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                                                                    Exhibit 10.1

                                                               EXECUTION VERSION

                          INTERNATIONAL GAME TECHNOLOGY

                      2.60% CONVERTIBLE DEBENTURES DUE 2036

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                               PURCHASE AGREEMENT

                                                               December 14, 2006

Banc of America Securities LLC
   As Representative of the several Purchasers
   named in Schedule I hereto (the "Representative")
c/o Banc of America Securities LLC
9 West 57th Street, 21st Floor
New York, NY 10019

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
$825,000,000 principal amount of the 2.60% Convertible Debentures, 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 $75,000,000 additional principal amount of such Debentures (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"). The Securities will have the benefit of a
registration rights agreement (the "Registration Rights Agreement"), to be dated
as of December 20, 2006, between the Company and the Purchasers. Banc of America
Securities LLC will act as the global coordinator for the offering and together
with Bear, Stearns & Co. Inc, Deutsche Bank Securities Inc., Goldman, Sachs &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC and
Wachovia Capital Markets, LLC, will act as joint-book-running managers for the
offering.

     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 that:

          (a) A preliminary Offering Circular, dated December 13, 2006 (the
     "Preliminary Offering Circular") and an Offering Circular, dated December
     14, 2006 (the "Offering Circular"), have been prepared in connection with
     the offering of the Securities and the shares of the 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 most recent Annual Report on Form 10-K (the "Form

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     10-K"), the definitive Proxy Statement on Schedule 14A, filed with the
     Commission on January 17, 2006, and the Current Reports on Form 8-K filed
     on March 13, 2006, June 21, 2006, July 7, 2006, September 29, 2006 and
     October 4, 2006, and all documents filed subsequent to the 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 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. 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 pm (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;

          (c) Any Issuer Written Information does not conflict with the
     information contained in the Preliminary Offering Circular, as amended or
     supplemented at the Applicable Time, or the Offering Circular and any such
     Issuer Written Information, as supplemented by and taken together with the
     Disclosure Package as of the Applicable Time, did not include 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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          (d) Neither the Company nor any of its subsidiaries has sustained
     since the date of the latest audited financial statements included 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 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;

          (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

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     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 December 20, 2006 (the "Indenture") between the
     Company and Wells Fargo Bank, National Association, as Trustee (the
     "Trustee"), under which they are to be issued; 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; 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; and the Registration Rights Agreement has been duly authorized
     and, assuming due authorization, execution and delivery by the Purchasers,
     when executed and delivered by the Company, will constitute a legal, valid,
     binding and enforceable instrument of the Company, subject, as to the
     enforcement, to bankruptcy, insolvency reorganization of general
     applicability relating to or affecting creditors' rights and to general
     equity principles;

          (j) 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
     Registration Rights Agreement and the Indenture 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,

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     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;

          (k) 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;

          (l) 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 Registration Rights Agreement and this
     Agreement and the consummation of the transactions herein and therein
     contemplated will not conflict with or result in a breach or 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;

          (m) 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 Registration Rights
     Agreement, except for such consents, approvals, authorizations,
     registrations or qualifications as may be required to comply with the
     provisions of the Registration Rights Agreement, 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;

          (n) 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;

          (o) The statements set forth in the Disclosure Package and the
     Offering Circular under the caption "Description of Debentures" and
     "Description of Common Stock", insofar as they purport to constitute a
     summary of the terms of the Securities and the Stock, under the caption
     "Certain United States Federal Income Tax Consequences", and under the
     caption "Plan of Distribution", insofar as they purport to

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     describe the provisions of the laws and documents referred to therein, are
     accurate and complete in all material respects;

          (p) 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;

          (q) 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;

          (r) 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;

          (s) The Company is not, and after giving effect to the offering and
     sale of the Securities, 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");

          (t) 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;

          (u) 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;

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

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          (w) 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;

          (x) 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;

          (y) 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;

          (z) 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 as of the end of the Company's last
     completed fiscal quarter; and

          (aa) 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.

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     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
98.25% 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 $75,000,000 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 or prior to the
First Time of Delivery and no later than the last day in the 13-day period
commencing on and including the First Time of Delivery (as defined below).

     3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose 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
     Securities Act if the offer or sale of the Securities or Stock were
     registered under the Securities 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, in
definitive form, and in such authorized denominations and registered in such
names as the Representative may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to the
Representative, through the facilities of The Depository Trust Company ("DTC"),
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. 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 December 20, 2006 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,

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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 (as defined below). 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 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;

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          (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 (other than the filing of a shelf
     registration statement in accordance with the Registration Rights
     Agreement) 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 contracts to
     issue Stock in connection with an acquisition, provided that (A) no actual
     issuance of Stock shall take place within such 90-day period, (B) such
     contract does not relate to a number of shares of Stock in excess of 20% of
     the Company's market capitalization at that time and (C) the Company shall
     have used its reasonable best effort to cause the other party or parties to
     such contract to deliver "lock-up" letters containing substantially similar
     terms to this Section 5(d);

