Exhibit 10.1

 

ANNEX I

 

HARRAH’S OPERATING COMPANY, INC.

Guaranteed Debt Securities

Payment of Principal, Interest and
Premium, if any, Guaranteed by

Harrah’s Entertainment, Inc.

 

 

PURCHASE AGREEMENT GENERAL PROVISIONS

 

February 4, 2005

 

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 the Initial Purchaser that:

 

(a)                                  The Offering Circular 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 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 Circular based
upon information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representative 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 Circular 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 or formed, as applicable, is
validly existing as a corporation, limited liability company or partnership in
good standing under the laws of the jurisdiction of its

 

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organization or formation, as applicable, has the power and authority to own its
property and to conduct its business as described in the Offering Circular 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 and are fully paid and non-assessable.  Except
as set forth in or as incorporated by reference in the Offering Circular, all of
the shares of capital stock or other equity or partnership interests of each
subsidiary of the Company or the Guarantor that would be considered a
“significant subsidiary” for purposes of Rule 1-02 under Regulation S-X pursuant
to the Securities Act (the “Significant Subsidiaries”) are owned directly or
indirectly by the Company or the Guarantor, respectively, except that 20% of the
equity interest in Des Plaines Development Ltd. is not owned directly or
indirectly by the Company or the Guarantor.  Except as set forth in or as
incorporated by reference in the Offering Circular, 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 or the terms of any partnership
agreement pertaining to any partnership that is a subsidiary of the Company or
that 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 Representative, 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 by
the Company and the Guarantor and, when executed, authenticated and issued in
accordance with the provisions of the Indenture and delivered to and paid for by
the Initial Purchaser in accordance with the terms of the Purchase Agreement,
(assuming due authorization,

 

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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 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, or 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 Securities 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
have been obtained 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 Circular (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 Circular and that 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.  Except as disclosed in the Offering Circular,
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;

 

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(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 in the Offering Circular,
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) that
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
Circular, each of the Company and the Guarantor and their respective
subsidiaries has sufficient trademarks, trade names, patent rights, copyrights,
or licenses to conduct their respective businesses as now conducted in all
material respects;

 

(o)                                 Except as disclosed in or specifically
contemplated by the Offering Circular, 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 respective
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
respective 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 that
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 Securities 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
Purchaser made pursuant to Section 3, and except as described in the Offering
Circular 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 Circular to register the
Securities under the Securities 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 Securities 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;

 

(w)                               The Company and Guarantor are subject to and
in compliance in all material respects with the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act;

 

(x)                                   Neither the Company nor the Guarantor has,
within the past 12 months, 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 and the Purchase Agreement dated
June 22, 2004 between the Company and the initial purchasers as set forth
therein and except in connection with any repurchase by the Guarantor of its
outstanding securities (other than the Securities)); and

 

(y)                                 The Company and the Guarantor are in
compliance in all material respects with all applicable provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations of the Commission
adopted thereunder.

 

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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 Representative
for the account of the Initial Purchaser of the Securities registered in such
names and in such denominations as the Representative 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 Purchaser duly paid by the Company.  Delivery of the Securities shall be
made through the facilities of The Depository Trust Company unless the
Representative shall otherwise instruct.

 

3.                                       Offering by Initial Purchaser.  The
Initial Purchaser 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 Circular
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) in accordance with the restrictions set
forth in Exhibit A 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 Purchaser’s
Obligations.  The obligations of the Initial Purchaser 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 Circular (exclusive of any amendments or supplements
thereto subsequent to the Execution Time) that, in the judgment of the
Representative, is material and adverse and that makes it, in the judgment of
the Representative, impracticable or

 

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inadvisable to proceed with the offering, sale or delivery of the Securities on
the terms and in the manner contemplated in the Offering Circular.

 

(b)                                 The Initial Purchaser 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 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 Purchaser shall have received
on the Closing Date an opinion of Stephen H. Brammell, 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 Circular
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 law
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 Circular and that 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 Circular, 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 material adverse effect on the Company, the
Guarantor or any of their respective subsidiaries taken as a whole.

 

(iii)          each of the Company’s, and Guarantor’s and their respective
subsidiaries’ controlling persons, and key employees have all necessary permits,
licenses and other authorizations required by Gaming Laws for the Company, the

 

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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.

