Exhibit 10.2
$200,000,000
PINNACLE ENTERTAINMENT,
INC.
8 1 / 4 % Senior Subordinated Notes due
2012
PURCHASE
AGREEMENT
February 27, 2004
LEHMAN BROTHERS INC.,
BEAR, STEARNS & CO.
INC.
DEUTSCHE BANK SECURITIES
INC.
SG COWEN SECURITIES
CORPORATION
UBS SECURITIES LLC
HIBERNIA SOUTHCOAST CAPITAL,
INC.
c/o Lehman Brothers,
Inc.
745 Seventh Avenue
New York, New York 10019
Dear Sirs:
PINNACLE ENTERTAINMENT, INC., a
Delaware corporation (the “ Company ”),
proposes, upon the terms and considerations set forth herein, to
issue and sell to you, as the initial purchasers (the “
Initial Purchasers ”), $200,000,000 in aggregate
principal amount of its 8 1 / 4
% Senior Subordinated
Notes due 2012 (the “ Series A Notes ”) (the
“ Offering ”). The Series A Notes (i) will have
terms and provisions which are summarized in the Preliminary
Offering Memorandum (as defined herein) and the Offering Memorandum
(as defined herein) and (ii) are to be issued pursuant to an
Indenture (the “ Indenture ”) to be dated as of
the Closing Date (as defined herein) to be entered into among the
Company, the Subsidiary Guarantors (as defined herein) and The Bank
of New York, as trustee (the “ Trustee ”). The
Company’s obligations under the Series A Notes, including the
due and punctual payment of interest on the Series A Notes, will be
unconditionally guaranteed (the “ Series A Subsidiary
Guarantees ”) by the subsidiaries of the Company listed
on Schedule II hereto that have signed this Agreement (each
a “ Subsidiary Guarantor ” and, collectively,
the “ Subsidiary Guarantors ”). As used herein,
the term Series A Notes shall include the Series A Subsidiary
Guarantees thereof by the Subsidiary Guarantors, unless the context
otherwise requires. This is to confirm the agreement concerning the
purchase of the Series A Notes from the Company by the Initial
Purchasers.
1. Preliminary Offering
Memorandum and Offering Memorandum . The Series A Notes will be
offered and sold to the Initial Purchasers without registration
under the Securities Act of 1933, as amended (the “
Securities Act ”), in reliance on an exemption
pursuant to Section 4(2) under the Securities Act. The Company and
the Subsidiary Guarantors have prepared a preliminary offering
memorandum, dated February 23, 2004 (the “ Preliminary
Offering Memorandum ”), and will prepare an offering
memorandum, to be dated on or prior to March 10,
2004 (the “ Offering Memorandum
”), setting forth information regarding the Company, the
Subsidiary Guarantors, the Series A Notes and the Series B Notes
(as defined herein). Any reference herein to the Preliminary
Offering Memorandum or the Offering Memorandum shall be deemed to
refer to and include the documents incorporated by reference
therein. The Company and the Subsidiary Guarantors hereby confirm
that they have authorized the use of the Preliminary Offering
Memorandum and the Offering Memorandum in connection with the
Offering and resale of the Series A Notes by the Initial
Purchasers.
It is understood and acknowledged
that upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the
Securities Act, the Series A Notes (and all securities issued in
exchange therefor, in substitution thereof) shall bear the
following legend:
“THIS NOTE (OR ITS
PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT
BE OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED
THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF
THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, ASSIGNED,
PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
“QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER
THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (IV) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR
IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, (V) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS) OR (VI) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES, (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES
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LAW OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.”
You have advised the Company that
you will make offers (the “ Exempt Resales ”) of
the Series A Notes purchased by you hereunder on the terms set
forth in the Offering Memorandum, as amended or supplemented,
solely to (i) persons (each, a “ 144A Purchaser
”) whom you reasonably believe to be “qualified
institutional buyers” as defined in Rule 144A under the
Securities Act (“ QIBs ”), (ii) a limited number
of other “accredited investors,” as defined in Rule
501(a)(1), (2), (3), (5), (6) or (7) under the Securities Act, that
make certain representations and agreements to the Company (each,
an “ Accredited Investor ”) and (iii) outside
the United States to certain persons you reasonably believe to be
eligible to purchase such Notes in offshore transactions in
reliance on Regulation S under the Securities Act, such persons
specified in clauses (i) through (iii) being referred to herein as
the (“ Eligible Purchasers ”). As used herein,
the terms “United States” and “U.S.
Persons” have the meaning given them in Regulation S under
the Securities Act. The Initial Purchasers will offer the Series A
Notes to Eligible Purchasers initially at a price equal to 99.282%
of the principal amount thereof. Such price may be changed at any
time without notice.