          (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)
     two years 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) If requested by you, to use its best efforts to cause such
     Designated Securities to be eligible for the PORTAL trading system of the
     National Association of Securities Dealers, Inc.;

          (h) 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;

          (i) (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

                                       10

<PAGE>

     Company is listed (or, if the Securities are not subject to filing
     requirements, such information as is required by Rule 144A under the
     Securities 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;

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

          (k) 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";

          (l) To reserve and keep available at all times, free of preemptive
     rights, shares of Stock for the purpose of enabling the Company to satisfy
     any obligations to issue shares of its Stock upon conversion of the
     Securities;

          (m) 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;

          (n) 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 Securities Act if the offer or sale of the
     Debentures or Common Stock were registered under the Securities Act;
     provided that such material shall not include the Disclosure Package, the
     Final Memorandum and any other offering materials prepared by or with the
     prior consent of the Representative;

          (o) 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

          (p) 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 Registration Rights Agreement, 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

                                       11

<PAGE>

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) 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; (vii) any cost incurred in connection
with the designation of the Securities for trading in PORTAL and the listing of
the shares of Stock issuable upon conversion of the Securities; and 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.

     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 you 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 you 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 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

                                       12

<PAGE>

     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;

          (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 Securities have been designated for trading on PORTAL;

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

          (j) 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 subsections (a) and (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 or any other
written information 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

                                       13

<PAGE>

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 or any other written information 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 Initial Purchasers for inclusion in
the Preliminary Memorandum or the Final Memorandum or in any amendment or
supplement thereto.

          (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 or any other
written information 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 or any other written information 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,

                                       14

<PAGE>

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 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.

                                       15

<PAGE>

     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 Representatives with the consent of
the non-defaulting Purchasers, to purchase the Securities which such defaulting
Purchaser or Purchasers agreed but failed or refused to 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
Representatives 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, 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 Subsequent 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
Final Offering Memorandum 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

                                       16

<PAGE>

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 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 Purchaser, 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 Banc of America Securities LLC, 9 West 57th Street,
New York, New York 10019, Facsimile: 212-933-2217, Attention: Syndicate
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.

     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. 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.

     19. The Company is authorized, subject to applicable law, to disclose any
and all aspects of this potential transaction that are necessary to support any
U.S. federal 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.

                                       17
<PAGE>

     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/ Thomas J. Matthews
                                            ------------------------------------
                                        Name: Thomas J. Matthews
                                        Title: President, Chief Executive
                                               Officer and Chief Operating
                                               Officer

Accepted as of the date hereof
on behalf of each of the Purchasers:

Banc of America Securities LLC

By: /s/ Tom Morrison
    ---------------------------------
Name: Tom Morrison
Title: Managing Director

                                       18

<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
                                                 AGGREGATE PRINCIPAL
                                                    AMOUNT OF FIRM
                                                   SECURITIES TO BE
PURCHASERS                                            PURCHASED
----------                                       -------------------
<S>                                              <C>
Banc of America Securities LLC ...............       $123,750,000
Bear, Stearns & Co. Inc. .....................         86,625,000
Deutsche Bank Securities Inc. ................         86,625,000
Goldman, Sachs & Co. .........................        123,750,000
Merrill Lynch, Pierce, Fenner & Smith
   Incorporated. .............................        123,750,000
UBS Securities LLC ...........................        123,750,000
Wachovia Capital Markets, LLC ................        123,750,000
BNP Paribas Securities Corp. .................          6,600,000
Mitsubishi UFJ Securities International plc ..          6,600,000
Mizuho International plc .....................          6,600,000
RBS Greenwich Capital ........................          6,600,000
Wells Fargo Securities, LLC ..................          6,600,000
                                                     ------------
   Total .....................................       $825,000,000
                                                     ============
</TABLE>

                                       S-1

<PAGE>

                                   SCHEDULE II

Issuer Written Information:

(i) Written Information: None

(ii) Oral Information: Issue Price: 98.625%

                                       I-2

<PAGE>

                                  SCHEDULE III

Initial Purchaser information pursuant to Section 8(a).

(i) By or on behalf of the Initial Purchasers:

The statements set forth under the heading "Plan of Distribution," in the first,
second and sixth sentences of the eighth paragraph in the Preliminary Memorandum
and the Final Memorandum.

(ii) By or on behalf of Mitsubishi UFJ Securities International plc only:

The statement set forth under the heading "Plan of Distribution," in the seventh
paragraph in the Preliminary Memorandum and the Final Memorandum.

                                       I-3

<PAGE>

                                     ANNEX I

                            FORM OF FINAL TERM SHEET

TERMS SHEET
Dated December 14, 2006

                          INTERNATIONAL GAME TECHNOLOGY
               2.60% CONVERTIBLE DEBENTURES DUE DECEMBER 15, 2036

     The information in this term sheet supplements IGT's preliminary offering
     circular, dated December 13, 2006 (the "Preliminary Circular") and
     supercedes the information in the Preliminary Circular to the extent
     inconsistent with the information in the Preliminary Circular. This term
     sheet is qualified in its entirety by reference to the Preliminary
     Circular. Terms used herein but not defined herein shall have the
     respective meanings as set forth in the Preliminary Circular.

