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Exhibit 1.1
Execution Copy
PREMIER ENTERTAINMENT BILOXI LLC
(D/B/A HARD ROCK HOTEL & CASINO BILOXI)
PREMIER FINANCE BILOXI CORP.
$160,000,000
10 3/4% First Mortgage Notes due 2012
PURCHASE AGREEMENT
dated January 15, 2004
BANC OF AMERICA SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
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TABLE OF CONTENTS
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PAGE
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SECTION 1. Representations and
Warranties..............................................................5
(a) No
Registration
Required....................................................................5
(b) No
Integration of Offerings or General
Solicitation.........................................5
(c)
Eligibility for Resale under Rule 144A and No Listed
Securities.............................5
(d) The
Preliminary Offering Memorandum and Offering
Memorandum.................................5
(e) Compliance
with Rule
144A...................................................................6
(f)
Authorization of the Purchase
Agreement.....................................................6
(g)
Authorization of the Registration Rights Agreement and DTC
Agreement........................6
(h)
Authorization of the Securities and the Exchange
Securities.................................6
(i)
Authorization of the
Indenture..............................................................7
(j)
Authorization of the Transaction
Documents..................................................7
(k) Material
Agreements.........................................................................7
(l)
Description of the Securities and the
Indenture.............................................8
(m)
Description of Transaction Documents and Material
Agreements................................8
(n) Ranking of
Indebtedness.....................................................................8
(o) No
Material Adverse
Change..................................................................8
(p)
Independent
Accountants.....................................................................8
(q)
Preparation of the Historical Financial
Statements..........................................8
(r) Due
Formation and Incorporation and Good Standing of the
Issuers............................9
(s) Corporate
or Organizational Power of the
Issuers............................................9
(t)
Capitalization and Other Equity Interest
Matters............................................9
(u)
Non-Contravention of Existing
Instruments..................................................10
(v) No
Consents, Approvals or
Authorizations...................................................10
(w) No
Material Actions or
Proceedings.........................................................10
(x) Valid and
Perfected Security
Interests.....................................................11
(y)
Intellectual Property
Rights...............................................................11
(z) All
Necessary Permits, Licenses,
etc.......................................................11
(aa)
No
Registration of
Securities..............................................................12
(bb)
Operation and Use of Hard Rock Hotel & Casino
Biloxi.......................................12
(cc)
Plans, Specifications, Construction Budget and Construction
Schedule for the
Hard Rock Hotel & Casino
Biloxi............................................................12
(dd)
Gaming Site
Approval.......................................................................13
(ee)
Title to
Properties........................................................................13
(ff)
Primary
Leases.............................................................................13
(gg)
Zoning.....................................................................................13
(hh)
Tax
Law
Compliance.........................................................................14
(ii)
Issuers Not an "Investment
Company"........................................................14
(jj)
Margin
Regulations.........................................................................14
(kk)
Insurance..................................................................................14
(ll)
No
Unlawful Contributions or Other
Payments................................................14
(mm)
Company's Accounting
System................................................................14
(nn)
Compliance with Environmental
Laws.........................................................15
(oo)
ERISA
Compliance...........................................................................15
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(pp)
Approval of Hard Rock
Licensing............................................................16
(qq)
Statistical and Market
Data................................................................16
(rr)
Compliance with Regulation
S...............................................................16
(ss)
Broker's or Finder's
Fee...................................................................16
(tt)
Related
Parties............................................................................16
(uu)
Expenditures to
Date.......................................................................17
SECTION 2. Purchase, Sale and
Delivery of the
Securities..............................................17
(a) The
Securities.............................................................................17
(b) The
Closing
Date...........................................................................17
(c) Delivery
of the
Securities.................................................................17
(d) Delivery
of Offering Memorandum to the Initial
Purchasers..................................18
(e) Initial
Purchasers as Qualified Institutional
Buyers.......................................18
SECTION 3. Additional
Covenants.......................................................................18
(a) Advise the
Initial Purchasers of Stop Orders and Certain Other
Events......................18
(b) Initial
Purchasers' Review of Proposed Amendments and
Supplements..........................18
(c) Amendments
and Supplements to the Offering Memorandum and Other Securities
Act
Matters................................................................................18
(d) Copies of
the Offering Memorandum and Consent to its
Use...................................19
(e) Blue Sky
Compliance........................................................................19
(f) Use of
Proceeds............................................................................20
(g) The
Depositary.............................................................................20
(h) Additional
Issuer
Information..............................................................20
(i) Agreement
Not To Offer or Sell Additional
Securities.......................................20
(j) Future
Reports to the Initial
Purchasers...................................................20
(k) No
Integration.............................................................................20
(l) Legended
Securities........................................................................21
(m)
PORTAL.....................................................................................21
(n) Usury
Laws.................................................................................21
(o)
Distribution of Offering
Materials.........................................................21
(p) Exchange
Offer.............................................................................21
(q) Issuance
of Equity to AA
Capital...........................................................21
(r)
Mississippi Bond Financing Documents
Approval..............................................21
SECTION 4. Payment of
Expenses........................................................................21
SECTION 5. Conditions of the
Obligations of the Initial
Purchasers....................................22
(a)
Representations, Warranties and
Covenants..................................................22
(b)
Accountants' Comfort
Letter................................................................22
(c) No Material Adverse Change or
Ratings Agency Change........................................23
(d) Opinion of
Counsel for the
Issuers.........................................................23
(e) Opinion of
Mississippi
Counsel.............................................................23
(f) Opinion of
Counsel for the Initial
Purchasers..............................................23
(g) Officers'
Certificate......................................................................23
(h) Bring-down
Comfort
Letter..................................................................24
(i)
Secretary's
Certificate....................................................................24
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(j) Offering
Memorandum; No Stop
Orders........................................................24
(k) No
Actions.................................................................................24
(l)
Transaction Documents and Material
Agreements..............................................25
(m) Regulatory
and Gaming
Approvals............................................................25
(n) Financing
Statements.......................................................................25
(o) Security
Interests
Perfected...............................................................25
(p)
Insurance..................................................................................25
(q) Real
Estate Title
Policy...................................................................25
(r) PORTAL
Listing.............................................................................25
(s) Concurrent
Transactions....................................................................25
(t)
Contractor's
Certificate...................................................................26
(u) Notice to
State of
Mississippi.............................................................26
(v) Notice to
City of
Biloxi...................................................................26
(w) Receipt of
Approval to Proceed with Development of Gaming
Site.............................26
(x) Receipt of
Approval of Transaction
Documents...............................................26
(y) Additional
Documents.......................................................................26
SECTION 6. Reimbursement of
Initial Purchasers'
Expenses..............................................26
SECTION 7. Offer, Sale and Resale
Procedures..........................................................27
SECTION 8.