Holders (including subsequent
transferees) of the Series A Notes will have the registration
rights set forth in the registration rights agreement (the “
Registration Rights Agreement ”), to be dated the
Closing Date, for so long as such Series A Notes constitute “
Transfer Restricted Securities ” (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Company and the Subsidiary Guarantors will agree to
file with the Securities and Exchange Commission (the “
Commission ”) under the circumstances set forth
therein, (i) a registration statement under the Securities Act (the
“ Exchange Offer Registration Statement ”)
relating to (A) the Company’s 8 1 / 4
% Series B Senior
Subordinated Notes due 2012 (the “ Series B Notes
” and, together with the Series A Notes, the “
Notes ”) and the guarantees of the Subsidiary
Guarantors to be endorsed on the Series B Notes (the “
Series B Subsidiary Guarantees ” and, together with
the Series A Subsidiary Guarantees, the “ Subsidiary
Guarantees ”) to be offered in exchange for the Series A
Notes and the Series A Subsidiary Guarantees (the “
Exchange Offer ”) and (ii) under certain circumstances
a shelf registration statement pursuant to Rule 415 under the
Securities Act (the “ Shelf Registration Statement
” and, together with the Exchange Offer Registration
Statement, the “ Registration Statements ”)
relating to the resale by certain holders of Series A Notes, and to
use their commercially reasonable efforts to cause such
Registration Statements to be declared and remain effective and
usable for the periods specified in the Preliminary Offering
Memorandum and the Registration Rights Agreement and to consummate
the Exchange Offer.
2. Representations, Warranties
and Agreements of the Company and the Subsidiary Guarantors .
The Company and each of the Subsidiary Guarantors represents,
warrants and agrees that:
(a) The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware. Each of the
Company’s subsidiaries set forth on Schedule III
hereto (each a “ Subsidiary ” and collectively,
the
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“ Subsidiaries ”) has been
duly organized and validly exists as a corporation, partnership or
limited liability company in good standing under the laws of its
jurisdiction of organization. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation, partnership or limited liability
company in each jurisdiction in which the character or location of
its properties (owned, leased or licensed) or the nature or conduct
of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which
(individually and in the aggregate) could not reasonably be
expected to have a material adverse effect on (i) the business,
condition (financial or otherwise), results of operations,
stockholders’ equity, properties or prospects of the Company
and the Subsidiaries, taken as a whole; (ii) the long-term debt or
capital stock of the Company and its Subsidiaries, taken as a whole
or (iii) the Offering (collectively, a “ Material
Adverse Effect ” ). Each of the Company and the
Subsidiaries has all requisite power and authority, and all
necessary consents, approvals, authorizations, orders,
registrations, qualifications, licenses (including, but not limited
to, gaming licenses, certificates and orders), filings and permits
(collectively, the “ Consents ” )
of, with and from all judicial, regulatory, self-regulatory and
other legal or governmental agencies and bodies and all third
parties, foreign and domestic, to own, lease and operate its
properties and conduct its business as it is now being conducted or
(other than with respect to City of St. Louis and St. Louis County
development proposals) proposed to be conducted and as disclosed in
the Preliminary Offering Memorandum, and each such Consent is valid
and in full force and effect, and neither the Company nor any
Subsidiary has received notice of any investigation or proceedings
which results in the revocation of any such Consent, except where
the failure to have such Consents could not reasonably be expected
to have, singly or in the aggregate, a Material Adverse Effect.
Each of the Company and the Subsidiaries is in compliance with all
applicable laws, securities laws (including the Sarbanes-Oxley
Act), rules, regulations, ordinances, directives, judgments,
decrees and orders, foreign and domestic, except where failure to
be in compliance could not reasonably be expected to have a
Material Adverse Effect. No Consent contains a materially
burdensome restriction not adequately disclosed in the Preliminary
Offering Memorandum.
(b) Subsequent to the dates as of
which information is given in the Preliminary Offering Memorandum,
except as set forth in the Preliminary Offering Memorandum, (i)
there has been no dividend or distribution of any kind declared,
paid or made by the Company or, except of dividends paid to the
Company or other Subsidiaries, any of its Subsidiaries on any class
of capital stock or repurchase or redemption by the Company or any
of its Subsidiaries or any call of capital, (ii) there has been no
Material Adverse Effect or any development that could reasonably be
expected to result in a Material Adverse Effect, whether or not
arising from transactions in the ordinary course of business, and
(iii) there has not been any transaction material to the Company
and its Subsidiaries, taken as a whole, entered into or any such
transaction that is probable of being entered into by the Company
or the Subsidiaries, other than transactions in the ordinary course
of business and changes and transactions described in or
contemplated by the Preliminary Offering Memorandum. Since the date
of the latest balance sheet presented in the Preliminary Offering
Memorandum, neither the Company nor any Subsidiary has incurred or
undertaken any material liabilities or obligations, whether direct
or indirect, liquidated or contingent, matured or unmatured, or
entered into any transactions which are material to the Company and
the Subsidiaries taken as a whole, except for liabilities,
obligations and transactions which are disclosed in the Preliminary
Offering Memorandum.
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(c) The outstanding shares of common
stock (par value $0.10 per share) of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable, and no preemptive rights of stockholders exist with
respect to any of the outstanding shares of common stock of the
Company.
