Exhibit 10.1
EXECUTION VERSION
INTERNATIONAL GAME TECHNOLOGY
2.60% CONVERTIBLE DEBENTURES DUE 2036
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PURCHASE AGREEMENT
December 14, ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ Securities LLC
As Representative of the several Purchasers
named in Schedule I hereto (the "Representative")
c/o Banc of America Securities LLC
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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, ▇▇▇▇▇▇▇ & Co. Inc, Deutsche Bank Securities Inc., ▇▇▇▇▇▇▇, Sachs &
Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ 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
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 ▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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
▇▇▇▇▇;
(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
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 ▇▇▇▇▇ 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
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) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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 & ▇▇▇▇▇ 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) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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
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
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
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
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
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, ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile: ▇▇▇-▇▇▇-▇▇▇▇, 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
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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/ ▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
18
SCHEDULE I
AGGREGATE PRINCIPAL
AMOUNT OF FIRM
SECURITIES TO BE
PURCHASERS PURCHASED
---------- -------------------
Banc of America Securities LLC ............... $123,750,000
Bear, ▇▇▇▇▇▇▇ & Co. Inc. ..................... 86,625,000
Deutsche Bank Securities Inc. ................ 86,625,000
▇▇▇▇▇▇▇, Sachs & Co. ......................... 123,750,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
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
▇▇▇▇▇ Fargo Securities, LLC .................. 6,600,000
------------
Total ..................................... $825,000,000
============
S-1
SCHEDULE II
Issuer Written Information:
(i) Written Information: None
(ii) Oral Information: Issue Price: 98.625%
I-2
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
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.
Issuer: International Game Technology (NYSE: IGT)
Title of securities: 2.60% Convertible Debentures Due ▇▇▇▇
▇▇▇▇▇▇▇▇▇ 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:
I-1
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).
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
-------------- ------ ------ ------ ------ ------ ------ ------ ------ ------- ------- ------- -------
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
- 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
ANNEX II
FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ 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
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
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
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
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 & ▇▇▇▇▇ LLP
II-5
ANNEX III
FORM OF OPINION OF ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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
(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
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President, General
Counsel and Secretary
III-3
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
(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-2