EXHIBIT 10.1
EXECUTION COPY
ANNEX I
▇▇▇▇▇▇'▇ Operating Company, Inc.
Guaranteed Debt Securities
Payment of Principal, Interest and
Premium, if any, Guaranteed by
▇▇▇▇▇▇'▇ Entertainment, Inc.
PURCHASE AGREEMENT GENERAL PROVISIONS
June 7, 2001
The provisions set forth herein are incorporated by reference
in a Purchase Agreement of even date herewith (such agreement, including the
provisions hereof as incorporated therein, the "Purchase Agreement"). The
Purchase Agreement is sometimes referred to herein as "this Agreement." Terms
defined in the Purchase Agreement are used herein as therein defined.
1. REPRESENTATIONS AND WARRANTIES. The Company and the
Guarantor, jointly and severally, represent and warrant to and agree with each
of the Initial Purchasers that:
(a) The Offering Memorandum does not contain and, as amended
or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in the Offering Memorandum based upon information relating to
any Initial Purchaser furnished to the Company in writing by such
Initial Purchaser through the Representatives expressly for use
therein;
(b) Each of the Company and the Guarantor has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Offering Memorandum and is duly qualified
to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company or the Guarantor and their
respective subsidiaries, taken as a whole;
(c) Each subsidiary of the Company and the Guarantor,
respectively, has been duly organized, is validly existing as a
corporation, limited liability company or partnership in good standing
under the laws of the jurisdiction of its organization, has the
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power and authority to own its property and to conduct its business as
described in the Offering Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company or the Guarantor and their respective
subsidiaries, taken as a whole; all of the issued shares of capital
stock or other equity interests of each subsidiary of the Company and
the Guarantor, respectively, have been duly and validly authorized and
issued, are fully paid and non-assessable. Except as set forth in or as
incorporated by reference in the Offering Memorandum, all of the shares
of capital stock or other equity or partnership interests of each
subsidiary of the Company or the Guarantor which would be considered a
"significant subsidiary" for purposes of Rule 1-02 under Regulation S-X
pursuant to the Act (the "Significant Subsidiaries") are owned directly
or indirectly by the Company or the Guarantor, respectively. Except as
set forth in or as incorporated by reference in the Offering
Memorandum, all of the shares of capital stock or other equity or
partnership interests of subsidiaries of the Company or the Guarantor
held by the Company or the Guarantor are held free and clear of all
liens, encumbrances, equities or claims except such liens,
encumbrances, equities or claims imposed by Gaming Laws, the terms of
any partnership agreement pertaining to any partnership that is a
subsidiary of the Company or which would not would not have a material
adverse effect on the Company or the Guarantor and their respective
subsidiaries, taken as a whole;
(d) This Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantor;
(e) The Indenture has been, or will be by the Closing Date,
duly authorized, executed and delivered by each of the Company and the
Guarantor and, assuming due authorization, execution and delivery
thereof by the Trustee, is, or will be by the Closing Date, a valid and
binding agreement of each of the Company and the Guarantor,
respectively, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity;
(f) The Registration Rights Agreement has been, or will be by
the Closing Date, duly authorized, executed and delivered by each of
the Company and the Guarantor and, assuming due authorization,
execution and delivery thereof by the Representatives, is, or will be
by the Closing Date, a valid and binding agreement of each of the
Company and the Guarantor, respectively, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity;
(g) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of the Purchase Agreement, (assuming due
authorization, execution and delivery thereof by the Trustee) will be
entitled to the benefits of the Indenture, and will be valid and
binding obligations of the Company and the Guarantor, respectively, in
each case enforceable in accordance
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with their respective terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity;
(h) The execution and delivery by each of the Company and the
Guarantor of, and the performance by each of the Company and the
Guarantor of its respective obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the Securities will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or the Guarantor, respectively,
or any agreement or other instrument binding upon the Company or any of
its subsidiaries, or the Guarantor or any of its subsidiaries,
respectively, that is material to the Company or the Guarantor and
their respective subsidiaries, taken as a whole, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction
over the Company or the Guarantor and any of their respective
subsidiaries, and no consent, approval, authorization, filing with or
order of, or qualification with, any governmental body or agency is
required in connection with, and prior to the consummation of, the
transactions contemplated in, or for the performance by the Company or
the Guarantor of its respective obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the Securities, except
such as will be obtained under the Act, the Exchange Act, and the Trust
Indenture Act, or as may be required by the securities or Blue Sky laws
of the various states and securities laws of any jurisdiction outside
the United States in connection with the offer and sale of the
Securities or as may be required pursuant to Gaming Laws;
(i) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company or the Guarantor and their respective
subsidiaries, taken as a whole, from that set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto
subsequent to the Execution Time);
(j) To the knowledge of the Company, there are no known legal
or governmental proceedings pending or threatened to which the Company
or the Guarantor and any of their respective subsidiaries is a party or
to which any of the properties of the Company or the Guarantor or any
of their respective subsidiaries is subject that are not adequately
disclosed in the Offering Memorandum and which would, individually or
in the aggregate, have a material adverse effect on the Company or the
Guarantor and their respective subsidiaries, taken as a whole. Neither
the Company nor the Guarantor has any reason to believe that any
governmental agency with authority pursuant to any Gaming Law is
investigating the Company, the Guarantor or any of their respective
subsidiaries in any non-routine matter, the results of which would
materially affect the operations of the Company and the subsidiaries of
the Company. Due to the highly regulated nature of the business of the
Company and the subsidiaries of the Company, there are ongoing
investigations by various governmental agencies with authority pursuant
to the various Gaming Laws;
(k) Neither the Company nor the Guarantor is, and after giving