(d) The authorized, issued, and
outstanding capital stock of the Company is as set forth in the
Preliminary Offering Memorandum in the column headed “
Actual ” under the caption “
Capitalization ,” and after giving effect to the
Offering and the other transactions contemplated by this Agreement
and the Preliminary Offering Memorandum, would be as set forth in
the column headed “ As Further Adjusted ” under
the caption “ Capitalization .”
(e) The Subsidiaries are the only
subsidiaries of the Company within the meaning of Rule 405 under
the Securities Act. Except for the Subsidiaries, the Company holds
no material ownership or other interest, nominal or beneficial,
direct or indirect, in any corporation, partnership, joint venture
or other business entity. All of the issued shares of capital stock
of or other ownership interests in each Subsidiary (except for
CASINO PARKING INC.) have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned (except
for CASINO PARKING INC.) directly or indirectly by the Company free
and clear of all liens, encumbrances, equities or claims, and no
options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations
into shares of capital stock or ownership interests in the
Subsidiaries are outstanding, except for liens, encumbrances or
claims created or arising in connection with the Company’s
new bank credit facility (the “ Bank Credit Facility
”) described in the Preliminary Offering Memorandum under the
caption “ Description of Other Indebtedness
.”
(f) Neither the Company nor any
Subsidiary is or, after giving effect to the Offering of the Notes
contemplated hereunder and the application of the net proceeds from
such sale as described in the Preliminary Offering Memorandum, will
be an “investment company” within the meaning of such
term under the Investment Company Act of 1940, as amended (the
“ 1940 Act ”) and the rules and regulations of
the Commission thereunder.
(g) Neither the Company nor any
Subsidiary (i) is in violation of its certificate or articles of
incorporation or organization, by-laws, certificate of formation,
limited liability company or operating agreement, partnership
agreement or other organizational documents, as applicable (ii) is
in default under, and no event has occurred which, with notice or
lapse of time or both, would constitute a default under or result
in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or
assets is subject or (iii) is in violation in any respect of any
law, rule, regulation, ordinance, directive, judgment, decree or
order of any judicial, regulatory or other legal or governmental
agency or body, foreign or domestic, except (in the case clauses
(ii) and (iii) above) violations or defaults that could not
(individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect and except (in the case of clause (ii)
above) for any lien, charge or encumbrance disclosed in the
Preliminary Offering Memorandum.
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(h) The Preliminary Offering
Memorandum with respect to the Series A Notes has been prepared by
the Company and the Subsidiary Guarantors for use by the Initial
Purchasers in connection with the Exempt Resales. The Offering
Memorandum with respect to the Series A Notes will be prepared by
the Company and the Subsidiary Guarantors for use by the Initial
Purchasers in connection with Exempt Resales on or prior to March
10, 2004, and such Offering Memorandum will incorporate by
reference (and when delivered to Eligible Purchasers on March 11,
2004 will include a copy of) either (i) the Company’s Form
10-K for the fiscal year ended December 31, 2003 or (ii) a Form
8-K, in either case, that contains the (1) consolidated financial
statements for the Company and its consolidated Subsidiaries
(covering the fiscal years ended December 31, 2001, December 31,
2002 and December 31, 2003) as audited by Deloitte & Touche
LLP, (the “ Audited Financials ”) and the
unqualified independent auditor’s report of Deloitte &
Touche LLP with respect thereto and (2) the Company’s
Management’s Discussion and Analysis of Financial Condition
and Results of Operations for the fiscal year ended December 31,
2003. No order or decree preventing the use of the Preliminary
Offering Memorandum, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act, has been issued and no
proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company or any of the Subsidiary Guarantors, is
contemplated.
(i) The Preliminary Offering
Memorandum, as of its date, did not, and as of the date hereof,
does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Offering Memorandum, as
of its date and as of the Closing Date, will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. Any amendments or supplements to either the
Preliminary Offering Memorandum or the Offering Memorandum, as of
the date of such amendment or supplement, when read together with
the Preliminary Offering Memorandum or the Offering Memorandum, as
applicable, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
However, this representation and warranty does not apply to
statements contained in or omissions from the Preliminary Offering
Memorandum or the Offering Memorandum made in reliance upon and in
conformity with information relating to the Initial Purchasers
furnished to the Company in writing by or on behalf of the Initial
Purchasers expressly for use therein, it being expressly understood
that the only information so furnished by the Initial Purchasers to
the Company is that set forth in Section 9(e) hereof.
(j) Assuming that (i) your
representations and warranties in Section 3 are true, (ii) the
representations of the Accredited Investors set forth in the
certificates of such Accredited Investors in the form set forth in
Annex A to the Offering Memorandum are true, and (iii) each
of the Eligible Purchasers is a QIB, an Accredited Investor or a
person who acquires the Series A Notes in an “offshore
transaction” and is not a “U.S. Person” (within
the meaning of Regulation S under the Securities Act), the purchase
and resale of the Series A Notes pursuant hereto (including
pursuant to the Exempt Resales) is exempt from the registration
requirements of the Securities Act. No form of general solicitation
or general advertising was used by the Company or any of its
representatives (other than the Initial Purchasers, as to whom
the
6
Company makes no representation) in connection
with the offer and sale of the Series A Notes, including, but not
limited to, articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast over
television or radio or any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued
and sold by the Company within the six-month period immediately
prior to the date hereof.
