EXHIBIT 1.1
Empress Entertainment, Inc.
(a Delaware corporation)
$150,000,000 8 1/8% Senior Subordinated Notes Due 2006
PURCHASE AGREEMENT
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June 11, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Wasserstein Perella Securities, Inc.
as Representatives of the several Initial Purchasers
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Empress Entertainment, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), Wasserstein Perella Securities, Inc.
("Wasserstein") and each of the other Initial Purchasers named in Schedule A
hereto (collectively, the "Initial Purchasers," which term shall also include
any initial purchaser substituted as hereinafter provided in Section 11 hereof),
for whom Merrill Lynch and Wasserstein are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective principal amounts set forth in said Schedule A of
$150,000,000 aggregate principal amount of the Company's 8 1/8% Senior
Subordinated Notes Due 2006 (the "Securities"). The Securities, the Exchange
Securities (as defined in the Registration Rights Agreement) and the Private
Exchange Securities (as defined in the Registration Rights Agreement) are to be
issued pursuant to an indenture to be dated as of June 18, 1998 (the
"Indenture") among the Company, the Guarantors (as defined in the Indenture) and
U.S. Bank Trust, National Association, as trustee (the "Trustee"). The
Securities, the Exchange Securities and the Private Exchange Securities will be
guaranteed (the
"Guarantees") by Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), Hammond Residential, L.L.C., an Indiana limited liability
company ("Hammond Residential" and, together with Empress Hammond, the "Indiana
Companies"), Empress Casino Joliet Corporation, an Illinois corporation
("Empress Joliet"), Empress River Casino Finance Corporation, a Delaware
corporation ("Finance" and, together with the Indiana Companies and Empress
Joliet, the "Guarantors") and all future Restricted Subsidiaries (as defined in
the Indenture) of the Company, as further provided in the Indenture. Securities
issued in book-entry form will be issued to Cede & Co. as nominee of The
Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated as
of the Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among
the Company, the Trustee and DTC.
Each of the Company and each Guarantor understands that the Initial
Purchasers propose to make an offering of the Securities on the terms and in the
manner set forth herein and agrees that the Initial Purchasers may resell,
subject to the conditions set forth herein, all or a portion of the Securities
to purchasers ("Subsequent Purchasers") at any time after the date of this
Agreement. The Securities are to be offered and sold through the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "1933 Act"), in reliance upon exemptions therefrom. Pursuant to the terms
of the Securities and the Indenture, investors that acquire Securities may only
resell or otherwise transfer such Securities if such Securities are hereafter
registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded by
Rule 144A ("Rule 144A") or Regulation S ("Regulation S") of the rules and
regulations promulgated under the 1933 Act by the Securities and Exchange
Commission (the "Commission")).
The Company has prepared and delivered to each Initial Purchaser copies of
a preliminary offering memorandum dated June 1, 1998 (the "Preliminary Offering
Memorandum") and has prepared and will deliver to each Initial Purchaser, on the
date hereof or the next succeeding day, copies of a final offering memorandum
dated June 11, 1998 (the "Final Offering Memorandum"), each for use by such
Initial Purchaser in connection with its solicitation of purchases of, or
offering of, the Securities. "Offering Memorandum" means, with respect to any
date or time referred to in this Agreement, the most recent offering memorandum
(whether the Preliminary Offering Memorandum or the Final Offering Memorandum,
or any amendment or supplement to either such document), including exhibits
thereto and any documents incorporated therein by reference, which has been
prepared and delivered by the Company to the Initial Purchasers in connection
with their solicitation of purchases of, or offering of, the Securities.
Capitalized terms not otherwise defined herein have the meanings given such
terms in the Offering Memorandum.
