Document:

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

 

 

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

 

6

 

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

 

7

 

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.

 

8

 

(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;

 

9

 

(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

 

10

 

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

 

(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

 

(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

 

(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

 

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

 

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

 

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

 

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

 

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

 

“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

 

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

 

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

 

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

 

A-1

 

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.

 

A-2

 

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

  
					

 

A-3

 

	
  The foregoing
  Agreement is hereby

  
	
  confirmed and
  accepted as of the

  
	
  date first above
  written.

  
	
   

  
	
  Goldman, Sachs
  & Co.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-4Exhibit 10.1

 

AMENDMENT NO. 1

 

To

 

AUTOMATIC ANNUITY REINSURANCE AGREEMENT

 

WHEREAS, ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK (“CEDANT”) and
ALLSTATE LIFE INSURANCE COMPANY (“REINSURER”) entered into that certain
Automatic Reinsurance Agreement effective January 2, 2004 (“Agreement”),
whereby the REINSURER reinsures all obligations under guaranteed minimum
accumulation benefit riders on variable annuity contracts issued directly by
the CEDANT.

 

WHEREAS, the CEDANT now wishes to cede all obligations under guaranteed
minimum withdrawal benefit riders and all guaranteed minimum death benefit
liabilities on certain variable annuity contracts issued directly or reinsured
by the CEDANT and the REINSURER wishes to reinsure such obligations and
liabilities under the terms of the Agreement.

 

NOW, THEREFORE, in consideration of the above stated premises and the
promises and the mutual agreements set forth herein, the parties hereto agree
as follows:

 

1.               This Amendment No. 1 shall be
effective as of January 1, 2005.

 

2.               Section 3 of Article I (“Definitions”)
is hereby deleted in its entirety and is replaced with the following:

 

“Rider” or “Riders” shall mean; (i) the
guaranteed minimum accumulation benefit riders; (ii) the guaranteed
minimum withdrawal benefit riders; and (iii) the guaranteed minimum death
benefits (whether provided by rider or base contract form); described in Exhibit A
of this Agreement.

 

3.               The provisions of Article V of the
Agreement (“Premiums”) are hereby deleted in their entirety and are replaced
with the following:

 

CEDANT shall pay REINSURER premiums for the coinsurance coverage
provided in this Agreement as set forth below.

 

With respect to guaranteed minimum accumulation benefit riders and
guaranteed minimum withdrawal benefit riders reinsured hereunder, the premium
will equal the “Rider Fee Percentage” multiplied by the “Benefit Base” as those
terms are defined in such Riders.

 

 

With respect to guaranteed minimum death benefits reinsured hereunder,
the premium will equal the highest applicable “Death Benefit Rider Fee
Percentage” described in Exhibit B of this Agreement multiplied by the
average of the contract’s total variable separate account beginning and ending
values for the applicable period.  The
Death Benefit Rider Fee Percentages set forth in Exhibit B may be changed
from time to time by CEDANT with no less than 30 days prior written notice to
REINSURER, subject to REINSURER’s right to terminate this Agreement for all new
business for which the new Death Benefit Rider Fee Percentages apply, as
provided below.

 

CEDANT shall pay REINSURER an initial premium
for all guaranteed minimum death benefit coverage in force as of January 1,
2005.  This premium will equal the CEDANT’S
statutory reserve as of December 31, 2004, for the inforce guaranteed
minimum death benefits being reinsured. 
The initial premium will be due February 28, 2005.

 

With respect to guaranteed minimum accumulation benefit riders or
guaranteed minimum withdrawal benefit riders, CEDANT will provide REINSURER
with no less than 30 days prior written notice of any changes to the
definitions of “Rider Fee Percentage” or “Benefit Base” for new business from
the definitions that apply to then-existing business with no less than 30 days
prior written notice.  With respect to
guaranteed minimum death benefits, CEDANT will provide REINSURER with no less
than 30 days prior written notice of any changes to the definition(s) of “variable
separate account values” for new business from the definitions that apply to
then-existing business.