effect to the offering and sale of the Securities and the application
of the proceeds thereof as described
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in the Offering Memorandum, neither will be, an "investment company" or
an entity "controlled by an investment company" as such terms are
defined in the Investment Company Act;
(l) The Company and the Guarantor and their respective
subsidiaries (i) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a material adverse effect on the
Company or the Guarantor and their respective subsidiaries, taken as a
whole;
(m) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, individually or in the
aggregate, have a material adverse effect on the Company or the
Guarantor and their respective subsidiaries, taken as a whole;
(n) Except as disclosed in the Offering Memorandum, each of
the Company and the Guarantor and their respective subsidiaries has
sufficient trademarks, trade names, patent rights, copyrights, or
licenses to conduct their businesses as now conducted in all material
respects;
(o) Except as disclosed in or specifically contemplated by the
Offering Memorandum, each of the Company and the Guarantor and their
respective subsidiaries has sufficient licenses, approvals and
authorizations required pursuant to Gaming Laws to conduct their
current businesses except such licenses, approvals and authorizations
required pursuant to Gaming Laws the absence of which, either
individually or in the aggregate, would not have a material adverse
effect on the Company or the Guarantor and their respective
subsidiaries, taken as a whole;
(p) Each of the Company's and Guarantor's and their respective
subsidiaries' controlling persons, key employees, and, to the Company's
or the Guarantor's knowledge, stockholders, have all necessary permits,
licenses and other authorizations required by Gaming Laws for the
Company, the Guarantor and their respective subsidiaries to conduct
their businesses as now conducted in all material respects; and neither
the Company nor the Guarantor has any knowledge that any of their
respective stockholders is unsuitable or may be deemed unsuitable by
any authorities pursuant to Gaming Laws;
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(q) No labor dispute with the employees of the Company or the
Guarantor or any of their respective subsidiaries exists, or to the
knowledge of the Company or the Guarantor, respectively, is imminent
which would, individually or in the aggregate, have a material adverse
effect on the Company or the Guarantor and their respective
subsidiaries, taken as a whole;
(r) Neither the Company, nor the Guarantor, nor any of their
respective affiliates, nor any person acting on its or their behalf
has, directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would
require the registration of the Securities under the Act;
(s) Neither the Company, nor the Guarantor, nor any of their
respective affiliates, nor any person acting on its or their behalf has
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or
sale of the Securities in the United States;
(t) Assuming the accuracy of the representations and
warranties and compliance with the agreements of the Initial Purchasers
made pursuant to Section 3 and each "accredited investor" made pursuant
to the letter required by Section 3(a)(ii) and except as described in
the Offering Memorandum under "Description of Notes -- Registration
Rights," it is not necessary in connection with the offer, sale and
delivery of the Securities in the manner contemplated by this Agreement
and the Offering Memorandum to register the Securities under the Act or
to qualify the Indenture under the Trust Indenture Act;
(u) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Act;
(v) Neither the Company, nor the Guarantor, nor any of their
respective affiliates, nor any person acting on its or their behalf has
engaged in any directed selling efforts with respect to the Securities,
and each of them has complied with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the
meanings given to them by Regulation S;
The Company and Guarantor are subject to and in full
compliance with the reporting requirements of Section 13 or Section
15(d) of the Exchange Act; and
Neither the Company nor the Guarantor has paid or agreed to
pay to any person any compensation for soliciting another to purchase
any securities of the Company or Guarantor (except as contemplated by
this Agreement).
2. PAYMENT AND DELIVERY. Except as otherwise provided in this
Section 2, payment for the Securities shall be made to the Company in federal or
other funds immediately available at the time and place set forth in the
Purchase Agreement, upon delivery to the Representatives for the respective
accounts of the several Initial Purchasers of the Securities registered in such
names and in such denominations as the Representatives shall request in writing
not less than one full Business Day prior to the date of delivery, with any
transfer taxes payable in connection with the transfer of the Securities to the
Initial Purchasers duly paid by the
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Company. Delivery of the Securities shall be made through the facilities of the
Depository Trust Company unless the Representatives shall otherwise instruct.
3. OFFERING BY INITIAL PURCHASERS. Each Initial Purchaser,
severally and not jointly, represents and warrants to and agrees with the
Company and the Guarantor that:
(a) It has not offered or sold, and, until the Securities are
registered under the Act as described in the Offering Memorandum under
the caption "Description of Notes -- Registration Rights," will not
offer or sell, any Securities except (i) to those it reasonably
believes to be qualified institutional buyers (as defined in Rule 144A
under the Act) and that, in connection with each such sale, it has
taken or will take reasonable steps to ensure that the purchaser of
such Securities is aware that such sale is being made in reliance on
Rule 144A; or (ii) to other institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D) who provide
to it and to the Company a letter in the form of Exhibit A hereto; or
(iii) in accordance with the restrictions set forth in Exhibit B
hereto.
(b) Neither it nor any person acting on its behalf has made or
will make offers or sales of the Securities in the United States by
means of any form of general solicitation or general advertising
(within the meaning of Regulation D) in the United States.
4. CONDITIONS TO THE INITIAL PURCHASERS' OBLIGATIONS. The
several obligations of the Initial Purchasers are subject to the performance by
the Company and Guarantor of their obligations hereunder and to the following
conditions:
(a) Subsequent to the execution and delivery of the Purchase
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's or the Guarantor's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company or the Guarantor and their
respective subsidiaries, taken as a whole, from that set forth
in the Offering Memorandum (exclusive of any amendments or
supplements thereto subsequent to the Execution Time) that, in
the judgment of the Representatives, is material and adverse
and that makes it, in the judgment of the Representatives,
impracticable to market the Securities on the terms and in the
manner contemplated in the Offering Memorandum.