 

(iv)                              the statements (A) in the Offering Circular
under the captions “Regulation and Licensing” and “Legal Matters,” (B) in “Item
1 - Business - Patents and Trademarks,” “Item 1 - Business - Governmental
Regulation” and “Item 3 - Legal Proceedings” of the Guarantor’s most recent
annual report on Form 10-K in respect of the year ended December 31, 2003, which
is incorporated by reference in the Offering Circular except for Part II, Items
6, 7 and 8, and Part IV, Item 15(a)(2) which have been updated in the
Guarantor’s current report on Form 8-K dated December 17, 2004, which is
incorporated by reference in the Offering Circular (C) in “Item 7 - Management’s
Discussion and Analysis of Financial Condition and Results of Operations - Debt
and Liquidity” of the Guarantor’s most recent annual report on Form 10-K in
respect of the year ended December 31, 2003, as amended and restated in the
Guarantor’s current report on Form 8-K dated December 17, 2004 and (D) in “Item
2 - Management’s Discussion and Analysis of Financial Condition and Results of
Operations - Debt and Liquidity” of the Guarantor’s quarterly reports on Form
10-Q in respect of the quarters ended March 31, June 30 and September 30, 2004,
which are incorporated by reference in the Offering Circular, in each case
insofar as such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly present in all material respects the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize in all material respects 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 issuance of the Securities or the transactions contemplated by the
Purchase Agreement, except as has already been obtained.

 

(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
pursuant to, the Purchase 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.

 

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(d)                                 The Initial Purchaser shall have received on
the Closing Date an opinion of Latham & Watkins LLP, outside counsel for the
Company and the Guarantor, dated the Closing Date, to the effect that:

 

(i)                                     this Agreement has been duly authorized
by all necessary corporate action of the Company and the Guarantor, and this
Agreement has been duly executed and delivered by the Company and the Guarantor;

 

(ii)                                  the Indenture has been duly authorized by
all necessary corporate action of the Company and the Guarantor, and the
Indenture has been duly executed and delivered by the Company and the Guarantor
and is the legally valid and binding agreement of the Company and the Guarantor,
enforceable against each of them in accordance with its terms;

 

(iii)                               the Registration Rights Agreement has been
duly authorized by all necessary corporate action of the Company and the
Guarantor, has been duly executed and delivered by the Company and the Guarantor
and is the legally valid and binding agreement of the Company and the Guarantor,
enforceable against each of them in accordance with its terms;

 

(iv)                              the Notes have been duly authorized by all
necessary corporate action of the Company and, when executed, issued and
authenticated in accordance with the terms of the Indenture and delivered to and
paid for by the Initial Purchaser in accordance with the terms of this
Agreement, will be the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms;

 

(v)                                 the notations of Guarantee of the Guarantor
to be endorsed on the Notes have been duly authorized by all necessary corporate
action of the Guarantor and, when executed and delivered in accordance with the
terms of the Indenture (assuming the due execution, issuance and authentication
of the Notes in accordance with the terms of the Indenture and delivery and
payment therefor by you in accordance with the terms of this Agreement), will be
the legally valid and binding obligations of the Guarantor, enforceable against
the Guarantor in accordance with their terms;

 

(vi)                              the execution and delivery of this Agreement,
the Indenture and the Registration Rights Agreement, and the execution, issuance
and sale of the Notes and the Guarantees by each of the Company and the
Guarantor, respectively, to the Initial Purchaser pursuant to this Agreement,
and the performance by each of the Company and the Guarantor on or prior to the
Closing Date of its respective obligations under this Agreement, the Indenture
and the Registration Rights Agreement required to be performed on or before the
Closing Date, do not:

 

(A)                              violate the Company’s governing documents or
the Guarantor’s governing documents, respectively;

 

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(B)                                violate the Delaware General Corporation Law,
or any federal or New York statute, rule or regulation applicable to the Company
or the Guarantor, respectively; or

 

(C)                                require any consents, approvals, or
authorizations to be obtained by the Company or the Guarantor from,
respectively, or any registrations, declarations or filings to be made by the
Company or the Guarantor with, respectively, in each case, any governmental
authority under any federal or New York statute, rule or regulation applicable
to the Company or the Guarantor, respectively, that have not been obtained or
made;

 

(vii)                           the statements in the Offering Circular under
the caption “Description of Notes,” insofar as they purport to describe or
summarize certain provisions of the Notes and the Guarantee, are accurate
descriptions or summaries in all material respects;

 