 

REINSURER shall have the right to terminate reinsurance under this
Agreement for all new business, but only with respect to riders or contracts
issued with the changed definition(s) for Rider Fee Percentage, Benefit Base,
Death Benefit Rider Fee Percentage, and/or “variable separate account value”.  Such right must be exercised within 90 days
after receipt of written notice from CEDANT informing the REINSURER of the
change or changes.

 

4.               The provisions of Exhibit A are
hereby deleted in their entirety and replaced with the following:

 

COVERED OBLIGATIONS

 

This Agreement covers all obligations under Guaranteed Minimum
Accumulation Benefit riders on variable annuity contracts issued directly by
CEDANT after the Effective Date.

 

This Agreement also covers all obligations under guaranteed minimum
withdrawal benefit riders on variable annuity contracts issued directly by
CEDANT on or after January 1, 2005.

 

 

This Agreement also covers all guaranteed minimum death benefits on
variable annuity contracts and riders (i) issued directly by CEDANT on or
after January 1, 2005 , except any contracts issued on form number
NYLU446, (ii) issued directly by CEDANT and in force as of December 31,
2004, on any of the contract or rider form numbers listed on Exhibit A-1
attached hereto and made a part hereof, or (ii) reinsured by CEDANT,
except for any reinsurance agreements reinsuring any part of or all the
obligations under the Riders that become effective after January 1, 2005,
that the REINSURER specifically excludes from this Agreement by written notice
to the CEDANT.

 

•                  Guaranteed
minimum death benefits covered by this Agreement includes benefits provided
under separate and explicit guaranteed minimum death benefit riders as well as
any guaranteed minimum death benefits provided under provisions contained in
the base contract form.

 

•                  CEDANT shall
give REINSURER no less than 30 days prior written notice of any new reinsurance
treaties it desires to have covered by this Agreement.  REINSURER shall have right to exclude any new
reinsurance treaty from this Agreement within 90 days after receipt of such
written notice from CEDANT.

 

Except as provided above, no other obligations under such variable
annuity contracts are covered by this Agreement.

 

5.               The attached Exhibit A-1 is hereby
added to and made a part of the Agreement.

 

6.               The attached Exhibit B is hereby
added to and made a part of the Agreement.

 

7.               Except as herein amended, all other
terms and conditions of the Agreement shall remain in full force and
effect.  Capitalized terms not otherwise
defined in this Amendment No. 1 shall have the same meaning as set forth
in the Agreement.

 

 

IN WITNESS HEREOF, the parties have caused this Amendment No. 1 to
Automatic Annuity Reinsurance Agreement to be duly executed by their respective
officers on the dates shown below.

 

 

	
  ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

  	
   

  
	
  (CEDANT)

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Samuel H. Pilch

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   Samuel H. Pilch

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   Group Vice President and Controller

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  January 11, 2005

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ALLSTATE LIFE INSURANCE COMPANY

  	
   

  
	
  (REINSURER)

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ James P. Zils

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  James P. Zils

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   Treasurer

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated:  January 11, 2005

  	
   

  
							

 

 

EXHIBIT A-1

 

GUARANTEED MINIMUM DEATH BENEFIT

IN-FORCE CONTRACT AND RIDER FORMS COVERED

 

PA126NY

PA128NY

PA130NY

PA140NY

PA153NY

 

 

EXHIBIT B

 

DEATH BENEFIT RIDER PERCENTAGE FEE

 

The Death Benefit Rider
Percentage Fees for guaranteed minimum death benefits are as follows:

 

1.     Maximum Annual Value (MAV):
0.20%

 

2.     Return of premium (ROP):
0.10%

 

3.     Ratchet: 0.15%

 

4.     Reset: 0.15%

 

Variable annuity contracts covered by this Agreement may provide two or
more of the above death benefits to the contract owner through provisions
contained in the base contract or contract rider.  In such cases, the highest of the applicable
Death Benefit Rider Percentage fees will be used to calculate the reinsurance
premium for the contract.

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