	
   

  
	
  BNP Paribas Securities Corp.

  	
   

  	
  15,104,000

  	
   

  
	
  Comerica Securities, Inc.

  	
   

  	
  15,104,000

  	
   

  
	
  Deutsche Bank Securities Inc.

  	
   

  	
  15,104,000

  	
   

  
	
  KeyBanc Capital Markets Inc.

  	
   

  	
  15,104,000

  	
   

  
	
  Mizuho Securities USA Inc.

  	
   

  	
  15,104,000

  	
   

  
	
  U.S. Bancorp Investments, Inc.

  	
   

  	
  15,104,000

  	
   

  
	
  Total

  	
   

  	
  $

  	
  725,000,000

  	
   

  



 


S I-1

















 


Schedule II


 


Issuer
Written Information:


 


(i) Written
Information: None.


 


(ii) Oral
Information:  Issue Price: 100%


 


S III-1

















 


Schedule III


 


Purchaser
information pursuant to Section 8(a).


 


By or on behalf of the
Purchasers:


 


The statements set forth
under the heading “Summary—Convertible Note Hedge and Warrant Transactions,” in
the first and third sentences of the third paragraph in the Preliminary
Offering Circular and the Offering Circular.


 


The statements set forth
under the heading “Risk Factors—The convertible note hedge and warrant
transactions may affect the value of the Notes and the Common Stock,” in the
first sentence of the second paragraph in the Preliminary Offering Circular and
the Offering Circular, in the first and fourth sentences of the third paragraph
in the Preliminary Offering Circular and the Offering Circular and in the
fourth paragraph in the Preliminary Offering Circular and the Offering
Circular.


 


The statements set forth
under the heading “Plan of Distribution,” in the third sentence of the second
paragraph, the first, second seventh and eighth sentences of the sixth
paragraph, the first sentence of the seventh paragraph, the first sentence of
the ninth paragraph, the first and fourth sentences of the tenth paragraph and
the second sentence of the eleventh paragraph in the Preliminary Offering
Circular and the Offering Circular.


 


S III-1

















 


Annex I


 


Form of Final Term Sheet


 


TERM
SHEET


Dated May 5, 2009


 


International Game
Technology

3.25% Convertible Notes Due 2014


 


The information in this term sheet supplements International
Game Technology’s preliminary offering circular, dated May 4, 2009 (the
“Preliminary Offering Circular”) and supersedes the information in the
Preliminary Offering Circular to the extent inconsistent with the information
in the Preliminary Offering Circular. 
This term sheet is qualified in its entirety by reference to the
Preliminary Offering Circular.  Terms
used herein but not defined herein shall have the respective meanings as set
forth in the Preliminary Offering Circular.


 


	
  Issuer:

  	
   

  	
  International Game
  Technology (NYSE: IGT)

  
	
  Title
  of securities:

  	
   

  	
  3.25% Convertible Notes Due 2014

  
	
  Aggregate
  principal amount offered:

  	
   

  	
  $725,000,000 (excluding the initial purchasers’ option to purchase up to $125,000,000 of additional Notes to cover over-allotments)

  
	
  Net
  proceeds:

  	
   

  	
  Approximately
  $701 million after deducting
  the initial purchasers’ discount and IGT’s estimated expenses (or
  approximately $822 million if the initial purchasers exercise in full their
  option to purchase additional Notes)

  
	
  Maturity:

  	
   

  	
  May 1, 2014

  
	
  Annual
  interest rate:

  	
   

  	
  3.25% per annum, accruing from the settlement date

  
	
  Issue
  price

  	
   

  	
  100.0%

  
	
  Interest payment dates:

  	
   

  	
  Each
  May 1 and November 1, beginning November 1, 2009

  
	
  Registration:

  	
   

  	
  144A

  
	
  Conversion
  rate:

  	
   

  	
  50.0808 shares of common stock per $1,000 principal amount of
  Notes

  
	
  Reference Price:

  	
   

  	
  $15.07, the
  NYSE closing price of IGT’s common stock on May 5, 2009

  
	
  Conversion premium:

  	
   

  	
  32.5% above the Reference Price

  
	
  Conversion price:

  	
   

  	
  Approximately
  $19.97 per share of common stock

  
	
  Convertible
  Note Hedge and Warrant Transactions:

  	
   

  	
   

  In
  connection with the offering of the Notes, IGT has entered into convertible
  note hedge transactions (the “convertible note hedges”) with hedge
  counterparties, including certain of the initial purchasers and their
  affiliates (the “hedge counterparties”). The convertible note hedges will
  cover, subject to customary anti-dilution adjustments, approximately 36.3
  million shares of IGT common stock, assuming the initial purchasers do not exercise
  their option to purchase additional Notes. IGT has also entered into warrant
  transactions with the hedge counterparties whereby IGT will sell to the hedge
  counterparties warrants to acquire, on a net-share settlement basis, subject
  to customary anti-dilution adjustments, the economic equivalent of
  approximately 36.3 million shares of IGT common stock (the “sold warrant
  transactions”), assuming the initial purchasers do not exercise their option
  to purchase additional Notes. If the initial purchasers exercise their option
  to purchase 

  



 


A I-1

















 


	
   

  	
   

  	
  additional
  Notes, the number of shares of Common Stock underlying the convertible note
  hedges and the sold warrant transactions will automatically increase on a pro
  rata basis, and IGT will use a portion of the net proceeds from the sale of
  the additional Notes to pay the net cost of such automatic increase.