The holders of Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of a
registration rights agreement, to be dated as of June 18, 1998 (the
"Registration Rights Agreement"), between the Company and the Initial
Purchasers. Pursuant to the Registration Rights Agreement, the Company will
agree to file with
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the Commission under the circumstances set forth therein (i) a registration
statement under the 1993 Act registering the Exchange Securities to be offered
in exchange for the Securities and to use its best efforts to cause such
registration statement to be declared effective and/or (ii) a shelf registration
statement pursuant to Rule 415 under the 1933 Act relating to the resale of the
Securities by holders thereof or, if applicable, relating to the resale of
Private Exchange Securities by the Initial Purchasers and to use its best
efforts to cause such shelf registration statement to be declared effective.
This Agreement, the Indenture, the Securities, the Exchange Securities, the
Private Exchange Securities, the Guarantees and the Registration Rights
Agreement are sometimes referred to herein collectively as the "Operative
Documents."
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Offering Memorandum.
SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company and the Guarantors.
Each of the Company and each Guarantor, jointly and severally, represents and
warrants to each Initial Purchaser as of the date hereof and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with each Initial Purchaser
as follows:
(i) Similar Offerings. Neither the Company nor any Guarantor has,
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directly or indirectly, solicited any offer to buy or offered to sell, and
neither the Company nor any Guarantor will, directly or indirectly, solicit
any offer to buy or offer to sell, in the United States or to any United
States citizen or resident, any security which is or would be integrated
with the sale of the Securities in a manner that would require the
Securities to be registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does not, and at
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the Closing Time will not, include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall
not apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the
Company in writing by any Initial Purchaser through the Representatives
expressly for use in the Offering Memorandum.
(iii) Independent Accountants. The accountants who certified the
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financial statements and supporting schedules included in the Offering
Memorandum are
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independent certified public accountants with respect to the Company and
the Guarantors within the meaning of Regulation S-X under the 1933 Act.
(iv) Financial Statements. The combined financial statements,
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together with the related schedules and notes, included in the Offering
Memorandum present fairly in all material respects the combined financial
position of the Company and the Guarantors at the dates indicated and the
combined statement of operations, stockholders' equity and cash flows of
the Company and the Guarantors for the periods specified; and said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Offering Memorandum present fairly in all material respects
in accordance with GAAP the information required to be stated therein. The
selected combined financial data and the summary combined financial data
included in the Offering Memorandum present fairly in all material respects
the information shown therein and have been compiled on a basis consistent
with that of the audited combined financial statements included in the
Offering Memorandum. The statistical information and other market-related
data included in the Offering Memorandum present fairly, in all material
respects, the information and data shown therein and are derived from
sources the Company believes are accurate.
(v) No Material Adverse Change in Business. Since the respective
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dates as of which information is given in the Offering Memorandum, except
as otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and the Guarantors considered
as one enterprise (a "Material Adverse Effect"), whether or not arising in
the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of the Guarantors, other than those in
the ordinary course of business, which are material with respect to the
Company and the Guarantors considered as one enterprise and would be
required to be described in a registration statement on Form S-1 under the
1933 Act, and (C) except in accordance with and consistent with past
practice, there has been no dividend or distribution of any kind declared,
paid or made by the Company or any of the Guarantors on any class of its
capital stock.
(vi) Good Standing of the Company and the Guarantors. Each of the
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Company and each Guarantor has been duly organized and is validly existing
as a corporation or limited liability company, as applicable, in good
standing under the laws of the state of its incorporation or formation, as
applicable, and has the corporate power and authority (or, in the case of
Hammond Residential, the power and authority) to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the
Operative Documents, the Credit Facility and the Fourth Supplemental
Indenture to the 1994 Indenture (as defined below) and to consummate the
Reorganization and the Covenant Defeasance; and each of the Company and
each Guarantor is duly qualified as a
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corporation or limited liability company, as applicable, to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect.
(vii) Capitalization of the Guarantors. All of the issued and
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outstanding capital stock of each Guarantor has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity other than a
pledge of stock of the Indiana Companies to Bank of America National Trust
and Savings Association which shall be released in connection with the
Closing of the Offering and re-pledged, together with the capital stock of
each of the other Guarantors, to Wells Fargo Bank under the Credit
Facility; and none of the outstanding shares of capital stock of any
Guarantor was issued in violation of any preemptive or similar rights
arising by operation of law, or under the charter or by-laws of any
Guarantor or under any agreement to which the Company or any Guarantor is a
party. Neither the Company nor any Guarantor owns any securities or
interests (debt or equity) in any person or entity other than the
Guarantors other than Cash Equivalents (as defined in the 1994 Indenture).