(k) There are no contracts or other
documents which are required to be described in the Preliminary
Offering Memorandum by the Securities Act or by the rules and
regulations of the Commission thereunder which have not been
described in the Preliminary Offering Memorandum.
(l) The Company is not required to
deliver the information specified in Rule 144A(d)(4) in connection
with the Exempt Resales and the Notes and the Subsidiary Guarantees
satisfy the requirements of Rule 144A(d)(3).
(m) The Company and each of the
Subsidiary Guarantors have full corporate, partnership or limited
liability company right, power and authority to enter into this
Purchase Agreement (this “ Agreement ”), to
perform their respective obligations hereunder and to consummate
the transactions contemplated by this Agreement and the Preliminary
Offering Memorandum. This Agreement and the transactions
contemplated by this Agreement and the Preliminary Offering
Memorandum have been duly and validly authorized by the Company and
each of the Subsidiary Guarantors. This Agreement has been duly and
validly executed and delivered by the Company and the Subsidiary
Guarantors and (assuming the due execution and delivery thereof by
the Initial Purchasers) constitutes the legal, valid and binding
obligation of the Company and the Subsidiary Guarantors,
enforceable against the Company and the Subsidiary Guarantors in
accordance with its terms, subject to the qualification that the
enforceability of the Company’s and the Subsidiary
Guarantors’ obligations hereunder may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting creditors’
rights generally, except as enforceability may be subject to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law)
and except as may be limited by state or federal laws or policies
relating to the non-enforceability of the indemnification
provisions contained herein.
(n) The Company and each of the
Subsidiary Guarantors have full corporate, partnership or limited
liability company right, power and authority to enter into the
Registration Rights Agreement and to perform their respective
obligations thereunder. The Registration Rights Agreement will be,
prior to the Closing Date, duly and validly authorized by the
Company and each of the Subsidiary Guarantors and, when executed by
the Company and the Subsidiary Guarantors in accordance with the
terms thereof, will be validly executed and delivered and (assuming
the due execution and delivery thereof by the Initial Purchasers)
will constitute the legal, valid and binding obligation of the
Company and the Subsidiary Guarantors, enforceable against the
Company and the Subsidiary Guarantors in accordance with its terms,
subject to the qualification that the enforceability of the
Company’s and the Subsidiary Guarantors’ obligations
thereunder may be limited by bankruptcy, fraudulent transfer,
insolvency, reorganization, moratorium and other laws relating to
or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability
is
7
considered in a proceeding in equity or at law)
and except as may be limited by state or federal laws or policies
relating to the non-enforceability of the indemnification
provisions contained therein. On the Closing Date, the Registration
Rights Agreement will conform in all material respects to the
description thereof in the Preliminary Offering Memorandum and the
Offering Memorandum.
(o) The Company and each of the
Subsidiary Guarantors have full corporate, partnership or limited
liability company right, power and authority to execute and deliver
the Indenture and to perform their respective obligations
thereunder. The Indenture will be, prior to the Closing Date, duly
and validly authorized by the Company and each of the Subsidiary
Guarantors and, when executed by the Company and the Subsidiary
Guarantors in accordance with the terms thereof, will be validly
executed and delivered and (assuming the due authorization,
execution and delivery thereof by the Trustee) will constitute the
legal, valid and binding obligation of the Company and the
Subsidiary Guarantors, enforceable against the Company and the
Subsidiary Guarantors in accordance with its terms, subject to the
qualification that the enforceability of the Company’s and
the Subsidiary Guarantors’ obligations thereunder may be
limited by bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors’ rights generally and by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law). On the Closing Date, the
Indenture will conform in all material respects to the description
thereof in the Preliminary Offering Memorandum and the Offering
Memorandum. No qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, and the rules and regulations of
the Commission thereunder (the “ TIA ”) is
required in connection with the offer and sale of the Series A
Notes contemplated hereby or in connection with the Exempt Resales.
On the Closing Date, the Indenture will conform in all material
respects to the requirements of the TIA and the rules and
regulations of the Commission thereunder applicable to an indenture
which is required to be qualified thereunder.
(p) The Company has full corporate
right, power and authority to offer and sell the Series A Notes.
The Series A Notes will be, prior to the Closing Date, duly and
validly authorized by the Company, and upon their execution and
delivery and (assuming due authorization, execution and delivery by
the Trustee) upon delivery to the Initial Purchasers against
payment therefor in accordance with the terms hereof and upon the
due execution, authentication and delivery of the Series A Notes in
accordance with the Indenture, will have been validly issued and
delivered, and will constitute the legal, valid and binding
obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, subject to the qualification that the enforceability of the
Company’s obligations thereunder may be limited by
bankruptcy, fraudulent transfer, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors’
rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law). On the Closing Date, the Series A Notes will conform as
to legal matters to the description thereof contained in the
Preliminary Offering Memorandum and the Offering Memorandum, which
summary description is accurate in all material
respects.