  
	
  Joint
  Book-Running Managers:

  	
   

  	
  Goldman,
  Sachs & Co.; Merrill Lynch, Pierce, Fenner & Smith
  Incorporated; Morgan Stanley & Co. Incorporated; Wachovia Capital
  Markets LLC

  
	
  Lead
  Manager:

  	
   

  	
  ABN
  AMRO Incorporated

  
	
  Co-Managers:

  	
   

  	
  BNP
  Paribas Securities Corp.; Comerica Securities, Inc.; Deutsche Bank
  Securities Inc.; Keybanc Capital Markets Inc.; Mitsubishi UFJ
  Securities (USA), Inc.; Mizuho Securities USA Inc.; U.S. Bancorp
  Investments, Inc.

  
	
  Trade
  date:

  	
   

  	
  May 5,
  2009

  
	
  Settlement:

  	
   

  	
  May 11, 2009

  
	
  CUSIP/ISIN:

  	
   

  	
  Restricted
  CUSIP Number: 459902AQ5

  Restricted
  ISIN Number: US459902AQ56

  
	
  Adjustment
  to Conversion Rate upon a Make Whole Adjustment Event:

  	
   

  	
  The following table sets forth the Share Price paid per
  share of our common stock in the Make Whole Adjustment Event and the number
  of additional shares per $1,000 principal amount of Notes by which the
  conversion rate will be increased (subject to adjustment):

  



 


	
   

  	
   

  	
  Share Price

  	
   

  
	
  Effective Date

  	
   

  	
  $15.07

  	
   

  	
  $16.00

  	
   

  	
  $17.50

  	
   

  	
  $20.00

  	
   

  	
  $22.50

  	
   

  	
  $25.00

  	
   

  	
  $30.00

  	
   

  	
  $35.00

  	
   

  
	
  May 11, 2009

  	
   

  	
  16.2762

  	
   

  	
  14.3770

  	
   

  	
  11.8989

  	
   

  	
  8.9284

  	
   

  	
  6.9058

  	
   

  	
  5.4828

  	
   

  	
  3.6784

  	
   

  	
  2.6385

  	
   

  
	
  May 1, 2010

  	
   

  	
  16.2762

  	
   

  	
  13.8397

  	
   

  	
  11.2916

  	
   

  	
  8.2571

  	
   

  	
  6.2352

  	
   

  	
  4.8364

  	
   

  	
  3.1296

  	
   

  	
  2.1859

  	
   

  
	
  May 1, 2011

  	
   

  	
  16.2762

  	
   

  	
  13.3373

  	
   

  	
  10.6371

  	
   

  	
  7.4913

  	
   

  	
  5.4563

  	
   

  	
  4.0918

  	
   

  	
  2.4996

  	
   

  	
  1.6808

  	
   

  
	
  May 1, 2012

  	
   

  	
  16.2762

  	
   

  	
  12.9045

  	
   

  	
  9.9427

  	
   

  	
  6.5812

  	
   

  	
  4.4935

  	
   

  	
  3.1765

  	
   

  	
  1.7575

  	
   

  	
  1.1115

  	
   

  
	
  May 1, 2013

  	
   

  	
  16.2762

  	
   

  	
  12.4192

  	
   

  	
  8.9009

  	
   

  	
  5.1590

  	
   

  	
  3.0431

  	
   

  	
  1.8571

  	
   

  	
  0.8274

  	
   

  	
  0.4821

  	
   

  
	
  May 1, 2014

  	
   

  	
  16.2762

  	
   

  	
  12.4192

  	
   

  	
  7.0621

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  



 


	
   

  	
   

  	
  Share Price

  	
   

  	
   

  
	
  Effective Date

  	
   

  	
  $40.00

  	
   

  	
  $50.00

  	
   

  	
  $65.00

  	
   

  	
  $80.00

  	
   

  	
  $100.00

  	
   

  	
  $125.00

  	
   

  	
  $150.00

  	
   

  	
   

  	
   

  
	
  May 11, 2009

  	
   

  	
  1.9946

  	
   

  	
  1.2726

  	
   

  	
  0.7626

  	
   

  	
  0.5051

  	
   

  	
  0.3124

  	
   

  	
  0.1769

  	
   

  	
  0.0976

  	
   

  	
   

  	
   

  
	
  May 1, 2010

  	
   

  	
  1.6248

  	
   

  	
  1.0170

  	
   

  	
  0.6045

  	
   

  	
  0.3985

  	
   

  	
  0.2427

  	
   