Indemnification............................................................................29
(a)
Indemnification of the Initial
Purchasers..................................................29
(b)
Indemnification of the Issuers, their Directors and
Officers...............................29
(c)
Notifications and Other Indemnification
Procedures.........................................30
(d)
Settlements................................................................................31
SECTION 9.
Contribution...............................................................................31
SECTION 10. Termination of this
Agreement..............................................................32
SECTION 11. Representations and
Indemnities to Survive
Delivery........................................33
SECTION 12.
Notices....................................................................................33
SECTION 13.
Successors.................................................................................34
SECTION 14. Partial
Unenforceability...................................................................34
SECTION 15. Governing Law
Provisions...................................................................34
(a) Consent to
Jurisdiction....................................................................34
SECTION 16. Default of One or More of
the Several Initial
Purchasers...................................35
SECTION 17. Tax
Disclosure.............................................................................35
SECTION 18. General
Provisions.........................................................................35
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PURCHASE AGREEMENT
January 15, 2004
BANC OF AMERICA SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
As Initial
Purchasers
c/o Banc of
America Securities LLC
9 West 57th
Street
New York, New
York 10019
Ladies and Gentlemen:
Premier Entertainment Biloxi LLC (d/b/a Hard Rock Hotel &
Casino
Biloxi), a Delaware limited liability
company (the "COMPANY"), and Premier
Finance Biloxi Corp., a Delaware
corporation ("PREMIER FINANCE" and, together
with the Company, the "ISSUERS"), propose
to issue and sell to the several
Initial Purchasers set forth on SCHEDULE A
(each an "INITIAL PURCHASER" and
collectively, the "INITIAL PURCHASERS"),
acting severally and not jointly, the
respective amounts set forth on such
SCHEDULE A of the Issuers' 10 3/4% First
Mortgage Notes due 2012 (the "SECURITIES"),
subject to the terms and conditions
set forth herein (the "OFFERING"). The
Securities are more fully described in
the Offering Memorandum referred to below.
Capitalized terms used herein and not
otherwise defined herein shall have the
meanings assigned to such terms in the
Indenture.
The Securities will be issued pursuant to an indenture, dated
as
of the Closing Date (as defined in Section
2 hereto) (the "INDENTURE"), among
the Issuers and U.S. Bank National
Association, as trustee (the "TRUSTEE").
Securities issued in book-entry form will
be issued in the name of Cede & Co.,
as nominee of The Depository Trust Company
(the "DEPOSITARY") pursuant to a DTC
Agreement, to be dated as of the Closing
Date (the "DTC AGREEMENT"), among the
Issuers, the Trustee and the
Depositary.
The holders of the Securities will be entitled to the benefits
of
a registration rights agreement, to be
dated as of the Closing Date (the
"REGISTRATION RIGHTS AGREEMENT"), among the
Issuers and the Initial Purchasers,
pursuant to which the Issuers will agree to
file, within 90 days of the Closing
Date, a registration statement with the
Securities and Exchange Commission (the
"COMMISSION") registering the Exchange
Securities (as defined below) under the
Securities Act of 1933, as amended (the
"SECURITIES ACT," which term, as used
herein, includes the rules and regulations
of the Commission promulgated
thereunder).
The obligations of the Issuers under the Securities, the
Indenture and the Collateral Documents (as
defined below) will be secured by
security interests in or pledge of certain
assets of the Issuers and a pledge of
all of the Company's outstanding equity
interests
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(collectively, the "COLLATERAL"). The
Issuers will enter into the documents and
agreements set forth on SCHEDULE B hereto
(collectively, the "COLLATERAL
DOCUMENTS") that will provide for the grant
of the security interests in and
pledges of the Collateral to the Trustee
for the benefit of the holders of the
Securities.
Concurrently with the closing of the offering of the
Securities,
(i) the Issuers shall issue and sell to
Rank America, Inc., a Delaware
corporation ("RANK"), $10,000,000 in
aggregate principal amount of the Company's
15% Junior Subordinated Notes due 2012 (the
"JUNIOR SUBORDINATED NOTE") pursuant
to an Investment Agreement, dated as of
January 13, 2004, among the Issuers and
Rank (the "INVESTMENT AGREEMENT") and (ii)
the Company shall issue and sell to
AA Capital Equity Fund L.P., a Delaware
limited partnership and AA Capital
Biloxi Co-Investment Fund, L.P., a Delaware
limited partnership (collectively,
"AA CAPITAL") 100 Class B common membership
units and 100 Class A preferred
membership units of the Company (the
"MEMBERSHIP INTERESTS"), as set forth in
the Amended & Restated Limited
Liability Company Operating Agreement of Premier
Entertainment Biloxi LLC, to be dated as of
the Closing Date, among the members
of the Company (the "LLC OPERATING
AGREEMENT") upon (a) the conversion of the
outstanding Term Loan Note in the aggregate
principal amount of $35,000,000,
dated as of May 15, 2003, as amended by the
First Modification to Term Loan Note
dated September 19, 2003 and as further
amended by the Second Modification to
Term Loan Note dated December 30, 2003,
executed by the Company in favor of AA
Capital Equity Fund, L.P., as successor by
merger with AA Capital Direct
Investments Fund, L.P. (the "TERM LOAN
NOTE") pursuant to the terms of the Loan
and Security Agreement, dated as of May 15,
2003, between the Company and AA
Capital Equity Fund, L.P., as successor by
merger with AA Capital Direct
Investments Funds L.P., as amended by the
First Amendment to the Loan and
Security Agreement, dated as of September
19, 2003 and as further amended by the
Second Amendment to the Loan and Security
Agreement, dated as December 30, 2003,
(collectively, the "LOAN AND SECURITY
AGREEMENT") and (b) the payment by AA
Capital to the Company of an additional
amount such that the total amount of the
investment by AA Capital in the Company as
of the Closing Date is equal to
$50,000,000, excluding accrued interest on
the Term Loan Note. The transactions
contemplated by this paragraph are
hereinafter referred to as the "CONCURRENT
TRANSACTIONS."