(q) The Subsidiary Guarantors have
full corporate, partnership or limited liability company right,
power and authority to offer and sell the unconditional guarantee
of the Company’s obligations under the Series A Notes,
including the due and punctual payment of
8
interest on the Series A Notes pursuant to the
Series A Subsidiary Guarantees. The Series A Subsidiary Guarantees
to be endorsed on the Series A Notes will be, prior to the Closing
Date, duly and validly authorized by each of the Subsidiary
Guarantors, and upon their execution and delivery and upon the due
execution, authentication and delivery of the Series A Notes in
accordance with the Indenture and the issuance of the Series A
Notes and the sale to the Initial Purchasers contemplated by this
Agreement, will have been validly issued and delivered, and will
constitute the legal, valid and binding obligations of each of the
Subsidiary Guarantors entitled to the benefits of the Indenture,
enforceable against each Subsidiary Guarantor in accordance with
their terms, subject to the qualification that the enforceability
of the Subsidiary Guarantors’ obligations thereunder may be
limited by bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors’ rights generally and by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law). On the Closing Date, the
Series A Subsidiary Guarantees to be endorsed on the Series A Notes
will conform as to legal matters to the description thereof
contained in the Preliminary Offering Memorandum and the Offering
Memorandum, which summary description is accurate in all material
respects.
(r) The Series B Notes will be,
prior to the Closing Date, duly and validly authorized by the
Company and, if and when duly and validly issued and authenticated
in accordance with the terms of the Indenture and delivered in
accordance with the Exchange Offer provided for in the Registration
Rights Agreement, will constitute the legal, valid and binding
obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, subject to the qualification that the enforceability of the
Company’s obligations thereunder may be limited by
bankruptcy, fraudulent transfer, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors’
rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law). When the Series B Notes are issued, the Series B Notes
will conform as to legal matters to the description thereof
contained in the Preliminary Offering Memorandum and the Offering
Memorandum, which summary description is accurate in all material
respects.
(s) The Subsidiary Guarantors have
the full corporate, partnership or limited liability company right,
power and authority to offer and sell the unconditional guarantee
of the Company’s obligations under the Series B Notes,
including the due and punctual payment of interest on the Series B
Notes pursuant to the Series B Subsidiary Guarantees. The Series B
Subsidiary Guarantees to be endorsed on the Series B Notes will be,
prior to the Closing Date, duly and validly authorized by the
Subsidiary Guarantors and, if and when duly executed and delivered
by the Subsidiary Guarantors in accordance with the terms of the
Indenture and upon the due execution and authentication of the
Series B Notes in accordance with the Indenture and the issuance
and delivery of the Series B Notes in the Exchange Offer
contemplated by the Registration Rights Agreement, will constitute
the legal, valid and binding obligations of the Subsidiary
Guarantors, enforceable against the Subsidiary Guarantors in
accordance with their terms, subject to the qualification that the
enforceability of the Subsidiary Guarantors’ obligations
thereunder may be limited by bankruptcy, fraudulent transfer,
insolvency, reorganization, moratorium and other laws relating to
or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). When the Series B
Subsidiary Guarantees to be endorsed on the
9
Series B Notes are issued, the Series B
Subsidiary Guarantees will conform as to legal matters to the
description thereof contained in the Preliminary Offering
Memorandum and the Offering Memorandum, which summary description
is accurate in all material respects.
(t) When the Series A Notes and
Series A Subsidiary Guarantees are issued and delivered pursuant to
this Agreement, such Series A Notes and Series A Subsidiary
Guarantees will not be of the same class (within the meaning of
Rule 144A under the Securities Act) as securities of the Company
that are listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”) or that are quoted in a United
States automated inter-dealer quotation system.
(u) The Company has not prior to the
date hereof made any offer or sale of any securities which could be
properly “integrated” with the offer and sale of the
Notes. Except as described in the Preliminary Offering Memorandum,
the Company has not sold or issued any shares of common stock or
debt securities during the six-month period preceding the date of
the Preliminary Offering Memorandum, including any sales pursuant
to Rule 144A under, or Regulations D or S of, the Securities Act,
other than shares issued pursuant to plans, qualified stock options
plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(v) Neither the Company nor any of
its affiliates, nor any person acting on its or their behalf (i)
has, within the six-month period prior to the date hereof, offered
or sold in the United States or to any U.S. person (as such terms
are defined in Regulation S under the Securities Act) the Notes or
any security of the same class or series as the Notes or (ii) has
offered or will offer or sell the Notes with respect to any
securities sold in reliance on Rule 903 of Regulation S, by means
of any directed selling efforts within the meaning of Rule 902(c)
of Regulation S. The Company and its affiliates and any person
acting on its or their behalf have complied and will comply with
the offering restrictions requirements of Regulation S. The Company
has not entered, and will not enter, into any contractual
arrangement with respect to the distribution of the Notes except
for this Agreement.