  	
  0.1323

  	
   

  	
  0.0675

  	
   

  	
   

  	
   

  
	
  May 1, 2011

  	
   

  	
  1.2192

  	
   

  	
  0.7511

  	
   

  	
  0.4472

  	
   

  	
  0.2944

  	
   

  	
  0.1763

  	
   

  	
  0.0909

  	
   

  	
  0.0407

  	
   

  	
   

  	
   

  
	
  May 1, 2012

  	
   

  	
  0.7858

  	
   

  	
  0.4829

  	
   

  	
  0.2921

  	
   

  	
  0.1911

  	
   

  	
  0.1098

  	
   

  	
  0.0500

  	
   

  	
  0.0149

  	
   

  	
   

  	
   

  
	
  May 1, 2013

  	
   

  	
  0.3439

  	
   

  	
  0.2245

  	
   

  	
  0.1369

  	
   

  	
  0.0842

  	
   

  	
  0.0396

  	
   

  	
  0.0059

  	
   

  	
  0.0000

  	
   

  	
   

  	
   

  
	
  May 1, 2014

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
   

  	
   

  



 


A I-2

















 


·                  If the Share Price is greater than $150.00 per share (subject to
adjustment), the conversion rate will not be adjusted.


·                  If the Share Price is less than $15.07 per share (subject to
adjustment), the conversion rate will not be adjusted.


 


Notwithstanding the foregoing, in no event will
the total number of shares of IGT common stock issuable upon conversion exceed 66.3570  shares
per $1,000 principal amount of Notes, subject to adjustment.


 


Capitalization


 


The
following table sets forth the cash and cash equivalents position and the
consolidated capitalization of IGT as of December 31, 2008:


 


·                  on an actual basis, and


 


·                  on an as adjusted basis to give effect to
the issuance of the Notes and the receipt of the net proceeds from the sale of
the Notes, after (i) payment of the initial purchasers’ commissions and
estimated offering expenses payable by us, (ii) payment for the
convertible note hedge being entered into in connection with this offering
(assuming no exercise of the initial purchasers’ option to purchase additional
Notes), (iii) receipt of proceeds from the sale of the warrants (assuming
no exercise of the initial purchasers’ option to purchase additional Notes),
and (iv) the repayment of a portion of the outstanding borrowings under
our credit facility, as if such events took place on December 31, 2008.


 


This
table should be read in conjunction with the financial statements and related
notes thereto included in our Annual Report on Form 10-K for the year
ended September 30, 2008 and in our Quarterly Report on Form 10-Q for
the three months ended December 31, 2008 (as amended by the Form 10-Q/A
filed on February 17, 2009), which are incorporated herein by reference.


 


	
   

  	
   

  	
  As of December 31, 2008

  	
   

  
	
   

  	
   

  	
  Actual

  	
   

  	
  As Adjusted

  	
   

  
	
   

  	
   

  	
  (In millions)

  	
   

  
	
  Cash, cash equivalents

  	
   

  	
  $

  	
  261.1

  	
   

  	
  $

  	
  261.1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Indebtedness:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Foreign credit facilities

  	
   

  	
  $

  	
  10.8

  	
   

  	
  $

  	
  10.8

  	
   

  
	
  Senior credit facility

  	
   

  	
  1440.0

  	
   

  	
  833.0

  	
   

  
	
  Installment purchase contract

  	
   

  	
  2.0

  	
   

  	
  2.0

  	
   

  
	
  Existing Notes

  	
   

  	
  829.4

  	
   

  	
  829.4

  	
   

  
	
  Notes

  	
   

  	
  —

  	
   

  	
  725.0

  	
   

  
	
  Total indebtedness

  	
   

  	
  2282.2

  	
   

  	
  2400.2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stockholders’ equity:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Common stock

  	
   

  	
  0.1

  	
   

  	
  0.1

  	
   

  
	
  Additional paid in capital

  	
   

  	
  1270.0

  	
   

  	
  1175.5

  	
   

  
	
  Treasury stock

  	
   

  	
  (799.0

  	
  )

  	
  (799.0

  	
  )

  
	
  Retained earnings

  	
   

  	
  466.4

  	
   

  	
  466.4

  	
   

  
	
  Accumulated other comprehensive income

  	
   

  	
  (32.2

  	
  )

  	
  (32.2

  	
  )

  
	
  Total stockholders’ equity

  	
   

  	
  905.3

  	
   

  	
  810.8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total capitalization (excluding cash and cash equivalents)

  	
   

  	
  $

  	
  3187.5

  	
   

  	
  $

  	
  3211.0

  	
   

  



 






(1) As adjusted for issuance of the Notes and
the receipt and application of the net proceeds from the sale of the Notes.


 


A I-3

















 


Update to ‘‘Risk Factors—Risk Factors Related to the
Notes—The convertible note hedge and warrant transactions may affect the value
of the Notes and the Common Stock.’’