On the Closing Date, the Issuers will irrevocably deposit with
U.S. Bank National Association, as
disbursement agent ("DISBURSEMENT AGENT"),
approximately $177.6 million of the net
proceeds from the offering of (i) the
Securities, (ii) the Junior Subordinated
Note and (iii) the Membership Interests
pursuant to the Cash Collateral and
Disbursement Agreement, to be dated as of
the Closing Date, among the Issuers, the
Disbursement Agent, the Trustee and
Professional Associates Constructions
Services, Inc. (the "DISBURSEMENT
AGREEMENT") in order to fund the costs
required for the design, development,
construction, equipping and opening of the
Hard Rock Hotel & Casino Biloxi.
For purposes of this Agreement, the following documents are
hereinafter referred to as the "TRANSACTION
DOCUMENTS":
(i)
this Agreement;
(ii) the
Indenture;
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(iii) the
Securities;
(iv) the
Registration Rights Agreement;
(v)
the DTC Agreement;
(vi) the
Investment Agreement;
(vii) the Junior
Subordinated Note;
(viii) the
Intercreditor Agreement, to be dated as of the
Closing Date,
among the Issuers, the Trustee and Rank (the "RANK
INTERCREDITOR
AGREEMENT"); and
(ix) the
Collateral Documents.
For purposes of this Agreement, the following documents are
hereinafter referred to as the "MATERIAL
AGREEMENTS":
(i)
the Loan and Security Agreement;
(ii) the
Term Loan Note;
(iii) the LLC
Operating Agreement;
(iv) the
License Agreement, dated as of May 15, 2003, between
the Company and
Hard Rock Hotel Licensing, Inc., a Florida corporation (the
"HARD ROCK
LICENSE");
(v)
the Lease Agreement (Cafe), dated as of December 30,
2003, between
the Company, as lessor, and Hard Rock Cafe International
(STP), Inc., a
New York corporation ("HARD ROCK STP"), as lessee (the "CAFE
LEASE");
(vi) the
Lease Agreement (Retail Store), dated as of December
30, 2003,
between the Company, as lessor, and Hard Rock STP, as lessee
(the
"RETAIL STORE
LEASE");
(vii) the
Memorabilia Lease, to be entered into between Hard
Rock STP, as
lessor, and the Company, as lessee (the "MEMORABILIA LEASE")
prior to the
opening of, and commencement of operations at, the Hard Rock
Hotel &
Casino Biloxi;
(viii) the Agreement
Between Owner and Contractor (the "OWNER
CONTRACTOR
AGREEMENT"), dated as of December 24, 2003, between the Company
and Roy Anderson
Corp., a Mississippi corporation (the "CONTRACTOR");
(ix) the
Abbreviated Standard Form of Agreement Between Owner
and Architect
(the "ARCHITECT AGREEMENT"), dated as of November 21, 2003,
between the
Company and Paul Steelman Ltd., a Nevada corporation (the
"ARCHITECT");
(x)
the Lease and Air Rights Agreement (the "BILOXI LEASE"),
dated as of
November 18, 2003, between the City of Biloxi, Mississippi, a
municipal
corporation
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organized and
existing under the laws of the State of Mississippi (the
"CITY OF
BILOXI"), as landlord, and the Company, as tenant, as amended;
(xi) the
Public Trust Tidelands Lease (the "TIDELANDS LEASE"),
dated as of
October 27, 2003, between the Secretary of State, with approval
of the Governor,
for and on behalf of the State of Mississippi, as lessor,
and the Company,
as lessee;
(xii) the Trust
Indenture (the "MISSISSIPPI BOND INDENTURE"),
dated as of
January 1, 2004, between the Mississippi Business Finance
Corporation, a
public corporation organized and existing under the laws of
the State of
Mississippi (the "MBFC") and the Trustee;
(xiii) the Bond
Purchase Contract (the "MISSISSIPPI BOND
PURCHASE
CONTRACT"), dated as of January 1, 2004, between the MBFC and
Premier Finance;
and
(xiv) the Loan
Agreement (the "MISSISSIPPI BOND LOAN AGREEMENT"
and,
collectively with the Mississippi Bond Indenture and the
Mississippi
Bond Purchase
Contract, the "MISSISSIPPI BOND FINANCING DOCUMENTS"), dated
as of January 1,
2004, between the MBFC and the Company.
The Issuers understand that the Initial Purchasers propose to
make an offering of the Securities on the
terms and in the manner set forth
herein and in the Offering Memorandum (as
defined below) and agree that the
Initial Purchasers may resell, subject to
the conditions set forth herein, all
or a portion of the Securities to
purchasers (the "SUBSEQUENT PURCHASERS") at
any time after the date of this Agreement.
The Securities are to be offered and
sold to or through the Initial Purchasers
without being registered with the
Commission under the Securities Act, in
reliance upon exemptions therefrom. The
terms of the Securities and the Indenture
will require that investors that
acquire Securities expressly agree that
Securities may only be resold or
otherwise transferred, after the date
hereof, if such Securities are registered
for sale under the Securities Act or if an
exemption from the registration
requirements of the Securities Act is
available (including the exemptions
afforded by Rule 144A ("RULE 144A") or
Regulation S ("REGULATION S")
thereunder).