(viii) Capitalization of the Company. The authorized, issued and
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outstanding capital stock of the Company was, on March 31, 1998, as set
forth in the Offering Memorandum in the column entitled "Actual" under the
caption "Capitalization"; all of the issued and outstanding capital stock
of the Company has been duly authorized and validly issued, is fully paid
and non-assessable; and none of the issued and outstanding shares of
capital stock of the Company was issued in violation of any preemptive
rights or similar rights arising by operation of law or under the charter
or by-laws of the Company or under any agreement to which the Company is a
party.
(ix) Authorization of Agreement. This Agreement has been duly
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authorized, executed and delivered by each of the Company and each
Guarantor.
(x) Authorization of Credit Facility. The Credit Facility has been
--------------------------------
duly authorized by each of the Company and each Guarantor to the extent
each is a party thereto, and, at the Closing Time, will have been duly
executed and delivered by the Company and each Guarantor (other than
Empress Joliet) to the extent each is a party thereto, and will constitute
a valid and binding agreement of the Company and each Guarantor (except
Empress Joliet) to the extent each is a party thereto, enforceable against
each of them other than Empress Joliet, to the extent each is a party
thereto, in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers and conveyances), reorganization,
moratorium or other similar laws relating to
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or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xi) Authorization of the Indenture. The Indenture has been duly
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authorized by each of the Company and each Guarantor and, at the Closing
Time, will have been duly executed and delivered by each of the Company and
each Guarantor and will constitute a valid and binding agreement of each of
the Company and each Guarantor, enforceable against each of them in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers and conveyances), reorganization, moratorium or
other similar laws relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law). On the date
hereof, at the date of the Offering Memorandum, and any amendment or
supplement thereto (if different), and at the Closing Time, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Commission promulgated pursuant thereto (collectively, the "TIA"), which
would be applicable to an Indenture qualified under the TIA.
(xii) Authorization of Registration Rights Agreement. The
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Registration Rights Agreement has been duly authorized by the Company and,
at the Closing Time, will have been duly executed and delivered by the
Company and will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers and
conveyances), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xiii) Authorization of Reorganization. The Reorganization has been
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duly authorized by the Company and each Guarantor to the extent each is a
party thereto and has been duly effected by the Company and each Guarantor
to the extent each is a party thereto as described in the Offering
Memorandum.
(xiv) Authorization of Covenant Defeasance. The Covenant Defeasance
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has been duly authorized by the Company and each Guarantor and, at the
Closing Time, will have been duly effected by the Company and each
Guarantor as described in the Offering Memorandum. The Covenant Defeasance
will have been effected in compliance with the TIA and the terms of the
1994 Indenture.
(xv) Authorization of Fourth Supplemental Indenture. The Fourth
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Supplemental Indenture to that certain indenture dated as of April 1, 1994,
by and among Finance, the Guarantors named therein and U.S. Bank Trust
National Association f/k/a First Trust National Association, as trustee
(the "1994 Indenture") has been duly authorized by the
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Company and each Guarantor and has been duly executed and delivered by each
of the Company, each Guarantor and the trustee under the 1994 Indenture
(the "1994 Trustee") and constitutes a valid and binding agreement of each
of the Company, each Guarantor and of the 1994 Trustee, enforceable against
each of the Company, each Guarantor and the 1994 Trustee in accordance with
its terms.
(xvi) Authorization of the Securities and the Guarantees. The
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Securities and the Guarantees have been duly authorized by the Company and
each Guarantor, respectively, and, at the Closing Time, will have been duly
executed by the Company and each Guarantor and, when authenticated in the
manner provided for in the Indenture and delivered against payment of the
purchase price therefor will constitute valid and binding obligations of
the Company and each Guarantor, enforceable against the Company and each
Guarantor, in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers and conveyances),
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be in the form contemplated by, and entitled to
the benefits of, the Indenture.