(b) The Initial Purchasers shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of each of the Company and the Guarantor, to the effect set
forth in Section 4(a)(i) above and to the
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effect that the representations and warranties of the Company and the
Guarantor, respectively, contained in this Agreement are true and
correct as of the Closing Date and that the Company and the Guarantor,
respectively, have complied with all of the agreements and satisfied
all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date. The officer signing and
delivering such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
(c) The Initial Purchasers shall have received on the Closing
Date an opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President and
General Counsel of the Company and the Guarantor, dated the Closing
Date, to the effect that:
(i) each of the Company, the Guarantor and the
Significant Subsidiaries has been duly organized, is validly
existing as a corporation, limited liability company or
partnership in good standing under the laws of the
jurisdiction of its organization, has the power and authority
to own its property and to conduct its business as described
in the Offering Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company or the
Guarantor and their respective subsidiaries, taken as a whole;
(ii) after inquiry of the members of the legal
departments of the Company and Guarantor, to the best of such
counsel's knowledge, (A) there are no legal or governmental
proceedings pending or threatened to which the Company or the
Guarantor and any of their respective subsidiaries is a party
or to which any of the properties of the Company or the
Guarantor or any of their respective subsidiaries is subject
that are not adequately disclosed in the Offering Memorandum
and which would, individually or in the aggregate, have a
material adverse effect on the Company or the Guarantor and
their respective subsidiaries, taken as a whole, (B) there are
no material statutes, regulations, contracts or other
documents that are not adequately disclosed in the Offering
Memorandum, and (C) there is no non-routine investigation of
the Company, the Guarantor or any of their respective
subsidiaries, by any governmental agency with authority
pursuant to any Gaming Law, the results of which would have a
material adverse effect on the Company, the Guarantor or any
of their respective subsidiaries;
(iii) Each of the Company's, the Guarantor's and
their respective subsidiaries' controlling persons, key
employees, and, to the best of such counsel's knowledge, their
stockholders, have all necessary permits, licenses and other
authorizations required by Gaming Laws for the Company, the
Guarantor and their respective subsidiaries to conduct their
businesses as now conducted except such licenses, approvals
and authorizations required pursuant to Gaming Laws the
absence of which, either individually or in the aggregate,
would not have a material adverse effect on the Company or the
Guarantor and their respective subsidiaries, taken as a whole;
and to the best of such counsel's knowledge none of the
respective stockholders of the Company or the Guarantor
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is unsuitable or may be deemed unsuitable by any authorities
pursuant to Gaming Laws;
(iv) the statements (A) in the Offering Memorandum
under the captions "Regulation and Licensing," and "Legal
Matters," (B) in "Items 1 and 2-Business and
Properties--Governmental Regulation" and "Item 3 - Legal
Proceedings" of the Company's annual report on Form 10-K in
respect of the year ended December 31, 2000, which is
incorporated by reference in the Offering Memorandum, and (C)
in Item 2-Management's Discussion and Analysis of Financial
Condition and Results of Operations- Debt and Liquidity" of
the Company's quarterly report on Form 10-Q in respect of the
quarter ended March 31, 2001, which is incorporated by
reference in the Offering Memorandum, in each case insofar as
such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(v) no consent, approval, authorization of, or
qualification with any authority pursuant to Gaming Laws is
required with respect to the issuance of the Securities or the
transactions contemplated by this Agreement and the Indenture
prior to such issuance of the Securities or the transactions
contemplated by this Agreement, except as has already been
obtained; and
(vi) the execution and delivery by each of the
Company and the Guarantor of, the transactions contemplated
in, and the performance by the Company and the Guarantor of
its respective obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the
Securities will not contravene, to the best of such counsel's
knowledge, any agreement or other instrument binding upon the
Company or the Guarantor and any of their respective
subsidiaries that is material to the Company or the Guarantor
and their respective subsidiaries, taken as a whole, or,
except for any approvals required from the Indiana Gaming
Commission for the Company to perform its obligations under
the Registration Rights Agreement, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or the Guarantor or any of their respective
subsidiaries, including without limitation, pursuant to any
Gaming Laws.