The Issuers have prepared and delivered to each Initial
Purchaser
copies of a Preliminary Offering
Memorandum, dated January 2, 2004 (the
"PRELIMINARY OFFERING MEMORANDUM"), and
have prepared and will deliver to each
Initial Purchaser, copies of the Offering
Memorandum, dated January 15, 2004,
describing the terms of the Securities,
each for use by such Initial Purchaser
in connection with its solicitation of
offers to purchase the Securities. As
used herein, the "OFFERING MEMORANDUM"
shall mean, with respect to any date or
time referred to in this Agreement, the
Issuers' Offering Memorandum, dated
January 15, 2003, including amendments or
supplements thereto, in the most
recent form that has been prepared and
delivered by the Issuers to the Initial
Purchasers in connection with their
solicitation of offers to purchase
Securities. Further, any reference to the
Preliminary Offering Memorandum or the
Offering Memorandum shall be deemed to
refer to and include any Additional
Issuer Information (as defined in Section
3) furnished by the Issuers prior to
the completion of the distribution of the
Securities.
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The Issuers hereby confirm their agreements with the Initial
Purchasers as follows:
SECTION 1. REPRESENTATIONS
AND WARRANTIES. The Issuers hereby, jointly and
severally, represent, warrant and covenant
to each Initial Purchaser as follows:
(a) NO
REGISTRATION REQUIRED. Subject to compliance by the Initial
Purchasers with the representations and
warranties set forth in Section 2 hereof
and with the procedures set forth in
Section 7 hereof, it is not necessary in
connection with the offer, sale and
delivery of the Securities to the Initial
Purchasers and to each Subsequent Purchaser
in the manner contemplated by this
Agreement and the Offering Memorandum to
register the Securities under the
Securities Act or, until such time as the
Exchange Securities are issued
pursuant to an effective registration
statement, to qualify the Indenture under
the Trust Indenture Act of 1939, as amended
(the "TRUST INDENTURE ACT," which
term, as used herein, includes the rules
and regulations of the Commission
promulgated thereunder).
(b) NO
INTEGRATION OF OFFERINGS OR GENERAL SOLICITATION. The Issuers
have not, directly or indirectly, solicited
any offer to buy or offered to sell,
and will not, directly or indirectly,
solicit any offer to buy or offer to sell,
in the United States or to any United
States citizen or resident, any security
which is or would be integrated with the
sale of the Securities in a manner that
would require the Securities to be
registered under the Securities Act. None of
the Issuers, their affiliates (as such term
is defined in Rule 501 under the
Securities Act (each, an "AFFILIATE"), or
any person acting on any of their
behalf (other than the Initial Purchasers,
as to whom the Issuers make no
representation or warranty) has engaged or
will engage, in connection with the
offering of the Securities, in any form of
general solicitation or general
advertising within the meaning of Rule 502
under the Securities Act. With
respect to those Securities sold in
reliance upon Regulation S, (i) none of the
Issuers, their Affiliates or any person
acting on their behalf (other than the
Initial Purchasers, as to whom the Issuers
make no representation or warranty)
has engaged or will engage in any directed
selling efforts within the meaning of
Regulation S and (ii) each of the Issuers
and their Affiliates and any person
acting on their behalf (other than the
Initial Purchasers, as to whom the
Issuers make no representation or warranty)
has complied and will comply with
the offering restrictions set forth in
Regulation S.
(c)
ELIGIBILITY FOR RESALE UNDER RULE 144A AND NO LISTED
SECURITIES.
The Securities are eligible for resale
pursuant to Rule 144A and will not be, at
the Closing Date, of the same class as
securities listed on a national
securities exchange registered under
Section 6 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT," which
term, as used herein, includes the
rules and regulations of the Commission
promulgated thereunder) or quoted in a
U.S. automated inter-dealer quotation
system. Neither of the Issuers have
securities 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.
(d) THE
PRELIMINARY OFFERING MEMORANDUM AND OFFERING MEMORANDUM. Each
of the Preliminary Offering Memorandum and
the Offering Memorandum, as of its
date, did not, and the Offering Memorandum,
as of the Closing Date, will not,
include 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 that this
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representation, warranty and agreement
shall not apply to statements in or
omissions from the Preliminary Offering
Memorandum or the Offering Memorandum,
as the case may be, made in reliance upon
and in conformity with information
furnished to the Issuers in writing by any
Initial Purchaser through Banc of
America Securities LLC expressly for use in
the Preliminary Offering Memorandum
and the Offering Memorandum. The Issuers
have not distributed and will not
distribute, prior to the later of the
Closing Date and the completion of the
Initial Purchasers' distribution of the
Securities, any offering material in
connection with the offering and sale of
the Securities other than the
Preliminary Offering Memorandum or the
Offering Memorandum.
(e)
COMPLIANCE WITH RULE 144A. Each of (1) the Preliminary Offering
Memorandum and each amendment or supplement
thereto, as of its date, and (2) the
Offering Memorandum, as of its date,
contains all the information specified in,
and meeting the requirements of, Rule 144A
under the Securities Act.
(f)
AUTHORIZATION OF THE PURCHASE AGREEMENT. This Agreement has
been
duly and validly authorized, executed and
delivered by, and is a valid and
binding agreement of, each of the Issuers,
enforceable in accordance with its
terms, except as rights to indemnification
and contribution hereunder may be
limited by applicable law or equitable
principles and except as the enforcement
hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or
other similar laws relating to or affecting
the rights and remedies of creditors
or by general equitable principles.