(w) The execution, delivery, and
performance of this Agreement, the Registration Rights Agreement,
the Indenture, the Notes and the Subsidiary Guarantees and
consummation of the transactions contemplated by this Agreement and
the Preliminary Offering Memorandum, including the issuance of the
Notes and the Subsidiary Guarantees and the use of proceeds
therefrom in the manner set forth under the caption “Use of
Proceeds” in the Preliminary Offering Memorandum, do not and
will not (i) except as set forth in clause (y) of the second
sentence hereof, require consent under or result in a breach of any
of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute
a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary pursuant to, any indenture, mortgage,
deed of trust, loan agreement or other agreement, instrument,
franchise, license or permit to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or their
respective properties, operations or assets may be bound or (ii)
violate any provision of the certificate or articles of
incorporation or organization, by-laws, certificate of formation,
limited liability company or operating agreement, partnership
agreement or other organizational documents of the Company or any
Subsidiary, or (iii) except as set forth in
10
clauses (w) and (z) of the second sentence
hereof, violate any law, rule, regulation, ordinance, directive,
judgment, decree or order of any judicial, regulatory or other
legal or governmental agency or body, domestic or foreign, except
(in the case of clauses (i) and (iii) above) as could not
reasonably be expected to have a Material Adverse Effect. No
Consent of, with or from any judicial, regulatory or other legal or
governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance
of this Agreement or consummation of the transactions contemplated
by this Agreement or the Preliminary Offering Memorandum, including
the issuance, sale and delivery of the Notes and the Subsidiary
Guarantees to be issued, sold and delivered hereunder, except (w)
approvals (including “shelf” approvals and waivers) by
or from the applicable gaming authorities in the States of Indiana,
Louisiana, Nevada and Mississippi, each of which, other than the
final Consent from the Indiana Gaming Commission, or the staff of
such commission, has been obtained, and with respect to the final
Consent to be obtained from the Indiana Gaming Commission, or the
staff of such commission, such final Consent will be obtained prior
to the Closing Date, (x) all applicable reports and filings
required by Nevada Gaming Commission Regulation 8.130 and the
equivalent provision of the Mississippi Gaming Control Act with
respect to the transactions contemplated by this Agreement and the
Indenture, none of which are required to be filed prior to the
Closing Date, (y) the written consent from Lehman Brothers
Commercial Paper Inc., as the administrative agent (the “
Administrative Agent ”) under the Company’s Bank
Credit Facility, (the “ Bank Consent ”) and (z)
such Consents (A) as may be required under state securities or blue
sky laws in connection with the purchase and distribution of the
Notes and the Subsidiary Guarantees by the Initial Purchasers, each
of which has been obtained and is in full force and effect, and (B)
as may be required under the Securities Act and for the
qualification of the Indenture under the TIA, with respect to the
performance of the Company’s and the Subsidiary
Guarantors’ agreements and obligations set forth in the
Registration Rights Agreement.
(x) The consolidated financial
statements of the Company and its consolidated Subsidiaries,
together with related notes and schedules as set forth or
incorporated by reference in the Preliminary Offering Memorandum,
present fairly in all material respects the financial position as
of the dates indicated and the results of operations and cash flows
for the periods specified of the Company and its consolidated
Subsidiaries. Except as otherwise stated in the Preliminary
Offering Memorandum, such financial statements and related
schedules have been prepared in accordance with generally accepted
accounting principles as applied in the United States, consistently
applied throughout the periods involved, except as disclosed
therein, and all adjustments necessary for a fair presentation of
results for such periods have been made, and the supporting
schedules included in the Preliminary Offering Memorandum present
fairly in all material respects the information required to be
stated therein. The other financial and statistical information of
the Company included or incorporated by reference in the
Preliminary Offering Memorandum present fairly in all material
respects the information included therein and have been prepared on
a basis consistent with that of the financial statements that are
included or incorporated by reference in the Preliminary Offering
Memorandum and the books and records of the respective entities
presented therein.
(y) There are no pro forma or as
adjusted financial statements which are required to be included in
the Preliminary Offering Memorandum in accordance with Regulation
S-X which have not been included as so required. The as adjusted
financial information included in the Preliminary Offering
Memorandum has been properly compiled and prepared in accordance
with the applicable requirements of the Securities Act, the
Exchange Act and the rules and
11
regulations of the Commission thereunder and
includes all adjustments necessary to present fairly in accordance
with generally accepted accounting principles the as adjusted
financial position of the respective entity or entities presented
therein at the respective dates indicated and their cash flows and
the results of operations for the respective periods
specified.
(z) The assumptions used in
preparing the as adjusted financial information included in the
Preliminary Offering Memorandum provide a reasonable and good faith
basis for presenting the significant effects directly attributable
to the transactions or events described therein; the related
adjustments made in the preparation of such as adjusted financial
information give appropriate effect to those assumptions; and such
as adjusted financial information reflects the proper application
of those adjustments to the corresponding historical financial
statement amounts.
(aa) Deloitte and Touche LLP, who
have certified and audited certain of the financial statements (i)
contained in the Preliminary Offering Memorandum and filed with the
Commission as part of, or incorporated by reference in, the
Preliminary Offering Memorandum and (ii) whose report appears in
the Preliminary Offering Memorandum, are independent public
accountants as required by the Securities Act and the rules and
regulations thereunder.