(xvii) Authorization of the Exchange Securities and the Private
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Exchange Securities. The Exchange Securities and the Private Exchange
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Securities have been duly authorized by the Company and, when executed by
the Company and authenticated in the manner provided for in the Indenture
and delivered in exchange for the Securities in accordance with the terms
of the Registration Rights Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers and conveyances), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture.
(xviii) Description of Operative Documents. The Securities, the
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Exchange Securities, the Private Exchange Securities, the Registration
Rights Agreement and the Indenture will conform in all material respects to
the respective statements relating thereto and descriptions thereof
contained in the Offering Memorandum and will be in substantially the
respective forms previously delivered to the Initial Purchasers.
(xix) Absence of Defaults and Conflicts. Neither the Company nor any
---------------------------------
Guarantor is in violation of its charter, operating agreement or by-laws,
as applicable, or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, including, without limitation, the 1994 Indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other
7
agreement or instrument to which the Company or any Guarantor is a party or
by which any of them may be bound, or to which any of the property or
assets of the Company or any Guarantor is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of each of the Operative Documents, the Credit Facility, the
Fourth Supplemental Indenture to the 1994 Indenture and any other agreement
or instrument entered into or issued or to be entered into or issued by the
Company or any Guarantor in connection with the transactions contemplated
hereby or thereby or in the Offering Memorandum and the consummation of the
Reorganization and the Covenant Defeasance and of the transactions
contemplated herein, in any other Operative Document and in the Offering
Memorandum (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds" and the issuance
and delivery of the Exchange Securities and the Private Exchange
Securities, if any) and compliance by the Company and each Guarantor with
its obligations hereunder or under any other Operative Document, the Credit
Facility or the Fourth Supplemental Indenture to the 1994 Indenture have
been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or a default or a Repayment
Event (as defined below), other than as contemplated in the Offering
Memorandum, under, or result in the creation or imposition of any lien,
charge or encumbrance upon, any property or assets of the Company or any
Guarantor pursuant to, the Agreements and Instruments, nor will such action
result in any violation of the provisions of the charter or by-laws of the
Company or any Guarantor or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Guarantor (including, without limitation, the Indiana Gaming
Commission and the Illinois Gaming Board) or any of their respective assets
or properties except for such violations which would not, singly or in the
aggregate, have a Material Adverse Effect. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) in excess of $5 million the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any Guarantor.
(xx) Absence of Labor Dispute. No labor dispute with the employees
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of the Company or any Guarantor exists or, to the knowledge of any of the
Company or any Guarantor, is imminent, and neither the Company nor any
Guarantor is aware of any existing or imminent labor disturbance by the
employees of any of the Company's or any Guarantor's principal suppliers or
contractors, which, in either case, may reasonably be expected to result in
a Material Adverse Affect.