(g)
AUTHORIZATION OF THE REGISTRATION RIGHTS AGREEMENT AND DTC
AGREEMENT. At the Closing Date, each of the
Registration Rights Agreement and
the DTC Agreement will be duly and validly
authorized, executed and delivered
by, and will be a valid and binding
agreement of, each of the Issuers,
enforceable in accordance with its terms,
except as the enforcement thereof may
be limited by bankruptcy, insolvency,
reorganization, moratorium or other
similar laws relating to or affecting the
rights and remedies of creditors or by
general equitable principles and except as
rights to indemnification under the
Registration Rights Agreement may be
limited by applicable law or equitable
principles. Pursuant to the Registration
Rights Agreement, the Issuers will
agree to file with the Commission, under
the circumstances set forth therein,
(i) a registration statement under the
Securities Act relating to another series
of debt securities of the Company with
terms substantially identical to the
Securities (the "EXCHANGE SECURITIES") to
be offered in exchange for the
Securities (the "EXCHANGE OFFER") and (ii)
to the extent required by the
Registration Rights Agreement, a shelf
registration statement pursuant to Rule
415 of the Securities Act relating to the
resale by certain holders of the
Securities, and in each case, to use their
best efforts to cause such
registration statements to be declared
effective.
(h)
AUTHORIZATION OF THE SECURITIES AND THE EXCHANGE SECURITIES.
(i)
The Securities to be purchased by the Initial Purchasers
from the Issuers
are in the form contemplated by the Indenture, have been
duly and validly
authorized for issuance and sale pursuant to this
Agreement and
the Indenture and, at the Closing Date, will have been duly
and validly
executed by each of the Issuers and, when authenticated in the
manner provided
for in the Indenture and delivered against payment of the
purchase price
therefor, will constitute valid and binding agreements of
each of the
6
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Issuers,
enforceable in accordance with their terms, except as the
enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization,
moratorium or other similar laws relating to or affecting
the rights and
remedies of creditors or by general equitable principles and
will be entitled
to the benefits of the Indenture.
(ii) The
Exchange Securities have been duly and validly
authorized for
issuance by the Issuers, and when issued and authenticated
in accordance
with the terms of the Indenture, the Registration Rights
Agreement and
the Exchange Offer, will constitute valid and binding
obligations of
each of the Issuers, enforceable against each of the Issuers
in accordance
with their terms, except as the enforcement thereof may be
limited by
bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to
or affecting enforcement of the rights and remedies of
creditors or by
general principles of equity and will be entitled to the
benefits of the
Indenture.
(i)
AUTHORIZATION OF THE INDENTURE. The Indenture has been duly and
validly authorized by each of the Issuers
and, at the Closing Date, will have
been duly and validly executed and
delivered by each of the Issuers and,
assuming the due authorization, execution,
delivery and performance by the
Trustee thereunder, will constitute a valid
and binding agreement of each of the
Issuers and, assuming the due
authorization, execution and delivery by the
Trustee, enforceable against each of the
Issuers in accordance with its terms,
except as the enforcement thereof may be
limited by bankruptcy, insolvency,
reorganization, moratorium or other similar
laws relating to or affecting the
rights and remedies of creditors or by
general equitable principles.
(j)
AUTHORIZATION OF THE TRANSACTION DOCUMENTS. Each of the
Transaction Documents (other than those
described in Sections (f) through (i) of
this Section 1), to the extent that either
of the Issuers is a party, has been
duly and validly authorized by each of the
Issuers, as applicable, and, at the
Closing Date, will have been duly and
validly executed and delivered by each of
the Issuers, as applicable, and will
constitute a valid and binding agreement of
each of the Issuers, as applicable,
enforceable against each of the Issuers, as
applicable, in accordance with its terms,
except as the enforcement thereof may
be limited by bankruptcy, insolvency,
reorganization, moratorium or other
similar laws relating to or affecting the
rights and remedies of creditors or by
general equitable principles. As of the
date hereof, there exist no conditions
that would constitute a default (or an
event of default that with notice, the
passage of time or otherwise, would
constitute a default) under any of the
Transaction Documents to which the Issuers
are a party.
(k)
MATERIAL AGREEMENTS. Each of the Material Agreements to which
either of the Issuers is a party are in
full force and effect as of the date
hereof, enforceable against each of the
Issuers, as applicable, in accordance
with their respective terms, except insofar
as the indemnification and
contribution provisions therein may limited
by applicable law or equitable
principles and except as the enforcement
thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or
other similar laws relating to or
affecting the rights and remedies of
creditors or by general equitable
principles. As of the date hereof, there
are no defaults or events of default,
that with notice, the passage of time or
otherwise could be a default, under any
provisions of such Material Agreements by
either of the Issuers, as applicable,
or, to the either of the Issuers'
knowledge, any other party thereto. To the
Company's knowledge, the Architect
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Agreement is enforceable against the
Architect and the Owner Contractor
Agreement is enforceable against the
Contractor.
(l)
DESCRIPTION OF THE SECURITIES AND THE INDENTURE. The
Securities,
the Exchange Securities and the Indenture
will conform in all material respects
to the respective statements relating
thereto contained in the Offering
Memorandum.
(m)
DESCRIPTION OF TRANSACTION DOCUMENTS AND MATERIAL AGREEMENTS.
Each of the Transaction Documents and
Material Agreements described in the
Offering Memorandum conform as to legal
matters and materials terms to the
description thereof contained in the
Offering Memorandum.
(n)
RANKING OF INDEBTEDNESS. When issued, the Securities will rank
senior in right of payment with all of the
Company's other unsubordinated
indebtedness.
(o) NO
MATERIAL ADVERSE CHANGE. Except as otherwise disclosed in the
Offering Memorandum, subsequent to the
respective dates as of which information
is given in the Offering Memorandum: (i)
there has been no material adverse
change, or any development that could
reasonably be expected to result in a
material adverse change, in the financial
condition, business, results of
operations, properties or prospects,
whether or not arising from transactions in
the ordinary course of business, of the
Issuers, considered as one entity (any
such change is called a "MATERIAL ADVERSE
CHANGE"); (ii) the Issuers, considered
as one entity, have not incurred any
material liability or obligation, indirect,
direct or contingent, not in the ordinary
course of business nor entered into
any material transaction or agreement not
in the ordinary course of business;
and (iii) there has been no dividend or
distribution of any kind declared, paid
or made by the Company, any of its
subsidiaries on any class of equity interest
or repurchase or redemption by the Company
or any of its subsidiaries of any
class of equity interest.