(d) The Initial Purchasers shall have received on the Closing
Date an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, outside counsel for the Company
and the Guarantor, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed
and delivered by each of the Company and the Guarantor;
(ii) the Indenture has been duly authorized, executed
and delivered by each of the Company and the Guarantor and,
assuming due authorization,
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execution and delivery thereof by the Trustee, is the legally
valid and binding agreement of each of the Company and the
Guarantor, enforceable against the Company and the Guarantor
in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity;
(iii) the Registration Rights Agreement has been duly
authorized, executed and delivered by each of the Company and
the Guarantor;
(iv) the Securities have been duly authorized and,
when executed and authenticated in accordance with the terms
of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement,
assuming due authorization, execution and delivery thereof by
the Trustee, will be entitled to the benefits of the
Indenture, will conform in all material respects as to legal
matters to the descriptions thereof contained in the Offering
Memorandum under the heading "Description of Notes" and will
be legally valid and binding obligations of the Company and
the Guarantor, respectively, enforceable against the Company
and the Guarantor in accordance with their respective terms,
subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles
of equity;
(v) the execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement and the
Securities by each of the Company and the Guarantor, the
transactions contemplated in, and the performance by each of
the Company and the Guarantor on or prior to the date hereof
of its respective obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the
Securities, will not violate the certificate of incorporation
or by-laws of each of the Company or the Guarantor,
respectively, the Delaware General Corporation law, or any
provision of any applicable federal or New York statute, rule
or regulation (other than federal securities laws, which are
specifically addressed elsewhere herein, or state securities
laws or Gaming Laws), and no consent, approval, authorization
or order of, or filing with, any federal or New York or
Delaware court or governmental agency or body is required for
the transactions contemplated in, or the performance by each
of the Company and the Guarantor on or prior to the date
hereof of its obligations under, this Agreement, the Indenture
and the Securities, except such as may be required under the
state securities laws or Blue Sky laws in connection with the
offer and sale of the Securities or as may be required by
Gaming Laws;
(vi) the statements under the heading "Description of
Notes" in the Offering Memorandum, insofar as such statements
constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the
information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters
referred to therein;
(vii) assuming the accuracy of the representations
and warranties and compliance with the agreements contained
herein, the Securities are not required
9
to be registered under the Act and the Indenture is not
required to be qualified under the Trust Indenture Act for the
offer and sale by the Initial Purchasers of the Securities in
the manner contemplated by this Agreement;
(viii) neither the Company nor the Guarantor is, and
after giving effect to the offering and sale of the Securities
and the application of the proceeds thereof as described in
the Offering Memorandum, neither will be, an "investment
company" as defined in the Investment Company Act without
taking account of any exemption arising out of the number of
holders of the Company's securities; and
(ix) Such counsel shall also state that, in addition,
no facts have come to such counsel's attention that cause such
counsel to believe that the Offering Memorandum, as of its
date and as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits 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, it
being understood that such counsel need express no belief with
respect to the financial statements and schedules or other
financial data included or incorporated by reference in, or
omitted from, the Offering Memorandum.
With respect to the last paragraph of this Section 4(d),
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ may state that its opinion and belief are based upon
its participation in the preparation of the Offering Memorandum and any
amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the
contents thereof (including documents incorporated by reference), but
are without independent check or verification (except to the extent set
forth in Section 4(d)(vi)).
The opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ described in this Section 4(d)
shall be rendered to the Initial Purchasers at the request of the
Company and the Guarantor and shall so state therein.
(e) The Initial Purchasers shall have received from Cleary,
Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, such
opinion or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the
Securities, the Indenture, the Registration Rights Agreement, the
Offering Memorandum (as amended or supplemented at the Closing Date)
and other related matters as the Representatives may reasonably
require, and the Company and the Guarantor shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(f) At the Closing Date, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. shall have
furnished to the Initial Purchasers a letter or letters, dated as of
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent accountants within the
meaning of the Act and the Exchange Act and stating in effect that:
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(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated in
the Offering Memorandum (as amended or supplemented at the
date of the letter) and reported on by them comply in form in
all material respects with the applicable accounting
requirements of the Exchange Act and the related published
rules and regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company,
the Guarantor and its subsidiaries; carrying out certain
specified procedures (but not an examination in accordance
with generally accepted auditing standards which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and executive,
human resources and audit committees of the Company, the
Guarantor and its subsidiaries; and inquiries of certain
officials of the Company and of the Guarantor who have
responsibility for financial and accounting matters of the
Company, the Guarantor and its subsidiaries as to transactions
and events subsequent to March 31, 2001, nothing came to their
attention which caused them to believe that: with respect to
the period subsequent to March 31, 2001, there were any
changes, at a specified date not more than five Business Days
prior to the date of the letter, in the consolidated long-term
debt of the Guarantor or capital stock of the Guarantor or
decreases in the stockholders' equity of the Guarantor as
compared with the amounts shown on the March 31, 2001
consolidated balance sheet included or incorporated in the
Offering Memorandum (as amended or supplemented at the date of
the letter), or for the period from March 31, 2001 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year in consolidated
total revenues or operating income or income before income
taxes or the total or per share amounts of consolidated net
income of the Guarantor and its subsidiaries, except in all
instances for changes or decreases set forth in such letter,
in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the Initial
Purchasers.
(iii) the statements and information contained in the
letter or letters are of the type ordinarily included in
accountants' "comfort letters" to Initial Purchasers with
respect to the financial statements and certain financial
information contained in or incorporated by reference into the
Offering Memorandum.
(g) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Offering Memorandum, there
shall not have been (i) any change or decrease specified in the letter
or letters referred to in paragraph (f) of this Section 4 or (ii) any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and the Guarantor
and its subsidiaries the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impractical or
inadvisable to market the Securities as contemplated by the Offering
Memorandum.
11
(h) As of the Closing Date the Securities shall be rated not
lower than BBB- by Standard & Poor's Corporation and Baa3 by ▇▇▇▇▇'▇
Investors Service, Inc.
(i) The Securities shall be eligible for clearance and
settlement through The Depositary Trust Company.
(j) Prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further information,
certificates and documents as the Representatives may reasonably
request.
5. COVENANTS OF THE COMPANY AND THE GUARANTOR. In further
consideration of the agreements of the Initial Purchasers herein contained, each
of the Company and the Guarantor covenants with each Initial Purchaser as
follows that:
(a) The Company and the Guarantor shall furnish the
Representatives, without charge, prior to 10:00 a.m. New York City time
on the Business Day next succeeding the date of this Agreement and
during the period mentioned in Section 5(c) below, as many copies of
the Offering Memorandum, any documents incorporated by reference
therein and any supplements and amendments thereto as the
Representatives may reasonably request.
(b) The Company and the Guarantor shall not amend or
supplement the Offering Memorandum without the prior written consent of
the Representatives, which shall not be unreasonably withheld or
delayed and the Company and the Guarantor shall not file any document
under the Exchange Act that is incorporated by reference in the
Offering Memorandum unless, prior to such proposed filing, they have
furnished the Representatives with a copy of such document for review
by the Representatives and the Representatives have not reasonably
objected to the filing of such document. The Company or the Guarantor,
as the case may be, shall promptly advise the Representatives when any
document filed under the Exchange Act that is incorporated by reference
in the Offering Memorandum shall have been filed with the Commission.