(bb) The Company and its
Subsidiaries make and keep accurate books and records and maintain
a system of internal accounting controls and other controls
sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only
in accordance with management’s general or specific
authorization; and (iv) the recorded accounting for assets is
compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(cc) Each of the Company and the
Subsidiaries has accurately prepared in all material respects and
timely filed all federal, state, local, foreign and other tax
returns that are required to be filed by it and has paid or made
provision for the payment of all taxes, assessments, governmental
or other similar charges, including, without limitation, all sales
and use taxes, all gaming taxes and all other taxes which the
Company or any Subsidiary is obligated to withhold from amounts
owing to employees, creditors and third parties, that are shown on
such returns, except, in each case, (i) those taxes that are not
reasonably likely to result in a Material Adverse Effect, (ii)
those taxes, assessments or other charges that are being contested
in good faith, if such taxes, assessments or other charges are
adequately reserved for or (iii) as described in the Preliminary
Offering Memorandum. Except as so described in the Preliminary
Offering Memorandum, no deficiency assessment with respect to a
proposed adjustment of the Company’s or any Subsidiary’
federal, state, local or foreign taxes is pending or, to the
Company’s knowledge, threatened, except that could not
reasonably be likely to result in a Material Adverse Effect. The
accruals and reserves on the books and records of the Company and
the Subsidiaries in respect of tax liabilities for any taxable
period not finally determined are adequate to meet any assessments
and related liabilities for any such period and, since December 31,
2002, the Company and the Subsidiaries have not incurred any
liability for taxes other than in the ordinary course of its
business, except that could not reasonably be likely to result in
a
12
Material Adverse Effect. There is no tax lien
(other than the lien for taxes not yet due and liens for taxes
being contested in good faith), whether imposed by any federal,
state or other taxing authority, outstanding against the assets,
properties or business of the Company or any Subsidiary, and the
Company does not know of any actual or proposed additional material
tax assessments, except as described in the Preliminary Offering
Memorandum.
(dd) The statistical and
market-related data and estimates included in the Preliminary
Offering Memorandum are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and
accurate, and such data agree with the sources from which they are
derived.
(ee) The Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act
and files reports with the Commission on the EDGAR System. The
Company’s common stock is registered pursuant to Section
12(b) of the Exchange Act and the outstanding shares of the
Company’s common stock are listed on the New York Stock
Exchange (the “ NYSE ”) and the Company has
taken no action designed to, or likely to have the effect of,
terminating the registration of its common stock under the Exchange
Act or de-listing the common stock from the NYSE, nor has the
Company received any notification that the Commission or the NYSE
is contemplating terminating such registration or
listing.
(ff) Neither the Company nor, to the
Company’s knowledge, any of its affiliates (within the
meaning of Rule 144 under the Securities Act) has taken, nor will
the Company or, to the Company’s knowledge, any of such
affiliates take, directly or indirectly, any action which
constitutes or is designed to cause or result in, or which might
reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to
facilitate the sale or resale of the Notes.
(gg) There are no contracts,
agreements or understandings between the Company or any of its
affiliates and any person (other than the Registration Rights
Agreement) granting such person the right to require the Company or
any of its affiliates to file a registration statement under the
Securities Act with respect to any securities of the Company or any
of its affiliates owned or to be owned by such person or to require
the Company or any of its affiliates to include such securities
with the Notes and the Subsidiary Guarantees registered pursuant to
the Registration Rights Agreement or with any securities being
registered pursuant to any other registration statement filed by
the Company under the Securities Act.
(hh) Neither the Company nor any of
its Subsidiaries has sustained, since the date of the latest
audited financial statements included or incorporated by reference
in the Preliminary Offering Memorandum, 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, other
than as set forth or contemplated in the Preliminary Offering
Memorandum; and, since such date, there has not been any change in
the capital stock 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, other than as set forth or contemplated in
the Preliminary Offering Memorandum.
13
(ii) Based on the knowledge of the
chief executive officer and chief financial officer of the Company,
(i) the Annual Report on Form 10-K for the year ended December 31,
2002 and the Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2003, June 30, 2003 and September 30, 2003 (each a
“ Report ”, and together, the “
Reports ”), fully comply with the requirements of
Section 13(a) or 15(d) of the Exchange Act; and (ii) the
information contained in each Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company and its consolidated Subsidiaries as of
the date of filing with the Commission.
(jj) The documents incorporated or
deemed to be incorporated by reference in the Preliminary Offering
Memorandum, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with
the requirements of the Securities Act, the Exchange Act and the
rules and regulations of the Commission thereunder, and, when read
together with the other information in, or incorporated in, the
Preliminary Offering Memorandum, at the date of the Preliminary
Offering Memorandum and at the Closing Date, do not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
(kk) The Company and the
Subsidiaries have good and marketable title to all real property
and to all personal property described in the Preliminary Offering
Memorandum as being owned by them, in each case free and clear of
all Liens, encumbrances and defects except (i) such as are
described in the Preliminary Offering Memorandum, (ii) such as
arise in connection with the Bank Credit Facility, (iii) such as do
not (individually or in the aggregate) interfere with the use made
or proposed to be made of such property by the Company and the
Subsidiaries or (iv) such as are not (individually or in the
aggregate) reasonably likely to have a Material Adverse Effect; and
any real property and buildings held under lease or sublease by the
Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as (i) do
not interfere with, the use made and proposed to be made of such
property and buildings by the Company and the Subsidiaries or (ii)
are not (individually or in the aggregate) reasonably likely to
have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any written notice of any claim adverse to
its ownership of any real or personal property or of any claim
against the continued possession of any real property, whether
owned or held under lease or sublease by the Company or any
Subsidiary, except as would not reasonably likely to have a
Material Adverse Effect.