(viii)                        no registration of the Securities under the
Securities Act, and no qualification of the Indenture under the Trust Indenture
Act is required for the purchase of the Securities by the Initial Purchaser or
the initial resale of the Securities, in each case, in the manner contemplated
by this Agreement and the Offering Circular (such counsel may state that it
expresses no opinion as to when or under what circumstances the Notes initially
sold by you may be offered or resold);

 

(ix)                                with your consent based solely on a
certificate of an officer of the Company as to factual matters, neither the
Company nor the Guarantor is, and immediately after giving effect to the
offering and sale of the Securities in accordance with the Purchase Agreement
and the application of the proceeds as described in the Offering Circular under
the caption “Use of Proceeds,” neither will be required to be registered as an
“investment company” within the meaning of the Investment Company Act; and

 

(x)                                   based on such facts and subject to the
limitations set forth in the Offering Circular, the statements in the Offering
Circular under the caption “Certain United States Federal Income Tax
Consequences,” insofar as they purport to summarize certain provisions of the
statutes and regulations referred to therein, are accurate summaries in all
material respects.

 

Such counsel may state that the primary purpose of such counsel’s professional
engagement was not to establish or confirm factual matters or financial or
quantitative information, and many determinations involved in the preparation of
the Offering Circular (and the documents incorporated by reference) are of a
wholly or partially non-legal character or related to legal matters outside the
scope of such counsel’s opinion letter to you of even date herewith.  Therefore,
such counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in, or
incorporated by reference in, the Offering Circular or the incorporated

 

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documents (except to the extent expressly set forth in numbered paragraphs (vii)
and (x) above), and have not made an independent check or verification thereof
(except as aforesaid).  However, in the course of acting as special counsel to
the Company and the Guarantor in connection with the preparation by the Company
and the Guarantor of the Offering Circular, such counsel reviewed the Offering
Circular and the incorporated documents, and participated in conferences and
telephone conversations with officers and other representatives of the Company,
counsel to the Company, the independent public accountants for the Company, your
representatives, and your counsel, during which conferences and conversations
the contents of the Offering Circular (and portions of the incorporated
documents) and related matters were discussed.  Such counsel also reviewed and
relied upon certain corporate records and documents, letters from counsel and
accountants, and oral and written statements of officers and other
representatives of the Company and others as to the existence and consequence of
certain factual and other matters.  Such counsel considered the foregoing in
light of such counsel’s understanding of applicable U.S. federal securities laws
and such counsel’s experience gained through practice thereunder.

 

Based on such counsel’s participation and review as described above, such
counsel shall advise you that during the course of such counsel’s services in
connection with this matter, no facts came to such counsel’s attention that
caused such counsel to believe that the Offering Circular, together with the
incorporated documents, as of its date or as of the date hereof, (together with
the incorporated documents at that date), contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that such counsel
expresses no belief with respect to the financial statements, schedules, or
other financial data included or incorporated by reference in, or omitted from,
the Offering Circular or the incorporated documents.

 

The opinion of Latham & Watkins LLP described in this Section 4(d) shall be
rendered to the Initial Purchaser at the request of the Company and the
Guarantor and shall so state therein.

 

(e)                                  The Initial Purchaser shall have received
from Cleary Gottlieb Steen & Hamilton LLP, counsel for the Initial Purchaser,
such opinion or opinions, dated the Closing Date and addressed to the
Representative, with respect to the issuance and sale of the Securities, the
Indenture, the Registration Rights Agreement, the Offering Circular (as amended
or supplemented at the Closing Date) and other related matters as the
Representative 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 Execution Time and at the Closing
Date, Deloitte & Touche LLP shall have furnished to the Initial Purchaser a
letter or letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Initial Purchaser,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and stating in effect that:

 

11

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(i)                                     in their opinion the audited financial
statements and financial statement schedules included or incorporated in the
Offering Circular (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 December 31, 2003,
nothing came to their attention which caused them to believe that: with respect
to the period subsequent to September 30, 2004, 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 September 30, 2004 consolidated balance sheet
included or incorporated in the Offering Circular (as amended or supplemented at
the date of the letter), or for the period from October 1, 2004 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 Purchaser.

 

(iii)                               the statements and information contained in
the letter or letters are of the type ordinarily included in accountants’
“comfort letters” to the Initial Purchaser with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Offering Circular.

 

(g)                                 Subsequent to the Execution Time or, if
earlier, the dates as of which information is given in the Offering Circular,
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 Purchaser, so material and adverse as to make it impractical or
inadvisable to proceed with the offering, sale or delivery of the Securities as
contemplated by the Offering Circular.