<TABLE>
<S>                                   <C>
Issuer:                               International Game Technology (NYSE: IGT)

Title of securities:                  2.60% Convertible Debentures Due 2036

Aggregate principal amount offered:   $825,000,000 million (excluding initial
                                      purchasers' option to purchase up to $75
                                      million of additional Debentures to cover
                                      over-allotments)

Net Proceeds:                         Approximately $810 million after deducting
                                      the initial purchasers' discount and IGT's
                                      estimated expenses.

Maturity:                             December 15, 2036, unless earlier
                                      redeemed, repurchased or converted

Annual interest rate:                 2.60% per annum, accruing from the
                                      settlement date

Interest payment dates:               Each June 15 and December 15, beginning
                                      June 15, 2007

Trade date:                           December 14, 2006

Registration:                         144A with Registration Rights

Conversion rate:                      16.1875 shares of common stock per $1,000
                                      aggregate principal amount of Debentures

Reference Price:                      $45.76

Conversion Premium:                   35% over NYSE closing price on December
                                      14, 2006

Conversion price:                     Approximately $61.78 per share of common
                                      stock

Settlement:                           December 20, 2006

CUSIP/ISIN:                           144A Debentures:

                                      CUSIP Number: 459902 AN 2
                                      ISIN Number: US459902AN26

                                      144A common stock issued on conversion of
                                      Debentures:

                                      CUSIP Number: 459902 AP 7
                                      ISIN Number: US459902AP73

Adjustment to Conversion Rate upon    See below
a Fundamental Change:
</TABLE>

                                       I-1

<PAGE>

The following table sets forth the Share Price paid per share of our Common
Stock in certain Fundamental Change transactions and the number of additional
shares per $1,000 principal amount of Debentures by which the conversion rate
will be increased (subject to adjustment).

<TABLE>
<CAPTION>
                                                                  SHARE PRICE
                 -------------------------------------------------------------------------------------------------------------
EFFECTIVE DATE   $45.76   $50.00   $55.00   $61.78   $65.00   $70.00   $80.00   $90.00   $100.00   $120.00   $140.00   $160.00
--------------   ------   ------   ------   ------   ------   ------   ------   ------   -------   -------   -------   -------
<S>              <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>       <C>       <C>       <C>
20-Dec-06          5.66     4.39     3.30     2.24     1.90     1.45     0.91     0.60      0.41      0.24      0.16      0.11
15-Dec-07          5.66     4.13     2.96     1.84     1.52     1.08     0.60     0.35      0.22      0.12      0.08      0.06
15-Dec-08          5.66     3.84     2.51     1.29     1.00     0.59     0.23     0.10      0.06      0.04      0.03      0.02
15-Dec-09          5.66     3.81     1.99     0.00     0.00     0.00     0.00     0.00      0.00      0.00      0.00      0.00
</TABLE>

     -    If the Share Price is greater than $160.00 per share (subject to
          adjustment), the conversion rate will not be adjusted.

     -    If the Share Price is less than $45.76 per share (subject to
          adjustment), the conversion rate will not be adjusted.

Notwithstanding the foregoing, in no event will the total number of the issuer's
shares of Common Stock issuable upon conversion exceed 21.8531 shares per $1,000
principal amount of Debentures, subject to adjustment.

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.

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.

                                       I-2

<PAGE>

                                    ANNEX II

                    FORM OF OPINION OF O'MELVENY & MYERS LLP

December [__], 2006

[LEAD MANAGER]
   As Representative of the several Purchasers
   named in Schedule I hereto
c/o [ADDRESS OF LEAD MANAGER]

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 $[___] principal amount of [___]% Convertible
Debentures, 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 $[___] additional principal amount of such Debentures (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 December [___],
2006, by and between the Company and the Purchasers (the "Purchase Agreement");

          (b) the Registration Rights Agreement;

          (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
December [__], 2006, 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 December [__],
2006, 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, 2006 (the "Form 10-K") and the
Company's Proxy Statement filed January 17, 2006.

                                      II-1

<PAGE>

          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 the Purchase Agreement, Indenture, Securities and Registration
Rights Agreement and (b) the Purchase Agreement, Indenture, Securities and
Registration Rights Agreement have been duly authorized by all necessary
corporate action on the part of the Company and have been duly executed and
delivered by the Company. To the extent the Company's obligations depend on the
enforceability of the Purchase Agreement, Registration Rights Agreement or
Indenture against the other parties to the Purchase Agreement, Registration
Rights Agreement or Indenture, we have assumed that each of the Purchase
Agreement, Registration Rights Agreement and Indenture is enforceable against
the other parties thereto.

          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.