 


The
cost of the convertible note hedge transactions that is not covered by the
proceeds from the sale of the warrants will be approximately $94.3 million
(assuming the initial purchasers do not exercise their option to purchase
additional Notes). If the initial purchasers exercise their option to purchase
additional Notes, the number of shares of Common Stock underlying the convertible
note hedges and the sold warrant transactions will automatically increase on a
pro rata basis, and IGT will use a portion of the net proceeds from the sale of
the additional Notes to pay the net cost of such automatic increase.


 


General


 


This
communication is intended for the sole use of the person to whom it is provided
by the sender.


 


These securities have not been registered under
the Securities Act of 1933, as amended, and may only be sold to qualified
institutional buyers pursuant to Rule 144A or pursuant to another
applicable exemption.


 


This material is confidential and is for your
information only and is not intended to be used by anyone other than you.  This information does not purport to be a
complete description of these securities or the offering.


 


This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.


 


ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR
BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED.  SUCH DISCLAIMERS OR OTHER NOTICES WERE
AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA
BLOOMBERG OR ANOTHER EMAIL SYSTEM.


 


A I-4
















 


Annex II


 


Form of Opinion of O’Melveny & Myers LLP


 


May 11, 2009


 


Goldman, Sachs & Co.
     As Representative of the several
Purchasers
     named in Schedule I to the Purchase
Agreement

c/o  Goldman, Sachs & Co.

85 Broad Street

New York, New York 10004


 


Ladies and Gentlemen:


 


We have acted as counsel to International Game
Technology, a Nevada corporation (the “Company”), in connection with the offer
and sale, to the several purchasers named in Schedule I to the Purchase
Agreement (as defined below), of an aggregate of $725,000,000 principal amount
of 3.25% Convertible Notes due 2014, convertible into common stock, par value
$0.00015625 (the “Stock”), of the Company (the “Firm Securities”) and, at the
election of the Purchasers, up to an aggregate of $125,000,000 additional
principal amount of such Notes (the “Optional Securities”) (the Firm Securities
and the Optional Securities are collectively referred to as the “Securities”).
We are providing this opinion to you at the request of the Company pursuant to Section 7(b) of
the Purchase Agreement.  Except as
otherwise indicated, capitalized terms used in this opinion without definition
will have the meanings given to such terms in the Purchase Agreement.


 


In our capacity as such counsel, we have
examined originals or copies of those corporate and other records and documents
we considered appropriate including the following:


 


(a)           an
executed copy of the Purchase Agreement, dated May 5, 2009, by and between
the Company and the Purchasers (the “Purchase Agreement”);


 


(b)           the
Hedge and Warrant Documentation;


 


(c)           the form of Securities; and


 


(d)           the Indenture.


 


As to relevant factual matters, we have relied
upon, among other things, certificates of officers of the Company.  In addition, we have obtained and relied upon
those certificates of public officials we considered appropriate.


 


We have also examined the Preliminary Offering
Circular, dated May 4, 2009, prepared in connection with the offer and
sale of the Securities (the “Preliminary Offering Circular”), together with the
documents included as Schedule I hereto, and the Offering Circular, dated May 5,
2009, prepared in connection with the offer and sale of the Securities (the
“Offering Circular”).  We also have
examined the Company’s Annual Report on Form 10-K for the fiscal year
ended September 30, 2008 (the “Form 10-K”), the Company’s Quarterly
Report on Form 10-Q for the three months ended December 31, 2008 (as
amended by the Form 10-Q/A filed on February 17, 2009), the Company’s
Proxy Statement filed January 16, 2009 and the Company’s Current Reports
on Form 8-K filed December 19, 2008 (as amended by the Form 8-K/A
filed on March 6, 2009), December 30, 2008, January 9, 2009, January 28,
2009 (as amended by the Form 8-K/A filed on March 6, 2009), February 4,
2009, March 6, 2009, March 25, 2009, April 23, 2009 and May 1,
2009 (the “Incorporated Documents”).


 


A II-1

















 


We have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with originals of all documents submitted to us as copies.  We have further assumed without independent
verification that (a) the Company is duly organized, validly existing and
in good standing in the jurisdiction of its organization and has the corporate
power and authority to execute, deliver and perform its obligations under each
of the Purchase Agreement, the Indenture, the Securities and the Hedge and
Warrant Documentation (collectively, the “Operative Documents”) and (b) each
of the Operative Documents has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company.  To the extent the Company’s
obligations depend on the enforceability of the Purchase Agreement, the
Indenture or the Hedge and Warrant Documentation against the other parties to
the Purchase Agreement, the Indenture or the Hedge and Warrant Documentation,
as the case may be, we have assumed that each of the Purchase Agreement, the
Indenture and the Hedge and Warrant Documentation is enforceable against the
other parties thereto.