 

12

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(h)                                 As of the Closing Date the Securities shall
be rated not lower than BBB- by Standard & Poor’s Corporation and Baa3 by
Moody’s 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 Purchaser such further information,
certificates and documents as the Representative may reasonably request.

 

5.                                       Covenants of the Company and the
Guarantor.  In further consideration of the agreements of the Initial Purchaser
herein contained, each of the Company and the Guarantor covenants with the
Initial Purchaser as follows that:

 

(a)                                  The Company and the Guarantor shall furnish
the Representative, without charge, prior to 10:00 a.m. New York City time on
the second 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
Circular, any documents incorporated by reference therein and any supplements
and amendments thereto as the Representative may reasonably request.

 

(b)                                 The Company and the Guarantor shall not
amend or supplement the Offering Circular without the prior written consent of
the Representative, 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 Circular unless, prior to such
proposed filing, they have furnished the Representative with a copy of such
document for review by the Representative and the Representative has not
reasonably objected to the filing of such document.  The Company or the
Guarantor, as the case may be, shall promptly advise the Representative when any
document filed under the Exchange Act that is incorporated by reference in the
Offering Circular 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 Purchaser (as determined by the
Representative), any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Offering Circular in order to make
the statements therein, in light of the circumstances when the Offering Circular
is delivered to a purchaser, not misleading, or if, in the opinion of counsel
for the Initial Purchaser, it is necessary to amend or supplement the Offering
Circular to comply with applicable law, forthwith to notify the Representative
of such event or condition and prepare and furnish, at its own expense, to the
Initial Purchaser and such other persons as the Initial Purchaser may reasonably
request, either amendments or supplements to the Offering Circular (in such
quantities as the Initial Purchaser may reasonably request) so that the
statements in the Offering Circular as so amended or supplemented will not, in
light of the circumstances when the Offering Circular is delivered to a
purchaser, be misleading or so that the Offering Circular, as amended or
supplemented, will comply with law.

 

13

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(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 Representative shall reasonably request and
promptly advise the Initial Purchaser 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 Registered 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 purchaser 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 Representative 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 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

 

14

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securities of the Company substantially similar to the Securities (other than
(i) the Securities, (ii) commercial paper issued in the ordinary course of
business and (iii) borrowings under our credit facility as described in the
Offering Circular), without the prior written consent of the Representative.

 

(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)                               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 Circular 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 Purchaser and dealers,
in the quantities hereinabove specified,

 

(ii)                                  all costs and expenses related to the
transfer and delivery of the Securities to the Initial Purchaser, including any
transfer or other taxes payable thereon (but excluding any transfer taxes on
resale of any of the Securities by the Initial Purchaser),

 

(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 Purchaser in connection with such qualification and in
connection with the Blue Sky or legal investment memorandum,

 

(iv)                              the fees and disbursements of the Trustee and
its counsel,

 

(v)                                 any fees charged by the rating agencies for
the rating of the Securities,

 

(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

 

15

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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 Section 8 below, the Initial Purchaser will pay all of
their costs and expenses, including fees and disbursements of their counsel,
stock transfer payable on resale of the Securities 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 the Initial Purchaser and each
person, if any, who controls the 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 Circular
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 the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser through the Representative expressly for use
therein.

 

(b)                                 The Initial Purchaser agrees 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 Representative expressly for use in the Offering Circular 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 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

 

16

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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 Representative, 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
(which consent shall not be unreasonably withheld), 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
Purchaser 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 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 Purchaser 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 Purchaser on

 

17

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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 Purchaser
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 Purchaser
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 Purchaser and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

 

(e)                                  The Company, the Guarantor and the Initial
Purchaser 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
Purchaser 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 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 Representative 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

 

18

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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
Representative, 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
Representative, impracticable or inadvisable to proceed with the offering, sale
or delivery of the Securities on the terms and in the manner contemplated in the
Offering Circular.

 

8.                                       Defaulting Initial Purchaser.

 

[Reserved].

 

If this Agreement shall be terminated by the Initial Purchaser 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 the Guarantor shall be unable to perform its obligations
under this Agreement, the Company and the Guarantor will reimburse the Initial
Purchaser for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Initial Purchaser 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.

 

“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.

 

“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.

 

19

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“Investment Company Act” shall mean the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission promulgated thereunder.

 

“Registered Exchange Offer” shall have the meaning ascribed thereto by the
Registration Rights Agreement.

 

“Regulation D” shall mean Regulation D under the Act.