          (iii) The Registration Rights Agreement 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

                                      II-2

<PAGE>

captions "Description of Debentures" 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 Registration Rights Agreement or for the issuance
and sale of the Securities, except such as may be required under the
Registration Rights Agreement and 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 Registration
Rights Agreement, 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 such counsel 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 Registration Rights Agreement 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 Registration
Rights Agreement, 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 Registration Rights Agreement, 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 Registration Rights Agreement and the Indenture, except as
otherwise expressly stated herein.

          (viii) Assuming the accuracy of the representations of the Company in
Section 2, paragraphs (q) and (t) 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

                                      II-3

<PAGE>

reports on 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 December [_], 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 Registration Rights
Agreement 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.

          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 Registration Rights Agreement that would cause the
performance of the Purchase Agreement, the Registration Rights Agreement or the
Indenture 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

                                      II-4

<PAGE>

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.

          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.

          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

                                      II-5

<PAGE>

                                    ANNEX III

                       FORM OF OPINION OF DAVID D. JOHNSON

                                                             December [__], 2006

[LEAD MANAGER]
   As Representative of the several Purchasers
   named in Schedule I hereto
c/o [ADDRESS OF LEAD MANAGER]

Ladies and Gentlemen:

          This opinion is being provided to you pursuant to Section 7(c) of that
certain purchase agreement, dated December [____], 2006, by and between
International Game Technology (the "Company") and the several purchasers named
in Schedule I thereto, in connection with the offer and sale of an aggregate of
$[_] principal amount of [____]% Convertible Debentures of the Company (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.

          I am the General Counsel of the Company and IGT, a Nevada corporation,
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 the Purchase Agreement,
Registration Rights Agreement, the Securities and the Indenture), 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, Registration Rights Agreement or Indenture against the
other parties to the Purchase Agreement, Registration Rights Agreement or
Indenture, I have assumed that each of the Purchase Agreement, Registration
Rights Agreement and Indenture 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;

          (ii) the Company 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-1

<PAGE>

          (iii) the execution and delivery of the Purchase Agreement, the
Indenture, the Securities and the Registration Rights Agreement have been duly
authorized by all necessary corporate action on the part of the Company and the
Indenture, the Securities, the Registration Rights Agreement and the Purchase
Agreement have been duly executed and delivered by the Company;

          (iv) the authorized capital stock of the Company consists of [_]
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 Indenture, the Purchase Agreement and the Registration
Rights Agreement, 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 here 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 the other
transactions contemplated by the Purchase Agreement, Registration Rights
Agreement and the Indenture (including without limitation, the approval of
Nevada gaming authorities with respect to a subsidiary guarantee of the
Debentures by IGT), except such as have been obtained and are in full force and
effect at the date hereof, and, to my knowledge

                                      III-2

<PAGE>

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 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,

                                        By: /s/ David D. Johnson
                                            -----------------------------------
                                            David D. Johnson
                                            Executive Vice President, General
                                            Counsel and Secretary

                                      III-3

<PAGE>

                                    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 five 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

                                      IV-1

<PAGE>

               (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.

                                      IV-2BANDAG,
INCORPORATED
SEVERANCE AGREEMENT FOR FREDERICO U. KOPITTKE  

        THIS
SEVERANCE AGREEMENT (“Agreement”) is entered into as of the 14th day of
December, 2006 by and between Bandag, Incorporated, an Iowa corporation, including any
successor or successors thereto (“Company”), and Frederico U. Kopittke
(“Employee”). 

RECITALS 

        WHEREAS,
Employee is and has been an at-will employee of Company, and possesses an extensive
knowledge of the business and affairs of Company, its proprietary information, trade
secrets, policies, methods, personnel, and problems; 

        WHEREAS,
Employee desires to continue to be employed at-will by Company, and acknowledges that this
Agreement provides for severance payments to which he is not otherwise entitled by any
contract or any other legal obligation; 

        WHEREAS,
the parties agree and acknowledge that this Agreement is not intended to constitute an
employment contract; does not create any employment rights other than those expressly set
forth herein; does not alter or modify Employee’s status as an “at-will”
employee of Company or the terms and conditions of his employment except as expressly set
forth herein, and does not create any rights to continued employment or to termination
only “for cause”; but rather, is intended solely to provide for the availability
of severance payments to Employee under the terms and conditions set forth herein; 

        NOW,
THEREFORE, in consideration of the covenants and agreements of the parties herein
contained, the sufficiency of which is acknowledged by each party, the parties hereto
agree as follows: 

          	 	1. 	
               Employee Covenants. If Employee becomes entitled to receive severance
               payments pursuant to paragraph 3 hereof, Employee covenants and agrees to be
               bound by the terms of the non-competition provisions set forth in
               subparagraph b. ii. of paragraph 2, below. Whether or not Employee
               becomes entitled to receive severance benefits pursuant to paragraph 3 hereof,
               Employee covenants and agrees to be bound by the terms of the additional
               provisions set forth in paragraph 2, below. 