(ll) The Company and the
Subsidiaries each own or possess the right to use all patents,
patent rights, patent applications, trademarks, trade names,
service marks, service names, trademark registrations, service mark
registrations, copyrights, license rights, know-how (including
trade secrets and other unpatented and unpatentable proprietary or
confidential information, systems or procedures) and other
intellectual property rights (“ Intellectual Property
”) described in the Preliminary Offering Memorandum as
necessary for the conduct of their business as currently being
conducted, except as could not reasonably be expected to result in
a Material Adverse Effect.
(mm) The Company and each of its
Subsidiaries carry, or are covered by, insurance in such amounts
and covering such risks as the Company reasonably considers
adequate for the conduct of their respective businesses and the
value of their respective
14
properties and as is reasonably customary for
companies engaged in similar businesses in similar industries.
Neither the Company nor any Subsidiary has received any notice from
any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly
in force on the date hereof and will be outstanding and duly in
force on the Closing Date.
(nn) Except as described in the
Preliminary Offering Memorandum, there is no judicial, regulatory
or other legal or governmental proceeding or other litigation
pending to which the Company or any Subsidiary is a party or of
which any property, operations or assets of the Company or any
Subsidiary is the subject which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect; to
the best of the Company’s knowledge, no such proceeding or
litigation is threatened or contemplated; and the defense of all
such proceedings and litigation against or involving the Company or
any Subsidiary could not reasonably be expected to have a Material
Adverse Effect.
(oo) No relationship, direct or
indirect, exists between or among any of the Company, a Subsidiary
or any affiliate of the Company, on the one hand, and any director,
officer, stockholder, customer or supplier of the Company, a
Subsidiary or any affiliate of the Company, on the other hand,
which is required by the Securities Act, the Exchange Act or the
rules and regulations of the Commission thereunder to be described
in the Preliminary Offering Memorandum which is not so described as
required. There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business)
or guarantees of indebtedness by the Company, a Subsidiary or any
affiliate of the Company to or for the benefit of any of the
officers or directors of the Company, a Subsidiary or any affiliate
of the Company or any of their respective family members which are
required to be disclosed in the Preliminary Offering Memorandum and
which are not disclosed therein.
(pp) There are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments for sale or liens related to or entitling
any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company or
any wholly owned subsidiary thereof or with respect to any capital
stock or other ownership interest that the Company or any of its
Subsidiaries owns in a less than wholly owned subsidiary, except
(i) as otherwise disclosed in the Preliminary Offering Memorandum,
(ii) such as are not material to the business, prospects, financial
condition or results of operations of the Company and its
Subsidiaries, taken as a whole or (iii) liens arising in connection
with the Bank Credit Facility.
(qq) The chief executive officer and
chief financial officer of the Company are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the rules and
regulations of the Commission under the Exchange Act) for the
Company and have (i) designed such disclosure controls and
procedures, or caused such disclosures and procedures to be
designed under their supervision, to ensure that material
information relating to the Company and its Subsidiaries is made
known to the chief executive officer and chief financial officer by
others within the Company and its Subsidiaries, (ii) evaluated the
effectiveness of the of the Company’s disclosure controls and
procedures as of the end of the period (the “ Evaluation
Date ”) covered by such Report, and (iii) presented in
each Report their conclusions about the effectiveness of the
disclosure controls and procedures based
15
on their evaluation as of the Evaluation Date.
The chief executive officer and chief financial officer of the
Company have disclosed, based upon their most recent evaluation of
the internal controls over financial reporting, to the
Company’s auditors and the Audit Committee of the
Company’s Board of Directors (i) all significant deficiencies
and material weaknesses in the design or operation of internal
controls over financial reporting which are reasonably likely to
adversely affect the Company’s ability to record, process,
summarize and report financial information, and (ii) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the Company’s
internal controls over financial reporting. The chief executive
officer and chief financial officer have indicated in each Report
any changes in the Company’s internal controls over financial
reporting that occurred during the Company’s most recent
fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal controls
over financial reporting.
(rr) Except as disclosed in the
Preliminary Offering Memorandum, there are no contracts, agreements
or understandings between the Company (or any Subsidiary) and any
person that would give rise to a valid claim against the Company,
any Subsidiary or any Initial Purchaser for a brokerage commission,
finder’s fee or other like payment in connection with the
transactions contemplated by this Agreement or the Preliminary
Offering Memorandum.
(ss) Neither the Company nor any of
its Subsidiar