(c) If, at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the
Representatives), any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Offering Memorandum
in order to make the statements therein, in the light of the
circumstances when the Offering Memorandum is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Initial
Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, forthwith to notify the
Representatives of such event or condition and prepare and furnish, at
its own expense, to the Initial Purchasers and such other persons as
the Initial Purchasers may reasonably request, either amendments or
supplements to the Offering Memorandum (in such quantities as the
Initial Purchasers may reasonably request) so that the statements in
the Offering Memorandum as so amended or supplemented will not, in the
light of the circumstances when the Offering Memorandum is delivered to
a purchaser, be misleading or so that the Offering Memorandum, as
amended or supplemented, will comply with law.
12
(d) The Company and Guarantor shall endeavor to qualify the
Securities for offer and sale under the securities or Blue Sky laws of
such jurisdictions as the Representatives shall reasonably request and
promptly advise the Initial Purchasers of the receipt by the Company or
the Guarantor of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
initiation or threatening-of any proceeding for such purpose.
(e) The Company and Guarantor shall not, and shall not permit
any of their Affiliates to, resell any Securities that have been
acquired by any of them, except, in the case of a Controlled Affiliate,
until the earlier of (i) the consummation of the Exchange Offer and
(ii) the declaration of effectiveness of a Shelf Registration Statement
pursuant to the Registration Rights Agreement.
(f) Neither the Company, nor the Guarantor, nor any of their
respective Affiliates, nor any person acting on behalf of any of the
foregoing, will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances
that would require the registration of the Securities under the Act.
(g) Neither the Company, nor the Guarantor, nor any of their
respective Affiliates, nor any person acting on behalf of any of the
foregoing, will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities in the United States.
(h) So long as any of the Securities are "restricted
securities" within the meaning of Rule 144(a)(3) under the Act, each of
the Company and the Guarantor will, during any period in which it is
not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act or it is not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange
Act, to provide to each holder of such restricted securities and to
each prospective purchaser (as designated by such holder) of such
restricted securities, upon the request of such holder or prospective
purchaser, any information required to be provided by Rule 144A(d)(4)
under the Act. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders,
from time to time of such restricted securities.
(i) Neither the Company, nor the Guarantor, nor any of their
respective Affiliates, nor any person acting on behalf of any of the
foregoing, will engage in any directed selling efforts with respect to
the Securities, and each of them will comply with the offering
restrictions requirement of Regulation S. Terms used in this paragraph
have the meanings given to them by Regulation S.
(j) To cooperate with the Representatives and use its best
efforts to permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
(k) During the period beginning at the Execution Time and
continuing until the date which is thirty (30) days after the Closing
Date, not to offer, sell, contract to sell or otherwise dispose of any
debt securities of the Company or warrants to purchase debt
13
securities of the Company substantially similar to the Securities
(other than (i) the Securities and (ii) commercial paper issued in the
ordinary course of business), without the prior written consent of the
Representatives.
(l) Not to take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company or the
Guarantor to facilitate the sale or resale of the Securities.
(m) In connection with any disposition of Securities pursuant
to a transaction made in compliance with paragraph 6 of Exhibit A, the
Company and the Guarantor will reissue certificates evidencing such
Securities without the legend referred to in paragraph 5 of Exhibit A
(provided, in the case of a transaction made in compliance with
paragraph 6(f) of Exhibit A, that the legal opinion referred to therein
so permits).
(n) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of the
Company's and the Guarantor's obligations under this Agreement,
including:
(i) the fees, disbursements and expenses of the
Company's and Guarantor's counsel and the Company's and
Guarantor's accountants in connection with the registration
and delivery of the Securities under the Act and all other
fees or expenses in connection with the preparation of the
Offering Memorandum and amendments and supplements or
amendments to either of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of
copies thereof to the Initial Purchasers and dealers, in the
quantities hereinabove specified,
(ii) all costs and expenses related to the transfer
and delivery of the Securities to the Initial Purchasers,
including any transfer or other taxes payable thereon (but
excluding any transfer taxes on resale of any of the
Securities by the Initial Purchasers),
(iii) the cost of printing or producing any Blue Sky
or legal investment memorandum in connection with the offer
and sale of the Securities under state law and all expenses in
connection with the qualification of the Securities for offer
and sale under state law as provided in Section 5(d) hereof,
including filing fees and the reasonable fees and
disbursements of counsel for the Initial Purchasers in
connection with such qualification and in connection with the
Blue Sky or legal investment memorandum,
(iv) the fees and disbursements of the Company's and
Guarantor's counsel and accountants and of the Trustee and its
counsel,
(v) any fees charged by the rating agencies for the
rating of the Securities,
14
(vi) the costs and expenses of the Company and the
Guarantor relating to investor presentations on any "road
show" undertaken in connection with the marketing of the
offering of the Securities, including, without limitation,
expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and the Guarantor
and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and
(vii) all other costs and expenses incident to the
performance of the obligations of the Company and the
Guarantor hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as
provided in this Section, Section 6 entitled "Indemnity and
Contribution", and the last paragraph of Section 8 below, the
Initial Purchasers will pay all of their costs and expenses,
including fees and disbursements of their counsel, and any
advertising expenses connected with any offers they may make.