               

          	 	2. 	
               Competitive Activity; Confidentiality; Nonsolicitation. 

               

	 	a.  	Acknowledgements
and Agreements. Employee hereby acknowledges and agrees                that in the
performance of Employee’s services for the Company, Employee                has been
and will be brought into frequent contact with existing and potential
               customers of the Company throughout the world. Employee also agrees that
trade                secrets and confidential information of the Company, more fully
described in                subparagraph 2. e. i., gained by Employee during Employee’s
association                with the Company, have been developed by the Company through
substantial                expenditures of time, effort and money and constitute valuable
and unique                property of the Company. Employee further understands and
agrees that the                foregoing makes it necessary for the protection of the
Company’s Business                that Employee not compete with the Company during
the term of this Agreement and                not compete with the Company for a
reasonable period thereafter, as further                provided in the following
subparagraphs.  

	 	b.  	Covenants.  

	 	i.  	Covenants
During Employment. During the period that Employee is employed                by the
Company and this Agreement is in effect, Employee will not compete with
               the Company anywhere in the world. In accordance with this restriction,
but                without limiting its terms, during such period, Employee will not:  

	 	(1)  	              enter
into or engage in any business which competes with the Company’s
               Business;  

	 	(2)  	              solicit
customers, business, patronage or orders for, or sell, any products or
               services in competition with, or for any business that competes with, the
               Company’s Business;  

	 	(3)  	          divert,
entice or otherwise take away any customers, business, patronage or                orders
of the Company or attempt to do so; or  

	 	(4)  	               promote
or assist, financially or otherwise, any person, firm, association,
               partnership, corporation or other entity engaged in any business which
competes                with the Company’s Business.  

	 	ii.  	Covenants
Following Termination. In consideration of the severance                payments
provided for herein (subject to paragraph 1 hereof), for a period of                one
(1) year following the termination of Employee’s performance of
               services for the Company, Employee will not:  

	 	(1)  	           enter
into or engage in any business which competes with the Company’s
               Business within the Restricted Territory;  

-2- 

	 	(2)  	              solicit
customers, business, patronage or orders for, or sell, any products and
               services in competition with, or for any business, wherever located, that
               competes with, the Company’s Business within the Restricted
Territory;  

	 	(3)  	             divert,
entice or otherwise take away any customers, business, patronage or                orders
of the Company within the Restricted Territory, or attempt to do so; or  

	 	(4)  	             promote
or assist, financially or otherwise, any person, firm, association,
               partnership, corporation or other entity engaged in any business which
competes                with the Company’s Business within the Restricted Territory.
 

	 	(5)  	directly
or indirectly attempt to disrupt, damage, impair or interfere with the
               Company’s Business by raiding any of the Company’s employees or
               soliciting any of them to resign from their employment by the Company, or
by                disrupting the relationship between the Company and any of its
consultants,                agents, representatives or vendors. Employee acknowledges
that this covenant is                necessary to enable the Company to maintain a stable
workforce and remain in                business.  

	 	iii.  	Indirect
Competition. For the purposes of subparagraphs 2. b. i. and ii.
               inclusive, but without limitation thereof, Employee will be in violation
thereof                if Employee engages in any or all of the activities set forth
therein directly                as an individual on Employee’s own account, or
indirectly as a partner,                joint venturer, employee, agent, salesperson,
consultant, officer and/or                director of any firm, association, partnership,
corporation or other entity, or                as a stockholder of any corporation in
which Employee or Employee’s spouse,                child or parent owns, directly
or indirectly, individually or in the aggregate,                more than five percent
(5%) of the outstanding stock.  

	 	iv.  	If
it shall be judicially determined that Employee has violated this
               subparagraph 2. b., then the period applicable to each obligation that
Employee                shall have been determined to have violated shall automatically
be extended by a                period of time equal in length to the period during which
such violation(s)                occurred.  

	 	c.  	The
Company. For purposes of this paragraph 2, the Company shall include
               any and all direct and indirect subsidiaries of the Company.  

-3- 

	 	d.  	Further
Covenants.  

	 	i.  	Employee
will keep in strict confidence, and will not, directly or indirectly,                at
any time, disclose, furnish, disseminate, make available or, except in the
               course of Employee’s performance of services for the Company, use any
trade                secrets or confidential business and technical information of the
Company or its                customers or vendors, without limitation as to when or how
Employee may have                acquired such information. Such confidential information
shall include, without                limitation, the Company’s unique selling,
manufacturing and servicing                methods and business techniques, training,
service and business manuals,                promotional materials, training courses and
other training and instructional                materials, vendor and product
information, customer and prospective customer                lists, other customer and
prospective customer information and other business                information. Employee
specifically acknowledges that all such confidential                information, whether
reduced to writing, maintained on any form of electronic                media, or
maintained in the mind or memory of Employee and whether compiled by                the
Company, and/or Employee, derives independent economic value from not being
               readily known to or ascertainable by proper means by others who can obtain
               economic value from its disclosure or use, that reasonable efforts have
been                made by the Company to maintain the secrecy of such information, that
such                information is the sole property of the Company and that any
retention and use                of such information by Employee during the term of this
Agreement (except in the                course of performing services for the Company) or
after the termination of this                Agreement shall constitute a
misappropriation of the Company’s trade                secrets.  

	 	ii.  	Employee
agrees that upon termination of Employee’s performance of                services,
for any reason, Employee shall return to the Company, in good                condition,
all property of the Company, including without limitation, the                originals
and all copies of any materials which contain, reflect, summarize,
               describe, analyze or refer or relate to any items of information listed in
               subparagraph 2. d. i. of this Agreement. In the event that
such                items are not so returned, the Company will have the right to charge
Employee                for all reasonable damages, costs, attorneys’ fees and other
expenses                incurred in searching for, taking, removing and/or recovering
such property.  