(xxi) Absence of Proceedings. Except as disclosed in the Offering
----------------------
Memorandum, there is no action, suit, proceeding, inquiry or investigation
before or by any court or governmental agency or body, domestic or foreign,
now pending, or, to the
8
knowledge of the Company or any Guarantor, threatened, against or affecting
the Company or any Guarantor which might reasonably be expected to result
in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the consummation of the Reorganization, the
Covenant Defeasance or the transactions contemplated by any of the
Operative Documents or the Credit Facility or the performance by the
Company or any Guarantor of its obligations under any of the Operative
Documents or under the Credit Facility. The aggregate of all pending legal
or governmental proceedings to which the Company or any Guarantor is a
party or of which any of their respective property or assets is the subject
which are not described in the Offering Memorandum, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xxii) Possession of Intellectual Property. The Company and the
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Guarantors own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any Guarantor has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any Guarantor therein, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xxiii) Absence of Further Requirements. Except for (A) the approval
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of the Credit Facility by the Illinois Gaming Board, (B) approvals
(including approvals by the Illinois Gaming Board and the Indiana Gaming
Commission), which approvals have been obtained to the extent required by
Indiana law or Illinois law, as applicable, and such approvals have not
been revoked, modified or suspended, (C) UCC filings to be made pursuant to
the Credit Facility and the Reorganization, (D) filings with the U.S. Coast
Guard with respect to the Credit Facility and the Reorganization and (E)
filings required to satisfy the Company's obligations under the
Registration Rights Agreement, no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency (including, without limitation,
Indiana Gaming Commission and the Illinois Gaming Board) is necessary or
required in connection with the offering, issuance or sale of the
Securities, the Exchange Securities, the Private Exchange Securities or the
Guarantees, the consummation of the Reorganization and the Covenant
Defeasance, the execution, delivery and performance by each of the Company
and each Guarantor of its obligations under each of the Operative
Documents, the Credit Facility and the Fourth Supplemental Indenture to the
1994 Indenture or the consummation of the transactions contemplated by any
of the foregoing.
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(xxiv) Possession of Licenses and Permits. Except for such failures
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as would not, singly or in the aggregate, result in a Material Adverse
Effect, (a) the Company and the Guarantors possess such permits, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies (including, without limitation, the Illinois
Gaming Board and the Indiana Gaming Commission) necessary to conduct the
business now operated by them; (b) the Company and the Guarantors are in
compliance with the terms and conditions of all such Governmental Licenses;
(c) all of the Governmental Licenses are valid and in full force and
effect; and (d) neither the Company nor any Guarantor has received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxv) Title to Property. The Company and the Guarantors have good
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and marketable title to all real property owned by the Company and such
Guarantors, respectively, and good title to all other material properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the Offering Memorandum or (b) do not,
singly or in the aggregate, materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company or any Guarantor; and all of the leases and
subleases material to the business of the Company and the Guarantors,
considered as one enterprise, and under which the Company or any Guarantor
holds properties described in the Offering Memorandum, are in full force
and effect, and neither the Company nor any Guarantor has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any Guarantor under any of the leases or subleases
mentioned above, or affecting or questioning the rights of such the Company
or any Guarantor to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xxvi) Tax Returns. Each of the Company and each Guarantor has filed
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all federal, state, local and foreign tax returns that are required to be
filed or has duly requested extensions thereof and has paid all taxes
required to be paid by it and any related assessments, fines or penalties,
except for any such tax, assessment, fine or penalty that is being
contested in good faith and by appropriate proceedings; and adequate
charges, accruals and reserves have been provided for in the financial
statements referred to in Section 1(a)(iv) above in respect of all federal,
state, local and foreign taxes for all periods as to which the tax
liability of the Company or any of the Guarantors has not been finally
determined or remains open to examination by applicable taxing authorities.
Each of the Company and each Guarantor has filed all other tax returns that
are required to have been filed by it pursuant to applicable foreign,
state, local or other law except insofar as the failure to file such
returns would not result in a Material Adverse Effect, and has paid all
taxes due pursuant to such returns or pursuant to any assessment
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received by the Company or any Guarantor, except for such taxes, if any, as
are being contested in good faith and as to which adequate reserves have
been provided. The charges, accruals and reserves on the books of the
Company and the Guarantors in respect of any income and corporation tax
liability for any years not finally determined are adequate to meet any
assessments or reassessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
result in a Material Adverse Effect. The Company's election to be taxed as
an S Corporation under the Internal Revenue Code of 1986, as amended, is
valid and in effect and has been valid and in effect at all times since its
date of incorporation or formation and is not affected by the
Reorganization. Each Guarantors' election to be taxed as a Qualified
Subchapter S Corporation is valid and in effect and is not affected by the
Reorganization.