 


INTERNAL REVENUE SERVICE CIRCULAR 230
NOTICE:  TO ENSURE COMPLIANCE WITH
TREASURY DEPARTMENT CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT:  (A) ANY DISCUSSION OF U. S. FEDERAL
INCOME TAX ISSUES IN THIS OPINION IS NOT INTENDED OR WRITTEN TO BE RELIED UPON,
AND CANNOT BE RELIED UPON, BY YOU FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE
IMPOSED ON YOU UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS
INCLUDED HEREIN IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE
MEANING OF CIRCULAR 230) OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) YOU
SHOULD SEEK ADVICE BASED ON YOUR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT
TAX ADVISOR.


 


On the basis of such examination, our reliance
upon the assumptions in this opinion and our consideration of those questions
of law we considered relevant, and subject to the limitations and
qualifications in this opinion, we are of the opinion that:


 


(i)            The
Indenture constitutes the legally valid and binding obligation of the Company,
enforceable against the Company in accordance with its 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.


 


(ii)           Upon
payment for and delivery of the Securities in accordance with the Purchase
Agreement and the authentication of the certificates representing the
Securities by a duly authorized signatory of the Trustee, the Securities 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.


 


A II-2

















 


(iii)          The
Hedge and Warrant Documentation constitutes the legally valid and binding
obligation of the Company, enforceable against the Company in accordance with
its 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) and except as rights to indemnity and
contribution thereunder may be limited by federal or state securities laws or
principles of public policy.


 


(iv)          The
statements in the Preliminary Offering Circular, considered together with the
documents included as Schedule I hereto, and in the Offering Circular under the
captions “Description of Notes” and “Certain United States Federal Income Tax
Considerations”, insofar as they purport to summarize the provisions of laws
and documents referred to therein, are accurate and complete in all material
respects.


 


(v)           No
order, consent, permit, registration, qualification or approval of any New York
or Federal governmental authority that we have, in the exercise of customary
diligence, recognized as applicable to the Company or to the transactions of
the type contemplated by the Purchase Agreement is required on the part of the
Company for the execution and delivery of the Purchase Agreement, the
Indenture, the Hedge and Warrant Documentation or for the issuance and sale of
the Securities, except as may be required under applicable Blue Sky or state
securities laws or gaming laws.


 


(vi)          The
Company’s execution and delivery of, and performance of its obligations under,
the Indenture, the Purchase Agreement and the Hedge and Warrant Documentation,
do not (a) violate the Company’s Articles of Incorporation or By-laws, (b) violate,
breach or result in a default under, any existing obligation of or restriction
on the Company under any other agreement (the “Other Agreements”) listed as an
exhibit to the Form 10-K or (c) breach or otherwise violate any
existing obligation of or restriction on the Company under any order, judgment
or decree of any New York or federal court or governmental authority binding on
the Company and identified to us in a certificate provided by the Company,
except that we express no opinion as to the effect of the Company’s performance
of its obligations in the Purchase Agreement, the Indenture and the Hedge and
Warrant Documentation on the Company’s compliance with financial covenants in
the Other Agreements.


 


(vii)         The
Company’s execution and delivery of, and performance of its obligations under,
the Indenture, the Purchase Agreement and the Hedge and Warrant Documentation,
do not violate any New York or Federal statute, rule or regulation that we
have, in the exercise of customary professional diligence, recognized as
applicable to the Company or any of its subsidiaries or to transactions of the
type contemplated by the Indenture, the Purchase Agreement or the Hedge and
Warrant Documentation, except that we express no opinion regarding any federal
securities laws, Blue Sky or state securities laws, gaming laws, or the
indemnification and contribution sections of the Purchase Agreement, the
Indenture and the Hedge and Warrant Documentation, except as otherwise
expressly stated herein.


 


A II-3

















 


(viii)        Assuming
the accuracy of the representations of the Company in Section 1,
paragraphs (s), (v) and (x) of the Purchase Agreement, and the
Purchasers in Section 3 of the Purchase Agreement, it is not necessary in
connection with the sale of the Securities under the circumstances contemplated
by the Purchase Agreement or the initial sale of the Securities by the
Purchasers as described in the Preliminary Offering Circular and the Offering
Circular to register the Securities under the Securities Act of 1933, as amended,
or to qualify the Indenture under the Trust Indenture Act, except that we
express no opinion as to the securities laws of any state.


 


(ix)           The
Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Preliminary Offering Circular and the Offering Circular, will not be an
investment company required to register under the Investment Company Act of
1940, as amended.


 


(x)            The
Incorporated Documents, on the respective dates they were filed, appeared on
their face to comply in all material respects with the requirements as to form
for reports on Form 8-K, Form 10-Q, Form 10-K and proxy
statements, as the case may be, under the Securities Exchange Act of 1934, as
amended, and the related rules and regulations in effect at the respective
dates of their filing, except that we express no opinion concerning the
financial statements and other financial information contained or incorporated
by reference therein or omitted therefrom.