-4- 

	 	e.  	Discoveries
and Inventions; Work Made for Hire.  

	 	i.  	Employee
agrees that upon conception and/or development of any idea, discovery,
               invention, improvement, software, writing or other material or design
that: (A)                relates to the business of the Company, or (B) relates to the
Company’s                actual or demonstrably anticipated research or development,
or (C) results from                any services performed by Employee for the Company,
Employee will assign to the                Company the entire right, title and interest
in and to any such idea, discovery,                invention, improvement, software,
writing or other material or design. Employee                has no obligation to assign
any idea, discovery, invention, improvement,                software, writing or other
material or design that Employee conceives and/or                develops entirely on
Employee’s own time without using the Company’s                equipment,
supplies, facilities, or trade secret information unless the idea,
               discovery, invention, improvement, software, writing or other material or
design                either: (x) relates to the business of the Company, or (y) relates
to the                Company’s actual or demonstrably anticipated research or
development, or                (z) results from any work performed by Employee for the
Company. Employee agrees                that any idea, discovery, invention, improvement,
software, writing or other                material or design that relates to the business
of the Company or relates to the                Company’s actual or demonstrably
anticipated research or development which                is conceived or suggested by
Employee, either solely or jointly with others,                within one (1) year
following termination of this Agreement or any successor                agreements shall
be presumed to have been so made, conceived or suggested in the                course of
Employee’s performance of services hereunder with the use of the
               Company’s equipment, supplies, facilities, and/or trade secrets.  

	 	ii.  	In
order to determine the rights of Employee and the Company in any idea,
               discovery, invention, improvement, software, writing or other material,
and to                insure the protection of the same, Employee agrees that during the
term of this                Agreement, and for one (1) year thereafter, Employee will
disclose immediately                and fully to the Company any idea, discovery,
invention, improvement, software,                writing or other material or design
conceived, made or developed by Employee                solely or jointly with others.
The Company agrees to keep any such disclosures                confidential. Employee
also agrees to record descriptions of all work in the                manner directed by
the Company and agrees that all such records and copies,                samples and
experimental materials will be the exclusive property of the                Company.
Employee agrees that at the request of and without charge to the                Company,
but at the Company’s expense, Employee will execute a written
               assignment of the idea, discovery, invention, improvement, software,
writing or                other material or design to the Company and will assign to the
Company any                application for letters patent or for trademark registration
made thereon, and                to any common-law or statutory copyright therein; and
that Employee will do                whatever may be necessary or desirable to enable the
Company to secure any                patent, trademark, copyright, or other property
right therein in the United                States and in any foreign country, and any
division, renewal, continuation, or                continuation in part thereof, or for
any reissue of any patent issued thereon.                In the event the Company is
unable, after reasonable effort, and in any event                after ten business days,
to secure Employee’s signature on a written                assignment to the Company
of any application for letters patent or to any                common-law or statutory
copyright or other property right therein, whether                because of Employee’s
physical or mental incapacity or for any other reason                whatsoever, Employee
irrevocably designates and appoints the General Counsel of                the Company as
Employee’s attorney-in-fact to act on Employee’s behalf                to
execute and file any such application and to do all other lawfully permitted
               acts to further the prosecution and issuance of such letters patent,
copyright                or trademark.  

-5- 

	 	iii.  	Employee
acknowledges that, to the extent permitted by law, all work papers,
               reports, documentation, drawings, photographs, negatives, tapes and
masters                therefor, prototypes and other materials (hereinafter, “items”),
               including without limitation, any and all such items generated and
maintained on                any form of electronic media, generated by Employee during
the term of this                Agreement shall be considered a “work made for hire” and
that                ownership of any and all copyrights in any and all such items shall
belong to                the Company. The item will recognize the Company as the
copyright owner, will                contain all proper copyright notices, e.g., “(creation
date) [Company                Name], All Rights Reserved,” and will be in condition
to be registered or                otherwise placed in compliance with registration or
other statutory requirements                throughout the world.  

	 	f.  	Communication
of Contents of Agreement. During the period that Employee                is employed
by the Company and this Agreement is in effect and for one (1) year
               thereafter, Employee will communicate the contents of paragraph 2 of this
               Agreement to any person, firm, association, partnership, corporation or
other                entity that Employee intends to be employed by, associated with, or
represent.  