(p)
INDEPENDENT ACCOUNTANTS. Ernst & Young LLP, who has expressed
its
opinion with respect to the financial
statements (which term as used in this
Agreement includes the related notes
thereto) included in the Offering
Memorandum, as of June 30, 2003 and for the
period from commencement of
operations on March 27, 2003 to June 30,
2003, are independent public or
certified public accountants within the
meaning of Regulation S-X under the
Securities Act and the Exchange Act. As of
the date hereof and as of the Closing
Date, the independence of such accountants
has not been and will not be
impaired.
(q)
PREPARATION OF THE HISTORICAL FINANCIAL STATEMENTS. The
historical financial statements of the
Company, together with the notes thereto,
included in the Offering Memorandum comply
as to form in all material respects
with the requirements of the Securities Act
and the Exchange Act, including,
without limitation, Regulation S-X, except
that the date of the financial
statements which have been audited is more
than 135 days prior to the date of
the Offering Memorandum, and present fairly
the financial position of the
Company, as of and at the dates indicated
and the results of operations and cash
flows of the Company, for the periods
specified therein. Such historical
financial statements (including the related
notes) have been prepared in
accordance with accounting principles
generally accepted in the United States
applied on a consistent basis throughout
the periods specified therein, and
subject, in the case of interim statements,
to normal recurring adjustments and
except as may be expressly stated in
the
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related notes thereto. Except as set forth
in the Offering Memorandum, since the
date of the latest of such historical
financial statements, there has been no
material increase in the Indebtedness (as
defined in the Offering Memorandum) of
the Company, taken as a whole, and there
has been no material adverse change in
the financial position, results of
operations or business of the Company, taken
as a whole. The financial data set forth in
the Offering Memorandum under the
caption "Selected Historical Financial
Data" and the other financial and
statistical information and data of the
Company, included in the Offering
Memorandum fairly present the information
set forth therein on a basis
consistent with that of the audited
financial statements of the Company
contained in the Offering Memorandum from
which such information has been
derived.
(r) DUE
FORMATION AND INCORPORATION AND GOOD STANDING OF THE ISSUERS.
Each of the Issuers has been duly
incorporated or organized, as the case may be,
and is validly existing as a corporation or
other organization, as the case may
be, in good standing under the laws of the
jurisdiction of its incorporation or
formation, as the case may be. Each of the
Issuers is duly qualified as a
foreign corporation or organization, as the
case may be, to transact business
and is in good standing in each
jurisdiction in which such qualification is
required, whether by reason of the
ownership or leasing of property or the
conduct of business, except for such
jurisdictions where the failure to so
qualify or to be in good standing would
not, individually or in the aggregate,
(i) result in a Material Adverse Change,
(ii) interfere with or adversely affect
the issuance or marketability of the
Securities or (iii) prohibit or prevent the
Issuers from using the proceeds of the
offering of the Securities in the manner
described in the Offering Memorandum under
the caption "Use of Proceeds" or as
otherwise permitted by the Indenture (any
of the events set forth in clauses
(i), (ii) or (iii), a "MATERIAL ADVERSE
EFFECT").
(s)
CORPORATE OR ORGANIZATIONAL POWER OF THE ISSUERS. Each of the
Issuers has all requisite corporate or
organizational power, as the case may be,
and authority necessary (i) to own, lease
and operate its properties and to
conduct its business as now being conducted
and as described in the Offering
Memorandum and to perform its obligations
under each of the Material Agreements,
(ii) to enter into and perform its
obligations under each of the Transaction
Documents, to the extent that it is a party
thereto, and to consummate the
transactions contemplated hereby and
thereby, including, without limitation, the
corporate or organizational power and
authority necessary to issue, sell and
deliver the Securities and the Exchange
Securities in accordance with and upon
the terms and conditions set forth in this
Agreement, the Indenture, the
Registration Rights Agreement and the
Offering Memorandum.
(t)
CAPITALIZATION AND OTHER EQUITY INTEREST MATTERS. At September
30, 2003, on a consolidated basis, after
giving pro forma effect to the issuance
and sale of the Securities pursuant hereto,
the Company would have an authorized
and outstanding capitalization as set forth
in the Offering Memorandum under the
caption "Capitalization." All of the
outstanding equity interests of the Issuers
have been duly authorized and validly
issued, are fully paid and non-assessable
and have been issued in compliance with
federal and state securities laws. None
of the outstanding equity interests of the
Issuers were issued in violation of
any preemptive rights, rights of first
refusal or other similar rights to
subscribe for or purchase securities of
either of the Issuers. There are no
authorized or outstanding options,
warrants, preemptive rights, rights of first
refusal or other rights to purchase, or
equity or debt securities convertible
into or exchangeable or exercisable for,
any equity interests of the Issuers.
The Company owns all of
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<Page>
the issued and outstanding equity interests
in Premier Finance, free and clear
of any liens, excepted liens permitted by
the Indenture and the Collateral
Documents and any restrictions on transfer
under applicable securities and
gaming laws. The Company does not own or
control, directly or indirectly, any
corporation, association or other entity
other than Premier Finance.