(xxvii) Environmental Laws. Except for such matters as are disclosed
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in the Offering Memorandum or where the failure of the following would not
result, singly or in the aggregate, in a Material Adverse Effect, (A)
neither the Company nor any Guarantor is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and the Guarantors have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any Guarantor and
(D) there are no events or circumstances that might reasonably be expected
to form the basis of an order for cleanup or remediation, or an action,
suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or any Guarantor relating to Hazardous
Materials or Environmental Laws.
(xxviii) Investment Company Act. Neither the Company nor any
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Guarantor is, and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described
in the Offering Memorandum, neither the Company nor any Guarantor will be,
an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended (the "1940 Act").
11
(xxix) Rule 144A Eligibility. Assuming the accuracy of the Initial
---------------------
Purchaser's covenant in Section 6(a)(i), the Securities are eligible for
resale pursuant to Rule 144A and will not be, at the Closing Time, of the
same class as securities listed on a national securities exchange
registered under Section 6 of the 1934 Act, or quoted on a U.S. automated
interdealer quotation system.
(xxx) No General Solicitation. None of the Company, its
-----------------------
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act or has
offered or will offer prior to the Closing Time (as defined in Section 2(b)
hereof) the Securities in any manner involving a public offering within the
meaning of Section 4(2) of the 1933 Act.
(xxxi) No Registration Required. Subject to compliance by the
------------------------
Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities
to the Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
(xxxii) No Directed Selling Efforts. With respect to those
---------------------------
Securities sold in reliance on Regulation S, (A) none of the Company, its
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (B) each of the Company and its Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers, as
to whom the Company makes no representation) has complied and will comply
with the offering restrictions requirement of Regulation S.
(xxxiii) Indiana Gaming Commission. (i) Empress Hammond has
-------------------------
received a riverboat owner's license (the "Indiana License") from the
Indiana Gaming Commission to operate the Hammond Facility; (ii) the Indiana
License is in full force and effect; (iii) Empress Hammond is in compliance
with the Indiana License and with the rules and regulations of the Indiana
Gaming Commission relating thereto; (iv) neither the Company nor Empress
Hammond has received any notice of proceedings relating to the revocation
or modification of the Indiana License, has any reason to believe that the
Indiana Gaming Commission is considering modifying, limiting, conditioning,
suspending, revoking, or not renewing the Indiana License, or has any
reason to believe there is an existing basis for the Indiana Gaming
Commission to deny the renewal of the Indiana License; (v) each of the
Company and Empress Hammond has complied with all applicable requirements
of the Indiana Gaming Commission with respect to the issuance of the
Securities, the
12
Exchange Securities, the Private Exchange Securities and the Guarantees as
contemplated by the Operative Documents, the consummation of the
Reorganization and the Covenant Defeasance, the execution, delivery and
performance of each of the Operative Documents, the Fourth Supplemental
Indenture to the 1994 Indenture and the Credit Facility and the
consummation of the transactions contemplated by any of the foregoing and
neither the Company nor Empress Hammond has entered into any contract,
commitment or arrangement (nor will the Company of Empress Hammond enter
into any contract, commitment or arrangement in connection with the
transactions described in the Offering Memorandum) that requires approval
by the Indiana Gaming Commission, which approval has not been obtained;
(vi) each of applicable the persons listed under the caption Management in
the Offering Memorandum (except as disclosed in the Offering Memorandum)
has all Governmental Approvals necessary with respect to being employed in
gaming operations in the State of Indiana and holding the positions
described under such caption and (vii) no holder or beneficial owner of the
Securities, the Exchange Securities or the Private Exchange Securities must
be licensed, qualified or found suitable under Indiana gaming laws solely
by virtue of holding or beneficially owning any principal amount of the
Securities, the Exchange Securities or the Private Exchange Securities.