 


We have participated in conferences in
connection with the preparation of the Preliminary Offering Circular, the
documents included as Schedule I hereto and the Offering Circular and reviewed
the Preliminary Offering Circular, the documents included as Schedule I hereto,
the Offering Circular and the Incorporated Documents but we have not
independently verified the accuracy, completeness or fairness of the statements
contained or incorporated therein, and the limitations inherent in the
examination made by us and the knowledge available to us are such that we are
unable to assume, and we do not assume, any responsibility for such accuracy,
completeness or fairness (except as otherwise specifically stated in paragraph (iv) above).  Subject to the foregoing, we confirm to you
that, on the basis of the information we gained in the course of performing the
services referred to above, nothing came to our attention that caused us to
believe that (i) the Preliminary Offering Circular, including the
Incorporated Documents, considered together with the documents included as
Schedule I hereto, considered as a whole at the Applicable Time, or (ii) the
Offering Circular, including the Incorporated Documents, considered as a whole
on May 5, 2009, and as of the date hereof, contained or contain any untrue
statement of a material fact or omitted or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. 
However, we express no opinion or belief as to the financial statements
and other financial information contained or incorporated by reference in the
Preliminary Offering Circular, the documents included as Schedule I hereto, the
Offering Circular or the Incorporated Documents or omitted therefrom.


 


Our opinions in paragraphs (i), (ii) and (iii) above
as to the enforceability of the Indenture, the Securities and the Hedge and
Warrant Documentation are subject to:


 


(i)                                     public policy
considerations, statutes or court decisions that may limit the rights of a
party to obtain indemnification against its own gross negligence, willful
misconduct or unlawful conduct; and


 


(ii)                                  the
unenforceability under certain circumstances of broadly stated or vaguely
stated waiver or waivers of rights granted by law where the waivers are against
public policy or prohibited by law.


 


A II-4

















 


We express no opinion as to the effect of
subsequent issuances of securities of the Company to the extent that such
issuances may result in the Company not having enough remaining authorized but
unissued shares of Stock for the conversion of the Securities.  We also advise you that, as a result of the
conversion and adjustment provisions of the Securities, the Securities may become
convertible into more shares of Stock than remain authorized but unissued.


 


For purposes of the opinions expressed in
paragraphs (v) and (vi), we have assumed that the Company will not in the
future take any discretionary action (including a decision not to act)
permitted by the Purchase Agreement, the Indenture or the Hedge and Warrant
Documentation that would cause the performance of the Purchase Agreement, the
Indenture or the Hedge and Warrant Documentation to violate any New York or
federal statute, rule or regulation or constitute a violation or breach of
or default under any of the Other Agreements or any order, judgments or decrees
referred to in clauses (b) and (c) of paragraph (vi) or require
an order, consent, permit or approval to be obtained from a New York or federal
governmental authority.


 


We express no opinion concerning federal or
state securities laws or regulations (except with respect to federal securities
laws and regulations for the opinions in paragraphs (viii) and (ix) above)
or the gaming laws or regulations of any jurisdiction.


 


Except with respect to the tax opinion set forth
in paragraph (iv) above, the law covered by this opinion is limited to the
present federal law of the United States and the present law of the State of New
York.  We express no opinion as to the
laws of any other jurisdiction and no opinion regarding the statutes,
administrative decisions, rules, regulations or requirements of any county,
municipality, subdivision or local authority of any jurisdiction.  With respect to the tax opinion, such opinion
is based on relevant provisions of the Internal Revenue Code of 1986, as
amended, Treasury Regulations promulgated thereunder (including proposed and
temporary Treasury Regulations), and interpretations of the foregoing as
expressed in court decisions, administrative determinations, and the
legislative history as of the date hereof. 
These provisions and interpretations are subject to change, which may or
may not be retroactive in effect, that might result in modifications of our
opinion.


 


This opinion is furnished by us as counsel for
the Company and may be relied upon by you only in connection with the offer and
sale of the Securities.  It may not be
used or relied upon by you for any other purpose or by any other person, nor
may copies be delivered to any other person, without in each instance our prior
written consent.  This opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters.  We assume no obligation to update or
supplement this opinion to reflect any facts or circumstances that arise after
the date of this opinion and come to our attention or any future changes in
laws.


 


	
   

  	
  Respectfully submitted,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  O’MELVENY &
  MYERS LLP

  



 


A II-5

















 


Annex III


 


Form of Opinion of David D. Johnson


 


May 11,
2009


 


Goldman, Sachs & Co.
     As Representative of the several
Purchasers
     named in Schedule I to the Purchase
Agreement

c/o  Goldman, Sachs & Co.

85 Broad Street

New York, New York 10004


 


Ladies and Gentlemen:


 


This opinion is being provided to you
pursuant to Section 7(c) of that certain purchase agreement (the
“Purchase Agreement”), dated May 5, 2009, by and between International Game
Technology, a Nevada corporation (the “Company”), and the several purchasers
named in Schedule I thereto, in connection with the offer and sale of an
aggregate of $725,000,000 principal amount of 3.25% Convertible Notes of the
Company and, at the election of the purchasers, up to an aggregate of
$125,000,000  additional principal
amount of such Notes.  Except as
otherwise indicated, capitalized terms used in this opinion without definition
will have the meanings given to such terms in the Purchase Agreement.