(u)
NON-CONTRAVENTION OF EXISTING INSTRUMENTS. Neither of the
Issuers
is in violation of its charter or by-laws
or organizational documents, as the
case may be, or is in default (or, with the
giving of notice or lapse of time or
both, would be in default) ("DEFAULT")
under any indenture, mortgage, loan or
credit agreement, note, contract,
franchise, lease or other instrument to which
either of the Issuers is a party or by
which either of them may be bound
(including, without limitation, the Loan
and Security Agreement) or to which any
of the property or assets of the Issuers is
subject (each, an "EXISTING
INSTRUMENT"), except for such Defaults as
would not, individually or in the
aggregate, result in a Material Adverse
Change. Each of the Issuer's execution,
delivery and performance of each of the
Transaction Documents and the Material
Agreements, to the extent that such Issuer
is a party thereto, and the issuance
and delivery of the Securities or the
Exchange Securities, and consummation of
the transactions contemplated hereby and
thereby and by the Offering Memorandum
(i) will not result in any violation of the
provisions of the charter or by-laws
or organizational documents, as the case
may be, of the Issuers, (ii) will not
conflict with or constitute a breach of, or
Default or a Debt Repayment
Triggering Event (as defined below) under,
or result in the creation or
imposition of any lien, charge or
encumbrance upon any property or assets of the
Issuers pursuant to, or require the consent
of any other party to, any Existing
Instrument, except for such conflicts,
breaches, Defaults, liens, charges or
encumbrances as would not, individually or
in the aggregate, result in a
Material Adverse Change and (iii) will not
result in any violation of any law,
administrative regulation or administrative
or court decree applicable to the
Issuers. As used herein, a "DEBT REPAYMENT
TRIGGERING EVENT" means any event or
condition which gives, or with the giving
of notice or lapse of time or both
would give, the holder of any note,
debenture or other evidence of indebtedness
(or any person acting on such holder's
behalf) the right to require the
repurchase, redemption or repayment of all
or a portion of such indebtedness by
the Issuers.
(v) NO
CONSENTS, APPROVALS OR AUTHORIZATIONS. No consent, approval,
authorization or other order of, or
registration or filing with, any court or
other governmental or regulatory authority
or agency, is required for the
Issuers' execution, delivery and
performance of each of the Transaction
Documents and the Material Agreements, to
the extent that it is a party thereto,
or the issuance and delivery of the
Securities or the Exchange Securities, or
consummation of the transactions
contemplated hereby and thereby and by the
Offering Memorandum, except such as have
been obtained or made by the Issuers
and are in full force and effect under the
Securities Act, applicable state
securities or Blue Sky laws and except such
as may be required by (a) federal
and state securities laws with respect to
the Issuers' obligations under the
Registration Rights Agreement and (b) the
Mississippi Gaming Commission with
respect to the grant of a gaming operator's
license to the Company.
(w) NO
MATERIAL ACTIONS OR PROCEEDINGS. There are no legal or
governmental actions, suits, proceedings,
inquiries or investigations before or
brought by any court or governmental agency
or body or pending or, to the best
of the Issuers' knowledge, threatened (i)
against or affecting either of the
Issuers which might reasonably be expected
to result in a Material Adverse
Effect or (ii) which might reasonably be
expected to materially and adversely
affect the
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properties or assets thereof or the
consummation has as the subject thereof any
material property owned or leased by either
of the Issuers.
(x)
VALID AND PERFECTED SECURITY INTERESTS. Upon the:
(i)
execution and delivery to the Trustee of each of the
Collateral
Documents,
(ii) the
delivery to the Trustee of the certificates
representing all
of the issued and outstanding Membership Interests of the
Company,
together with powers thereto executed in blank,
(iii) filing of
the UCC-1 financing statements as contemplated
by the
Collateral Documents,
(iv)
recording of the Deed of Trust (as defined in SCHEDULE B
attached hereto)
in the appropriate real property records, and
(v)
recording of the Preferred Ship Mortgage(s) (as defined
in SCHEDULE B
attached hereto) with the United State Coast Guard,
the Trustee will have a valid, duly
perfected, first priority security interest
in all of the Collateral listed in the
Collateral Documents, subject to any
Liens permitted by the Collateral
Documents, as security for the payment of the
obligations of the Issuers under Indenture,
the Securities and the Collateral
Documents. The actions, recordings and
filings described in the immediately
preceding sentence are the only actions,
recordings and filings necessary to
publish notice of and perfect the rights of
the Trustee in all of the
Collateral, except for such additional
actions, recordings and filings as the
Issuers, the Initial Purchasers and the
Trustee may determine prior to the
Closing Date.
(y)
INTELLECTUAL PROPERTY RIGHTS. The Issuers own or possess
sufficient trademarks, trade names, patent
rights, copyrights, licenses,
approvals, trade secrets and other similar
rights (collectively, "INTELLECTUAL
PROPERTY RIGHTS") reasonably necessary to
conduct their businesses as now
conducted; and, other than the expected
expiration of the Hard Rock License
pursuant to the terms thereof, the expected
expiration of any other Intellectual
Property Rights would not result in a
Material Adverse Change. Neither of the
Issuers has received any notice of
infringement or conflict with asserted
Intellectual Property Rights of others,
which infringement or conflict, if the
subject of an unfavorable decision, would
result in a Material Adverse Change.
(z) ALL
NECESSARY PERMITS, LICENSES, ETC. Each of the Issuers
possesses, and is operating in compliance
with, all certificates, approvals,
orders, franchises, authorities, licenses
(including, without limitation, Gaming
Licenses (as defined in the Indenture)) or
permits issued by the appropriate
local, state, federal or foreign regulatory
agencies or bodies (including any
Gaming Authority (as defined in the
Indenture)) as are necessary to own and
lease its properties and as are legally
required for the operation of the
Company's businesses as presently conducted
or as described in the Offering
Memorandum (collectively, all such legally
required certificates, approvals,
orders, franchises, authorities, licenses
and permits are referred to herein as
"LICENSES"), all of which are valid and in
full force and effect except as would
not reasonably be expected to have a
Material Adverse Effect and except for such
Licenses which the Issuers
11
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would not customarily possess at the date
hereof but which will be obtained in
the ordinary course of development of the
Hard Rock Hotel & Casino Biloxi, and
each such License is listed on SCHEDULE C
hereto. Neither Issuer has received
any notice of proceedings relating to,
limiting, suspending, modifying, revoking
or failing to renew any of such Licenses.