 

“Regulation S” shall mean Regulation S under the Act.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

 

“Shelf Registration Statement” shall have the meaning ascribed thereto by the
Registration Rights Agreement.

 

“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

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EXHIBIT A

 

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) 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 3(a)(i) 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 “Securities 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 February 9, 2005, 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, warrants and agrees that:

 

(a)  it has not offered or sold and, prior to the expiry of a period of six
months from the Closing Date, 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
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an

 

A-1

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offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995;

 

(b) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000 (the “FSMA”)) received by it in connection with
the issue or sale of any Securities in circumstances in which section 21(1) of
the FSMA does not apply to the Company or the Guarantor; and

 

(c) it has complied and will comply with all applicable provisions of the FSMA
with respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom.

 

A-2

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HARRAH’S OPERATING COMPANY, INC.
HARRAH’S ENTERTAINMENT, INC.

 

$250,000,000

 

Senior Floating Rate Notes due 2008

 

Payment of Principal, Interest and
Premium, if any, Guaranteed by

 

Harrah’s Entertainment, Inc.

 

PURCHASE AGREEMENT

 

New York, New York

February 4, 2004

 

Goldman, Sachs & Co.

85 Broad Street

New York, NY  10004

 

Ladies and Gentlemen:

 

Harrah’s Operating Company, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to the party named below (the “Initial Purchaser”)
$250,000,000 principal amount of its Senior Floating Rate Notes due 2008 (the
“Notes”) payment of principal, interest and premium, if any, in respect of which
notes are to benefit from the guarantee (the “Guarantee”) of Harrah’s
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 February 9, 2005,
among the Company, the Guarantor and U.S. Bank National Association, as trustee
(the “Trustee”).  The Securities will have the benefit of a registration rights
agreement (the “Registration Rights Agreement”) to be dated as of February 9,
2005, among the Company, the Guarantor and the Initial Purchaser, pursuant to
which the Company and the Guarantor have agreed to register the Securities under
the Securities Act, subject to the terms and conditions therein specified.  The
sale of the Securities to the Initial Purchaser will be made without
registration of the Securities under the Securities Act in reliance upon
exemptions from the registration requirements of the Securities Act.

 

In connection with the sale of the Securities, the Company and the Guarantor
have prepared an offering Circular dated February 4, 2005 (including any
information incorporated by reference therein, the “Offering Circular”).  The
Offering Circular sets forth certain information concerning the Company, the
Guarantor and the Securities.  Unless stated to the contrary, all references
herein to the Offering Circular are to the Offering Circular 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

 

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authorized the use of the Offering Circular, and any amendment or supplement
thereto, in connection with the offer and sale of the Securities by the Initial
Purchaser.

 

The term “Representative” as used herein shall mean you as the Initial
Purchaser.  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 Circular shall be deemed to refer to and include any information filed
under the Exchange Act subsequent to the Execution Time that 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 Initial Purchaser, and the Initial Purchaser agrees
to purchase from the Company, $250,000,000 aggregate principal amount of
Securities at a purchase price of 99.75% of the principal amount of Securities,
plus accrued interest, if any, from February 9, 2005 to the date of payment and
delivery.

 

The Initial Purchaser will pay for the Securities upon delivery thereof at the
offices of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York,
New York at 10:00 a.m. (New York City time) on February 9, 2005, or at such
other time, not later than 5:00 p.m. (New York City time) on February 9, 2005,
as shall be designated by the Representative. 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 Circular dated
February 4, 2005, including the following:

 

Terms of Securities

 

Maturity Date:

 

February 8, 2008

 

 

 

Interest Rate:

 

3-month LIBOR + .60%

 

 

 

Optional Redemption:

 

Company call on or after February 8, 2007

 

 

 

Interest Payment Dates:

 

Each February 8, May 8, August 8 and November 8, commencing May 8, 2005

 

 

 

Closing Date:

 

February 9, 2005

 

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.

 

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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 Initial Purchaser.

 

 

Very truly yours,

 

 

 

 

 

HARRAH’S OPERATING COMPANY, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

Jonathan S. Halkyard

 

 

Title:

Vice President and Treasurer

 

 

 

 

 

HARRAH’S ENTERTAINMENT, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

Jonathan S. Halkyard

 

 

Title:

Vice President and Treasurer

 

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The foregoing Agreement is hereby

confirmed and accepted as of the

date first above written.

 

Goldman, Sachs & Co.

 

 

By:

 

 

 

Name:

 

Title:

 

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