 


I am the General Counsel of the Company and
IGT, a Nevada corporation (“IGT”), and have made such investigations of fact
and law, reviewed such corporate records of the Company and IGT and originals
or copies identified to my satisfaction as true copies of such documents
(including each of the Purchase Agreement, the Securities, the Indenture and
the Hedge and Warrant Documentation (collectively, the “Operative 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. To the extent the Company’s
obligations depend on the enforceability of the Purchase Agreement, the
Indenture or the Hedge and Warrant Documentation against the other parties to
the Purchase Agreement, the Indenture or the Hedge and Warrant Documentation, I
have assumed that each of the Purchase Agreement, the Indenture and the Hedge
and Warrant Documentation is enforceable against the other parties thereto.


 


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)            each
of the Company and IGT has been duly incorporated and is validly existing in
good standing under the laws of the State of Nevada and has the corporate power
and authority to own its properties and assets and to conduct its business as
described in the Disclosure Package and the Offering Circular;


 


A III-1

















 


(ii)           each
of the Company and IGT is qualified as a foreign corporation to do business in
each jurisdiction in which it owns or leases substantial properties or in which
the conduct of its business requires such qualification and is in good standing
in each such jurisdiction, except to the extent the failure to so qualify or be
in good standing would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect;


 


(iii)          the
execution and delivery of each of the Operative Documents have been duly
authorized by all necessary corporate action on the part of the Company and
each of the Operative Documents has been duly executed and delivered by the
Company;


 


(iv)          the
authorized capital stock of the Company consists of 1,280,000,000 shares of
common stock;


 


(v)           the
outstanding shares of capital stock of the Company and IGT have been duly
authorized by all necessary corporate action on the part of the Company or IGT,
as the case may be, and are validly issued, fully paid and non-assessable;


 


(vi)          the
shares of common stock issuable upon conversion of the Securities (the
“Shares”) have been duly authorized and reserved for issuance by all necessary
corporate action on the part of the Company and, upon conversion of the
Securities and delivery of the Shares in accordance with the Indenture, the
Shares will be validly issued, fully paid and non-assessable and shall not be
subject to any preemptive rights under the Company’s Articles of Incorporation,
By-laws or the Nevada General Corporation Law.


 


(vii)         all
outstanding shares of capital stock of IGT are owned of record by the Company
free and clear of any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interests, claims, liens or
encumbrances;


 


(viii)        the
Company’s execution and delivery of, and performance of its obligations under,
the Operative Documents, do not (a) violate the Company’s Articles of
Incorporation or By-laws, (b) violate, breach or result in a default under
any material indenture, contract, lease mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition or
instrument to which the Company or IGT is a party or bound or to which any of
their respective properties is subject or (c) breach or otherwise violate
any existing obligation of or restriction on the Company or IGT under any
order, judgment or decree or any Nevada court or governmental authority or any
existing applicable Nevada statute, rule or regulation to which the
Company or IGT or any of their respective properties may be subject;


 


(ix)           to
my knowledge there is no pending or threatened action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries or its or their property that
is not described in the Disclosure Package, except in each case for such
proceedings that are not, individually or in the aggregate, reasonably likely
to have a Material Adverse Effect;


 


(x)            to
my knowledge, after inquiry of the Company’s outside regulatory counsel in the
States of Mississippi, Nevada, and New Jersey, and other than those arising
under state securities laws as to which no opinion is expressed, no
authorization, approval, consent or order of any Mississippi, Nevada or New
Jersey governmental authority or agency is required in connection with the
offering, issuance or sale of the Securities to the Purchasers or 


 


A III-2

















 


the other transactions contemplated by the
Purchase Agreement, the Indenture and the Hedge and Warrant Documentation
(including without limitation, the approval of Nevada gaming authorities with
respect to a subsidiary guarantee of the Securities by IGT), except such as are
disclosed on Appendix A hereto or have been obtained and are in full force and
effect at the date hereof, and, to my knowledge after such inquiry, no such
governmental authority or agency is investigating the Company or any related
party, other than any such investigation that could not reasonably be expected
to have a Material Adverse Effect;


 


(xi)           the
statements in the Disclosure Package and the Offering Circular under the
caption “Description of IGT Common Stock”, insofar as they purport to summarize
the provisions of the Articles of Incorporation and By-laws of the Company and
certain provisions of the Nevada General Corporation Law, are accurate in all
material respects; and


 


(xii)          the
Company has all necessary authorizations, approvals, consents and permits from
any governmental authority or agency required to conduct its business as
described in the Disclosure Package and the Offering Circular, except to the
extent the failure to have any such authorization, approval or consent or
permit would not reasonably be expected to have a Material Adverse Effect.


 


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.  My
opinions in paragraph (x) with respect to matters under the laws of the
States of Mississippi and New Jersey are based solely upon inquiries which have
been made of the Company’s outside regulatory counsel in such States.  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.