The descriptions in the Offering
Memorandum of local, state, federal or
foreign statutes, laws, ordinances, rules
and regulations governing the Issuers and
their respective businesses,
including, without limitation, any proposed
amendments or additions to any such
statutes, laws, ordinances, rules or
regulations, are accurate in all material
respects and fairly present the information
required to be shown therein.
Neither Issuer has received any notice of
the enactment, amendment or repeal of
any such statutes, laws, ordinances, rules
or regulations required to be
described in the Offering Memorandum,
except for such enactments, amendments or
repeals as are described in the Offering
Memorandum.
(aa)
NO REGISTRATION OF SECURITIES. There are no holders of
securities
of the Issuers who, by reason of the
Issuers' execution of this Agreement or any
other Transaction Document to which they
are a party or the consummation by the
Issuers of the transactions contemplated
hereby and thereby, have the right to
request or demand that the Issuers register
under the Securities Act or
analogous foreign laws and regulations
securities held by them other than
pursuant to the Registration Rights
Agreement.
(bb)
OPERATION AND USE OF HARD ROCK HOTEL & CASINO BILOXI. The
contemplated operation and use of the Hard
Rock Hotel & Casino Biloxi and the
construction of the Hard Rock Hotel &
Casino Biloxi in the manner set forth in
the Offering Memorandum will be, at the
time of construction and operation, as
applicable, in compliance with all
applicable municipal, county, state and
federal laws, regulations, ordinances,
standards, order and other regulations,
where the failure to comply therewith would
not, individually or in the
aggregate, result in a Material Adverse
Change. Under currently applicable
Gaming Laws, zoning and use laws,
ordinances, rules and regulations, the Hard
Rock Hotel & Casino Biloxi may be used
for the purposes contemplated in the
Offering Memorandum, the Indenture, the
Notes and the Collateral Documents.
(cc)
PLANS, SPECIFICATIONS, CONSTRUCTION BUDGET AND CONSTRUCTION
SCHEDULE FOR THE HARD ROCK HOTEL &
CASINO BILOXI. The Company has prepared the
Initial Project Budget (as defined in the
Disbursement Agreement) and the
Construction Schedule (as defined in the
Disbursement Agreement) and has
developed the assumptions on which the
Initial Project Budget and Construction
Schedule are based. The Initial Project
Budget and the Construction Schedule
are, as of the Closing Date, (i) in the
opinion of the Company, based on
reasonable assumptions as to all legal and
factual matters material to the
estimates set forth therein, (ii) call for
the construction of the Minimum
Facilities (as defined in the Indenture) on
or prior to the Operating Deadline
(as defined in the Indenture) and (iii)
consistent with the provisions of the
Indenture and the other Transaction
Documents. The Initial Purchasers have been
furnished with a copy of the plans,
specifications, Construction Budget and
Construction Schedule for the construction
of the Hard Rock Hotel & Casino
Biloxi and other necessary expenditures.
The anticipated Construction Schedule
of the Hard Rock Hotel & Casino Biloxi
is as set forth in the Offering
Memorandum. The Construction Budget of the
Hard Rock Hotel & Casino Biloxi
(including, without limitation, interest,
legal, architectural, engineering,
planning, zoning and other similar costs)
does not exceed the amounts for such
costs set forth under the caption "Use
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of Proceeds" in the Offering Memorandum. In
addition, each of the other amounts
set forth in the section entitled "Sources
and Uses of Funds" under the caption
"Use of Proceeds" in the Offering
Memorandum are based upon reasonable
assumptions as to all matters material to
the estimates set forth therein and
are not expected to exceed the amounts set
forth for such items.
(dd)
GAMING SITE APPROVAL. Prior to the date hereof, the Company has
received gaming site approval and site
development plan approval from the
Mississippi Gaming Commission for the
proposed Site (as defined below) on which
the Hard Rock Hotel & Casino Biloxi
will be located.
(ee)
TITLE TO PROPERTIES. The Issuers have good and marketable title
in fee simple to all real property owned by
the Company (including, without
limitation, the real property constituting
the site for the Hard Rock Hotel &
Casino Biloxi), or in the case of leased
real property described on SCHEDULE D
hereto, good and marketable leasehold title
(collectively, the "SITE"), and good
and marketable title all personal property
and assets reflected as owned by the
Issuers in the financial statements
referred to in Section 1(q) above and which
is material to the business of the Issuers,
in each case free and clear of any
security interests, mortgages, liens,
encumbrances, equities, claims and other
defects, other than Permitted Liens (as
defined in the Indenture). The real
property, improvements, equipment and
personal property held under lease by the
Issuers are held under valid, subsisting
and enforceable leases or subleases,
with such exceptions as are not material
and do not materially interfere with
the use made or proposed to be made of such
real property, improvements,
equipment or personal property by the
Issuers.
(ff)
PRIMARY LEASES. True, correct and complete copies of the leases
or subleases set forth on SCHEDULE D have
(i) been delivered to the Initial
Purchasers, including all existing
amendments, modifications or waivers thereof
and (ii) have not been modified, whether in
writing or pursuant to any purported
oral modification, except as set forth on
SCHEDULE D. Each of the leases set
forth on SCHEDULE D has been duly recorded
in the offices where such recording
is required. The consummation of the
transactions contemplated by this Agreement
and the Offering Memorandum, including the
filing and recording of the Deed of
Trust, does not constitute a violation or
default under any of the leases set
forth on SCHEDULE D. There is no pending or
threatened condemnation of any
portion of the Site. Each lease set forth
on SCHEDULE D is valid and subsisting
and is in full force and effect in
accordance with its terms. It has not been
modified, except as set forth on SCHEDULE
D. All rent due through and including
the effective date hereof has been paid and
the Company has performed all of its
presently accrued obligations under such
leases. Except as would not, singly or
in the aggregate, have a Material Adverse
Effect, the Company does not have any
notice of any default or material claim of
any sort that has been asserted by
anyone adverse to the rights of the Company
under any of the leases or subleases
mentioned above, or affecting or
questioning the rights of the Company to the
continued possession of the leased or
subleased premises under any such lease or
sublease, no default b