6. INDEMNITY AND CONTRIBUTION.
(a) The Company and the Guarantor, jointly and severally,
agree to indemnify and hold harmless each Initial Purchaser and each
person, if any, who controls any Initial Purchaser within the meaning
of either Section 15 of the Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Offering Memorandum or amendment or
supplement thereto (if the Company or the Guarantor shall have
furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to
any Initial Purchaser furnished to the Company in writing by such
Initial Purchaser through the Representatives expressly for use
therein.
(b) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company and the Guarantor, and each
person, if any, who controls the Company or the Guarantor,
respectively, within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company and the Guarantor to such Initial Purchaser,
but only with reference to information relating to such Initial
Purchaser furnished to the Company in writing by such Initial Purchaser
through the Representatives expressly for use in the Offering
Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to
15
either Section 6(a) or 6(b), such person (the "Indemnified Party")
shall promptly notify the person against whom such indemnity may be
sought (the "Indemnifying Party") in writing and the indemnifying
party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate
in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the
Representatives, in the case of parties indemnified pursuant to Section
6(a) above, and by the Company, in the case of parties indemnified
pursuant to Section 6(b) above. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability
by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the second and third sentences
of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
6(a) or 6(b) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchasers on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause
6(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect
16
not only the relative benefits referred to in clause 6(d)(i) above but
also the relative fault of the Company and the Guarantor on the one
hand and of the Initial Purchasers on the other hand in connection with
the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Initial Purchasers on the other hand in connection
with the offering of the Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of such
Securities (before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the Initial
Purchasers, in each case as set forth in the table on the cover of the
Offering Memorandum, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company and the Guarantor on the
one hand and the Initial Purchasers on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company or the Guarantor or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Initial Purchasers' respective obligations to contribute pursuant to
this Section 6 are several in proportion to the respective principal
amounts of Securities they have purchased hereunder, and not joint.
(e) The Company, the Guarantor and the Initial Purchasers
agree that it would not be just or equitable if contribution pursuant
to this Section 6 were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the
equitable considerations referred to in Section 6(d). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 6,
no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for
in this Section 6 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at
law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 6 and the representations, warranties and other statements
of the Company and the Guarantor contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on
behalf of any Initial Purchaser or any person controlling any Initial
Purchaser or the Company or the Guarantor, or their respective officers
or directors or any person controlling the
17
Company or the Guarantor, respectively, and (iii) acceptance of and
payment for any of the Securities.
7. TERMINATION. This Agreement shall be subject to termination
by notice given by the Representatives to the Company, if (a) after the
execution and delivery of the Purchase Agreement and prior to the Closing Date
(i) trading generally shall have been suspended or materially limited on or by,
as the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company or the Guarantor shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in the judgment of the
Representatives, is material and adverse and (b) in the case of any of the
events specified in clauses 7(a)(i) through 7(a)(iv), such event, individually
or together with any other such event, makes it, in the judgment of the
Representatives, impracticable to market the Securities on the terms and in the
manner contemplated in the Offering Memorandum.
8. DEFAULTING INITIAL PURCHASERS. If, on the Closing Date, any
one or more of the Initial Purchasers shall fail or refuse to purchase
Securities that it has or they have agreed to purchase hereunder on such date,
and the aggregate amount of Securities which such defaulting Initial Purchaser
or Initial Purchasers agreed but failed or refused to purchase is not more than
one-tenth of the aggregate amount of the Securities to be purchased on such
date, the other Initial Purchasers shall be obligated severally in the
proportions that the amount of Securities set forth opposite their respective
names in the Purchase Agreement bears to the aggregate amount of Securities set
forth opposite the names of all such non-defaulting Initial Purchasers, or in
such other proportions as the Representatives may specify, to purchase the
Securities which such defaulting Initial Purchaser or Initial Purchasers agreed
but failed or refused to purchase on such date; provided that in no event shall
the amount of Securities that any Initial Purchaser has agreed to purchase
pursuant to this Agreement be increased pursuant to this Section 8 by an amount
in excess of one-ninth of such amount of Securities without the written consent
of such Initial Purchaser. If, on the Closing Date, any Initial Purchaser or
Initial Purchasers shall fail or refuse to purchase Securities and the aggregate
amount of Securities with respect to which such default occurs is more than
one-tenth of the aggregate amount of Securities to be purchased on such date,
and arrangements satisfactory to the Representatives and the Company for the
purchase of such Securities are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser, the Company or the Guarantor. In any such case
either the Representatives or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Offering Memorandum or in any other documents
or arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
If this Agreement shall be terminated by the Initial
Purchasers, or any of them, because of any failure or refusal on the part of the
Company or the Guarantor to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company or
18
the Guarantor shall be unable to perform its obligations under this Agreement,
the Company and the Guarantor will reimburse the Initial Purchasers or such
Initial Purchasers as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Initial Purchasers
in connection with this Agreement or the offering contemplated hereunder.
9. DEFINITIONS. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in The City of New York.
"Commission" shall mean the Securities and Exchange
Commission.
"Controlled Affiliate" means any person or entity that is
directly, or indirectly through one or more intermediaries, controlled by the
Company, the Guarantor, or both.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Exchange Offer" shall have the meaning ascribed thereto by
the Registration Rights Agreement.
"Execution Time" shall mean, the date and time that this
Agreement is executed and delivered by the parties hereto.
"Gaming Laws" means any foreign, federal, state or local law
and the rules and regulations thereunder and any similar laws and regulations
governing any aspect of legalized gambling in any foreign, federal, state or
local jurisdiction in which the Company or the Guarantor or any of their
respective subsidiaries conducts business.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Regulation D" shall mean Regulation D under the Act.
"Regulation S" shall mean Regulation S under the Act.
"Shelf Registration Statement" shall have the meaning ascribed
thereto by the Registration Rights Agreement.