 


This opinion is furnished by me as general
counsel for the Company and may be relied upon by you only in connection with
the offer and sale of the Securities.  It
may not be used or relied upon by you for any other purpose or by any other
person, nor may copies be delivered to any other person, without in each
instance our prior written consent.  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 that arise after
the date of this opinion and come to my attention or any future changes in
laws.


 


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  David
  D. Johnson

  
	
   

  	
  Executive
  Vice President, General Counsel and Secretary

  



 


A III-3

















 


APPENDIX A


 


1.             In your performance of certain
obligations under the terms of the Hedge and Warrant Documentation, you may
from time to time acquire five percent (5%) or more of a class of voting
securities of the Company, in which event you will be required pursuant to the
laws, rules or regulations of certain Gaming Authorities (as defined in
the Purchase Agreement) to submit notices, reports or other disclosure
documentation concerning such acquisition and, depending on the amount of such
acquisition, you may be required to apply to certain Gaming Authorities for a
license, qualification, finding of suitability or other form of approval as a
shareholder.


 


2.             Without limiting the foregoing:


 


a.           In
your performance of certain obligations under the terms of the Hedge and
Warrant Documentation, you may from time to time acquire more than five percent
(5%) of a class of voting securities of the Company, in which event you will be
required within ten days to submit to the Nevada Gaming Commission pursuant to
Nevada Revised Statutes (“NRS”) 463.643 a copy of any required or voluntarily
filed report (and amendments thereto) pursuant to section 13(d) or 

16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
of such acquisition as made to the United States Securities and Exchange
Commission (the “SEC”); and


 


b.           In
your performance of certain obligations under the terms of the Hedge and
Warrant Documentation, you may from time to time acquire more than ten percent
(10%) of a class of voting securities of the Company, in which event you will
be required (x) within ten days to report to the Nevada Gaming Commission
pursuant to NRS 463.643 such acquisition and submit a copy of any required or
voluntarily filed report (and amendments thereto) pursuant to section 13(d) or
16(a) of the Exchange Act of such acquisition as made to the SEC; and (y) apply
to the Nevada Gaming Commission for a finding of suitability as a shareholder
of the Company within 30 days after receipt of written application notice from
the Nevada State Gaming Control Board.


 


A III-4

















 


Annex IV


 


Form of Comfort Letter


 


Pursuant to Section 7(d) of
the Purchase Agreement, the accountants shall furnish letters to the
Representative to the effect that:


 


(i)        They are an independent
registered public accounting firm with respect to the Company and its
subsidiaries within the meaning of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the applicable published rules and
regulations thereunder adopted by the Securities and Exchange Commission and
the Public Company Accounting Oversight Board (United States);


 


(ii)       In our opinion, the
consolidated financial statements and financial statement schedules audited by
us and included in the Disclosure Package and the Offering Circular comply as
to form in all material respects with the applicable requirements of the
Exchange Act and the related published rules and regulations;


 


(iii)      The unaudited selected
financial information with respect to the consolidated results of operations
and financial position of the Company for the five most recent fiscal years
included in the Disclosure Package and the Offering Circular agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years;


 


(iv)      On the basis of limited
procedures not constituting an audit in accordance with generally accepted
auditing standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading of the latest
available interim financial statements of the Company and its subsidiaries, inspection
of the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Disclosure Package and the
Offering Circular, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:


 


(A)    any
unaudited pro forma consolidated condensed financial statements included in the
Disclosure Package and the Offering Circular do not comply as to form in all
material respects with the applicable accounting requirements or the pro forma
adjustments have not been properly applied to the historical amounts in the
compilation of those statements;


 


(B)     as
of a specified date not more than three days prior to the date of such letter,
there have been any changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on the date of the
latest financial statements included in the Disclosure Package and the Offering
Circular), or any increase in the consolidated long-term debt of the Company
and its subsidiaries, or any decreases in consolidated net current assets or
stockholders’ equity or other items specified by the Representative, or any
increases in any items specified by the Representative, in each case as
compared with amounts shown in the latest balance sheet included in the
Disclosure Package and the Offering Circular except in each case for changes,
increases or decreases which the Disclosure Package and the Offering Circular
discloses have occurred or may occur or which are described in such letter; and


 


A IV-1

















 


(C)     for
the period from the date of the latest financial statements included in the
Disclosure Package and the Offering Circular to the specified date referred to
in clause (B) there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of consolidated net income
or other items specified by the Representative, or any increases in any items
specified by the Representative, in each case as compared with the comparable
period of the preceding year and with any other period of corresponding length
specified by the Representative, except in each case for decreases or increases
which the Disclosure Package and the Offering Circular discloses have occurred
or may occur or which are described in such letter; and


 


(v)       In addition to the
examination referred to in their report(s) included in the Disclosure
Package and the Offering Circular and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs (iii) and
(iv) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Representative, which are derived from the general accounting
records of the Company and its subsidiaries, which appear in the Disclosure
Package and the Offering Circular, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement


 


A IV-2