-6- 

	 	g.  	Relief.
Employee acknowledges and agrees that the remedy at law available                to the
Company for breach of any of Employee’s obligations under this
               Agreement would be inadequate. Employee therefore agrees that, in addition
to                any other rights or remedies that the Company may have at law or in
equity,                temporary and permanent injunctive relief may be granted in any
proceeding which                may be brought to enforce any provision contained in
subparagraphs 2. b., 2. d.,                2. e. and 2. f. inclusive, of this Agreement,
without the necessity of proof of                actual damage.  

	 	h.  	Reasonableness.
Employee acknowledges that Employee’s obligations                under this
paragraph 2 are reasonable in the context of the nature of the                Company’s
Business and the competitive injuries likely to be sustained by                the
Company if Employee were to violate such obligations. Employee further
               acknowledges that this Agreement is made in consideration of, and is
adequately                supported by the agreement of the Company to perform its
obligations under this                Agreement and by other consideration, which
Employee acknowledges constitutes                good, valuable and sufficient
consideration.  

	 	i.  	Company’s
Business. For purposes of this Agreement,                “Company’s Business” means
any of the following (i) the                production, manufacture and sale of precured
tread rubber, equipment and                supplies for the retreading of tires for
trucks, buses, industrial equipment and                off-road equipment; (ii) the sale
and service as a business organization with                annual sales in excess of $5
millionof new and retread tires to                commercial and industrial
customers; and (iii) the provision as a business                organization with annual
sales in excess of $5 million of tire management or                quick-service truck
lubrication services.  

	 	j.  	Restricted
Territory. For purposes of this Agreement, “Restricted                Territory” means:
(i) the geographic area(s) within a fifty (50) mile                radius of any and all
Company location(s) in, to, or for which Employee                performed services, to
which Employee was assigned or had any responsibility                (either direct or
supervisory) at the time of termination of this Agreement and                at any time
during the two (2) year period prior to such termination; and (ii)                all of
the specific customer accounts, whether within or outside of the
               geographic area described in (i) above, for which Employee had any
               responsibility (either direct or supervisory) at the time of termination
of this                Agreement and at any time during the two (2) year period prior to
such                termination.  

          	 	3. 	
               Severance Payments. Company agrees that if, after there is a “Change
               of Control,” and if, within one year of the date of the Change of Control,
               Company involuntarily terminates Employee’s employment with Company without
               “Cause” (as defined herein) or if Employee voluntarily terminates his
               employment with Company for “Good Reason” (as defined herein), it will
               pay Employee a severance payment equal to two years’ then current base
               salary (subject to all required federal, state and local payroll withholding).
               Company will pay Employee the severance amount in twenty-four (24) equal monthly
               installments, with the first installment paid within twenty (20) days after the
               date of Employee’s termination, and subsequent monthly installment payments
               made thereafter on the 1st day of each month. Notwithstanding the
               foregoing, if such payments become payable on account of the termination of the
               Employee’s employment with the Company and if the Employee is a
               “specified employee” within the meaning of Section 409A of the
               Internal Revenue Code, the payments that would be due during the six month
               period that immediately follows the Employee’s termination shall be made on
               the first business day following the date that is six months after the
               Employee’s termination; subsequent payments shall be made as described in
               the preceding sentence. For purposes of this paragraph, the date of
               Employee’s employment termination is defined as the last date on which
               Employee renders services to Company. 

               

-7- 

	 	a.  	It
is understood and agreed to by the parties that, as used in this                paragraph 3,
the term “involuntary termination” does not include                the
termination of Employee’s employment with Company due to death,
               disability, retirement, quitting or any other type of voluntary
separation, by                agreement or otherwise, from Company (except for Good
Reason).  

	 	b.  	It
is understood and agreed to by the parties that, as used in this                paragraph 3,
the term “Good Reason” means (i) a reduction in the                Employee’s
salary and benefits to amounts which are not substantially the                same as
those in effect on the date hereof, whether such reduction is made all                at
once or cumulatively, or (ii) the relocation of the Employee’s principal
               place of employment to a location more than fifty (50) miles from the
               Employee’s principal place of employment on the date hereof.  

	 	c.  	For
purposes of this Agreement, “Cause” shall mean (i) the commission
               by the Employee of one or more acts that constitute a felony under United
States                federal, state, or local criminal law; (ii) the engaging in by the
Employee of                intentional conduct not taken in good faith which has caused
financial injury to                Company or damage to Employer’s reputation; (iii)
the continuing refusal by                the Employee to perform the Employee’s
duties or responsibilities; or (iv)                a significant violation of the Company’s
employment policies or the                Company’s policies regarding ethics or
business conduct. Such acts or                failures shall constitute Cause only if the
Employee is given written notice                that specifies the particular acts or
failures to act on the basis of which the                decision to terminate employment
was made. In the case of a termination for                Cause as described in clauses
(iii) and (iv), the Employee shall be given the                opportunity, within ten
(10) days of the receipt of such notice to meet with the                Company to defend
such acts or failures to act, prior to termination. The                Company may
suspend the Employee’s title and authority pending such                meeting.  