19
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission promulgated
thereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
12. HEADINGS. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
20
▇▇▇▇▇▇'▇ Operating Company, Inc.
▇▇▇▇▇▇'▇ Entertainment, Inc.
$500,000,000
7.125% Senior Notes due 2007
PURCHASE AGREEMENT
New York, New York
June 7, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Commerzbank Capital Markets Corp.
As Representatives of the Initial Purchasers
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇'▇ Operating Company, Inc., a Delaware corporation (the
"Company") proposes to issue and sell to the several parties named below (the
"Initial Purchasers"), for whom you (the "Representatives") are acting as
representatives, $500,000,000 principal amount of its 7.125% Senior Notes due
2007, payment of principal, interest and premium, if any, in respect of which
notes are to be guaranteed by ▇▇▇▇▇▇'▇ Entertainment, Inc., a Delaware
corporation (the "Guarantor"; such notes, together with such guarantee, the
"Securities"). The Securities are to be issued under an indenture (the
"Indenture"), to be dated as of June 14, 2001, among the Company, the Guarantor
and Firstar Bank, N.A., as trustee (the "Trustee"). The Securities have the
benefit of a registration rights agreement (the "Registration Rights
Agreement"), dated as of June 14, 2001, among the Company, the Guarantor and the
Initial Purchasers, pursuant to which the Company and the Guarantor have agreed
to register the Securities under the Act, subject to the terms and conditions
therein specified. The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Act in reliance upon
exemptions from the registration requirements of the Act.
In connection with the sale of the Securities, the Company and
the Guarantor have prepared a final offering memorandum, dated June 7, 2001
(including any and all exhibits thereto and any information incorporated by
reference therein, the "Offering Memorandum"). The Offering Memorandum sets
forth certain information concerning the Company, the Guarantor and the
Securities. Unless stated to the contrary, all references herein to the Offering
Memorandum are to the Offering Memorandum at the Execution Time and are not
meant to include any amendment or supplement, or any information incorporated by
reference therein, subsequent to the Execution Time. The Company hereby confirms
that it has authorized the use
1
of the Offering Memorandum, and any amendment or supplement thereto, in
connection with the offer and sale of the Securities by the Initial Purchasers.
To the extent there are no additional parties listed in the
table below other than you, the term Representatives as used herein shall mean
you as the Initial Purchasers, and the terms Representatives and Initial
Purchasers shall mean either the singular or plural as the context requires. The
use of the neuter in this Agreement shall include the feminine and masculine
wherever appropriate. Certain terms used herein are defined in Section 9 of
Annex I hereto. Unless stated to the contrary, any references herein to the
terms "amend", "amendment" or "supplement" with respect to the Offering
Memorandum shall be deemed to refer to and include any information filed under
the Exchange Act subsequent to the Execution Time which is incorporated by
reference therein.
Subject to the terms and conditions, and in reliance upon the
representations and warranties, set forth or incorporated by reference herein,
the Company hereby agrees to sell to the several Initial Purchasers, and each
Initial Purchaser agrees, severally and not jointly, to purchase from the
Company the respective principal amounts of Securities set forth below opposite
its name at a purchase price of 98.949% of the principal amount of Securities,
plus accrued interest, if any, from June 14, 2001 to the date of payment and
delivery:
PRINCIPAL AMOUNT OF
SECURITIES
INITIAL PURCHASERS TO BE PURCHASED
------------------ --------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc............................................... US$252,500,000.00
Commerzbank Capital Markets Corp....................................... 147,500,000.00
Banc of America Securities LLC......................................... 15,000,000.00
Fleet Securities, Inc. ................................................ 15,000,000.00
▇▇▇▇▇ Fargo Brokerage Services, LLC.................................... 15,000,000.00
Credit Suisse First Boston Corporation................................. 10,000,000.00
Deutsche Banc Alex. ▇▇▇▇▇ Inc. ........................................ 10,000,000.00
▇▇ ▇▇▇▇▇ Securities Corporation........................................ 10,000,000.00
CIBC World Markets Corp................................................ 5,000,000.00
Credit Lyonnais Securities (USA) Inc. ................................. 5,000,000.00
Scotia Capital (USA) Inc. ............................................ 5,000,000.00
Bear, ▇▇▇▇▇▇▇ & Co. Inc................................................ 2,500,000.00
▇▇▇▇▇▇▇, Sachs & Co. .................................................. 2,500,000.00
Jefferies & Co., Inc................................................... 2,500,000.00
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated...................................... 2,500,000.00
--------------------------
Total......................................................... US$500,000,000.00
The Initial Purchasers will pay for the Securities upon
delivery thereof at the offices of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. (New York City time) on June 14, 2001,
or at such other time, not later than 5:00 p.m. (New York City time) on June 14,
2001, as shall be designated by the Representatives. The time and date of such
payment and delivery are hereinafter referred to as the Closing Date.
The Securities shall have the terms set forth in the Offering
Memorandum dated June 7, 2001, including the following:
TERMS OF SECURITIES
Maturity Date: June 1, 2007
Interest Rate: 7.125%
Optional Redemption: Make Whole Call at TSY + 30 basis points
Interest Payment Dates: Each June 1 and December 1, commencing
December 1, 2001
Closing Date: June 14, 2001
All provisions contained in the Annex I hereto, entitled
"Purchase Agreement General Provisions," are herein incorporated by reference in
their entirety and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein, except that if
any term defined in such document is otherwise defined herein, the definition
set forth herein shall control.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
between the Company and the Guarantor and the several Initial Purchasers.
Very truly yours,
▇▇▇▇▇▇'▇ OPERATING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇'▇ ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Commerzbank Capital Markets Corp.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
For themselves and the other several Initial
Purchasers named in the foregoing Agreement.
EXHIBIT A
NON-DISTRIBUTION LETTER FOR INSTITUTIONAL ACCREDITED INVESTORS
_____________ ___, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Commerzbank Capital Markets Corp.
As Representatives of the Initial Purchasers
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇'▇ Entertainment, Inc.
▇▇▇▇▇▇'▇ Operating Company, Inc.
▇▇▇ ▇▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Purchase of $ principal amount
of 7.125% Senior Notes Due 2007 (the "Securities")
OF ▇▇▇▇▇▇'▇ OPERATING COMPANY, INC. (THE "COMPANY")(1)
Ladies and Gentlemen:
In connection with our purchase of the Securities we confirm
that:
1. We understand that the Securities are not being and will
not be registered under the Securities Act of 1933, as amended (the "Act"), and
are being sold to us in a transaction that is exempt from the registration
requirements of the Act.
2. We acknowledge that (a) neither the Company, nor the
Guarantor, nor the Initial Purchasers (as defined in the Offering Memorandum
dated June 7, 2001 relating to the Securities (the "Offering Memorandum")) nor
any person acting on behalf of the Company, the Guarantor or the Initial
Purchasers has made any representation to us with respect to the Company, the
Guarantor or the offer or sale of any Securities; and (b) any information we
desire concerning the Company, the Guarantor and the Securities or any other
matter relevant to our decision to purchase the Securities (including a copy of
the Offering Memorandum) is or has been made available to us.
------------------------
1 Each U.S. purchaser, or account for which each U.S. purchaser is acting,
should purchase at least $250,000 of Securities.
A-1
3. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities, and we are (or any account for which we are
purchasing under paragraph 4 below is) an institutional "accredited investor"
(within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Act) able to bear the economic risk of investment in the Securities.
4. We are acquiring the Securities for our own account (or for
accounts as to which we exercise sole investment discretion and have authority
to make, and do make, the statements contained in this letter) and not with a
view to any distribution of the Securities, subject, nevertheless, to the
understanding that the disposition of our property will at all times be and
remain within our control.
5. We understand that (a) the Securities will be in registered
form only and that any certificates delivered to us in respect of the Securities
will bear a legend substantially to the following effect:
"These Securities have not been registered under the
Securities Act of 1933. Further offers or sales of these
Securities are subject to certain restrictions, as set forth
in the Offering Memorandum dated June 7, 2001 relating to
these Securities."
and (b) the Company and the Guarantor have agreed to reissue
such certificates without the foregoing legend only in the event of a
disposition of the Securities in accordance with the provisions of paragraph 6
below (provided, in the case of a disposition of the Securities in accordance
with paragraph 6(f) below, that the legal opinion referred to in such paragraph
so permits), or at our request at such time as we would be permitted to dispose
of them in accordance with paragraph 6(a) below.
6. We agree that in the event that at some future time we wish
to dispose of any of the Securities, we will not do so unless such disposition
is made in accordance with any applicable securities laws of any state of the
United States and:
(a) the Securities are sold in compliance with Rule 144(k)
under the Act; or
(b) the Securities are sold in compliance with Rule 144A under
the Act; or
(c) the Securities are sold in compliance with Rule 904 of
Regulation S under the Act; or
(d) the Securities are sold pursuant to an effective
registration statement under the Act; or
(e) the Securities are sold to the Company; or
A-2
(f) the Securities are disposed of in any other transaction
that does not require registration under the Act, and we theretofore
have furnished to the Company or its designee an opinion of counsel
experienced in securities law matters to such effect or such other
documentation as the Company or its designee may reasonably request.
Very truly yours,
By
--------------------------------
(Authorized Officer)
A-3
EXHIBIT B
SELLING RESTRICTIONS FOR OFFERS AND
SALES OUTSIDE THE UNITED STATES
(1)(a) The Securities have not been and will not be registered
under the Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Regulation
S under the Act or pursuant to an exemption from the registration requirements
of the Act. Each Initial Purchaser represents and agrees that, except as
otherwise permitted by Section 3(a)(i) or (ii) of the Agreement to which this is
an exhibit, it has offered and sold the Securities, and will offer and sell the
Securities, (i) as part of their distribution at any time; and (ii) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S under the Act.
Accordingly, each Initial Purchaser represents and agrees that neither it, nor
any of its Affiliates nor any person acting on its or their behalf has engaged
or will engage in any directed selling efforts with respect to the Securities,
and that it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that, at
or prior to the confirmation of sale of Securities (other than a sale of
Securities pursuant to Section 4(a)(i) or (ii) of the Agreement to which this is
an exhibit), it shall have sent to each distributor, dealer or person receiving
a selling concession, fee or other remuneration that purchases Securities from
it during the distribution compliance period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Act") and may not be
offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and June 14,
2001, except in either case in accordance with Regulation S or
Rule 144A under the Act. Terms used above have the meanings
given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it
has not entered and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the
Securities, except with its Affiliates or with the prior written
consent of the Company.
(c) Terms used in this section have the meanings given to them
by Regulation S.
(2) Each Initial Purchaser represents and agrees that (i) it
has not offered or sold and, prior to the date six months after the date of
issuance of the Securities, will not offer or sell any Securities to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or as
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995;
(ii) it has complied and will comply with all applicable provisions of the
Financial Services ▇▇▇ ▇▇▇▇, as amended, of the United Kingdom
B-1
with respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or passed
on and will only issue or pass on in the United Kingdom any document received by
it in connection with the issue of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services ▇▇▇ ▇▇▇▇ (Investment
Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom the
document may otherwise lawfully be issued or passed on.
B-2