-8- 

	 	d.  	For
purposes of this Agreement, a “Change in Control of the Company”               shall
be deemed to have occurred if:  

	 	i.  	Any
individual, entity, successor to either or group acting in concert (other
               than the Company or any trustee or other fiduciary holding securities
under an                employee benefit plan of the Company or members of the “Carver
               Family,” as defined in Article IV.4.(f)(iv) of the Company’s
Restated                Articles of Incorporation, as amended) acquires beneficial
ownership (as defined                in Rule 13d-3 under the Securities Exchange Act of
1934, as amended), directly                or indirectly, of securities of the Company
representing one-third                (33 1/3%) or more of the combined voting power
of the Company’s then                outstanding voting securities;  

	 	ii.  	The
following individuals cease for any reason to constitute a majority of the
               number of directors then serving: individuals who, as of the date of this
               Agreement, constitute the Board of Directors of the Company and any new
director                (other than a director whose initial assumption of office is in
connection with                an actual or threatened election contest, including but
not limited to a consent                solicitation, relating to the election of
directors of the Company) whose                appointment or election by the Board of
Directors of the Company or nomination                for election by the Company’s
shareholders was approved or recommended by a                vote of at least two-thirds
(2/3) of the directors then still in office who                either were directors as
of the date of this Agreement or whose appointment,                election or nomination
for election was previously so approved or recommended;  

	 	iii.  	There
is consummated a merger or consolidation of the Company or any direct or
               indirect subsidiary of the Company with any other corporation, other than
a                merger or consolidation immediately following which the individuals who
comprise                the Board of Directors of the Company immediately prior thereto
constitute at                least a majority of the Board of Directors of the Company,
the entity surviving                such merger or consolidation or, if the Company or
the entity surviving such                merger is then a subsidiary, the ultimate parent
thereof; or  

-9- 

	 	iv.  	The
shareholders of the Company approve a plan of complete liquidation of the
               Company or there is consummated an agreement for the sale or disposition
by the                Company of all or substantially all of the Company’s assets
(or any                transaction having a similar effect), other than a sale or
disposition by the                Company of all or substantially all of the Company’s
assets to an entity,                immediately following which the individuals who
comprise the Board of Directors                of the Company immediately prior thereto
constitute at least a majority of the                board of directors of the entity to
which such assets are sold or disposed of                or, if such entity is a
subsidiary, the ultimate parent thereof.  

        Notwithstanding
the foregoing, a Change in Control of the Company shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of integrated transactions
immediately following which the holders of shares of all classes of the Company’s
common stock immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately following such transaction or
series of transactions. 

	 	e. 	It
is further understood and agreed to by the parties that in the event Employee
          engages in any conduct in violation of, or inconsistent with, his obligations
          under paragraph 2 (subject to paragraph 1 hereof), in addition to all other
          rights and remedies available to Company, Company’s obligation to make
          further severance payments under this Agreement shall be immediately and
forever           discharged and released and Employee shall be obligated to reimburse
Company for           all severance payments theretofore made by Company.  

	 	4. 	Entire
Agreement. This Agreement constitutes the entire agreement and
          understanding of the parties pertaining to the subject matter contained herein
          and supersedes all prior and contemporaneous agreements, representations and
          understandings, whether written or oral, as to the matters set forth herein,
and           Employee expressly releases Company from any obligations under such
previous           agreements, if any, including without limitation, any rights of
Employee under           any previous employment agreement with Company, if any.  

	 	5. 	Modification
and Waiver. No provisions of this Agreement may be modified,           waived or
discharged unless such a waiver, modification or discharge is agreed           to in
writing signed by the parties hereto.  

	 	6. 	No
Other Agreements. No agreements or representations, oral or otherwise,
          express or implied, with respect to the subject matter hereof have been made by
          either party which are not expressly set forth in this Agreement.  

-10- 

	 	7. 	Costs
of Enforcement. In the event that a court of competent jurisdiction
          determines that Employee has breached this Agreement, Employee shall be liable
          to Company for all of its actual costs (statutory and nonstatutory), expenses
          and attorneys’ fees, incurred to enforce this Agreement.  

	 	8. 	Successors
and Assigns. This Agreement shall be binding upon and inure to           the benefit
of Company, its successors and assigns, including the purchaser of           all or
substantially all of the assets of Company, and Employee and his heirs,
          executors, administrators and legal representatives. Employee may not assign
          this Agreement, in whole or in any part.  

	 	9. 	Governing
Law. The validity, interpretation, construction and performance           of this
Agreement shall be governed by the laws of the State of Iowa applicable           to
contracts made and to be performed therein between residents thereof.  

	 	10. 	Counterparts.
This Agreement may be executed in one or more counterparts,           each of which
shall be deemed to be an original but all of which together shall           constitute
one and the same instrument.  

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written. 

	EMPLOYEE	BANDAG, INCORPORATED
	

/s/ Frederico U. Kopittke	By:  /s/ Jeffrey C. Pattison
	Frederico U. Kopittke	Its:  VP Controller, Assistant Secretary

-11-

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