(xxxiv) Illinois Gaming Board. (i) Empress Joliet has received a
---------------------
riverboat owner's license (the "Illinois License") from the Illinois Gaming
Board to operate the Joliet Facility; (ii) the Illinois License is in full
force and effect; (iii) Empress Joliet is in compliance with the Illinois
License and with the rules and regulations of the Illinois Gaming Board
relating thereto; (iv) neither the Company nor Empress Joliet has received
any notice of proceedings relating to the revocation or modification of the
Illinois License, has any reason to believe that the Illinois Gaming Board
is considering modifying, limiting, conditioning, suspending, revoking, or
not renewing the Illinois License, or has any reason to believe there is an
existing basis for the Illinois Gaming Board to deny the renewal of the
Illinois License; (v) each of the Company and Empress Joliet has complied
with all applicable requirements of the Illinois Gaming Board with respect
to the issuance of the Securities, the Exchange Securities, the Private
Exchange Securities and the Guarantees as contemplated by the Operative
Documents, the consummation of the Reorganization and the Covenant
Defeasance, the execution, delivery and performance of each of the
Operative Documents, the Fourth Supplemental Indenture to the 1994
Indenture and the consummation of the transactions contemplated by any of
the foregoing and neither the Company nor Empress Joliet has entered into
any contract, commitment or arrangement (nor will the Company of Empress
Joliet enter into any contract, commitment or arrangement in connection
with the transactions described in the Offering Memorandum) that requires
approval by the Illinois Gaming Board except for the Credit Facility, which
approval has not been obtained; (vi) each of the applicable persons listed
under the caption Management in the Offering Memorandum (except as
disclosed in the Offering Memorandum) has all Governmental Approvals
necessary with respect to being employed in gaming operations in the State
of Illinois and holding the positions described under such caption; and
(vii) no holder or beneficial owner of the
13
Securities, the Exchange Securities or the Private Exchange Securities must
be licensed, qualified or found suitable under Illinois gaming laws solely
by virtue of holding or beneficially owning any principal amount of the
Securities, the Exchange Securities or the Private Exchange Securities.
(xxxv) Internal Controls. Each of the Company and each Guarantor
-----------------
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorization and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxxvi) Insurance. Each of the Company and each Guarantor carries
---------
or is entitled to the benefits of insurance, with, to the Company's
knowledge, financially sound and reputable insurers, in such amounts and
covering such risks as the Company's management deems sufficient and all
such insurance is in full force and effect.
(xxxvii) Registration Rights. Except as described in the Offering
-------------------
Memorandum, there are no persons with registration rights or other similar
rights to have any securities registered by the Company or any Guarantor
under the 1933 Act.
(xxxviii) Solvency. Each of the Company and each Guarantor is, and
--------
immediately after the Closing Time will be, Solvent. As used herein, the
term "Solvent" means, with respect to the Company or any Guarantor, as the
case may be, on a particular date, that on such date (A) the fair market
value of the assets of the Company or the Guarantor, as the case may be, is
greater than the total amount of liabilities (including contingent
liabilities) of the Company or the Guarantor, as the case may be, (B) the
present fair salable value of the assets of the Company or the Guarantor,
as the case may be, is greater than the amount that will be required to pay
the probable liabilities of the Company or the Guarantor, as the case may
be, on its debts as they become absolute and matured, (C) the Company or
the Guarantor, as the case may be, is able to realize upon its assets and
pay its debts and other liabilities, including contingent obligations, as
they mature, and (D) the Company or the Guarantor, as the case may be, does
not have unreasonably small capital.
(xxxix) Events of Default. No event of default exists under any
-----------------
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument constituting Senior Indebtedness (as defined in the
Indenture).
(xl) Certain Relationships. Except for those described in the
---------------------
Offering Memorandum, no relationship, direct or indirect, exists between or
among any of the
14
Company, any Guarantor or any affiliate of the Company or any Guarantor, on
the one hand, and any director, officer, stockholder, customer or supplier
of any of them, on the other hand, which would be required to be described
in a registration statement on Form S-1 under the 1933 Act.
(xli) Offering Materials. Neither the Company nor any Guarantor
------------------
has distributed and, prior to the later to occur of (i) the Closing Time
and (ii) completion of the distribution of the Securities, will not
distribute any offering material in connection with the offering and sale
of the Securities other than any preliminary offering memorandum, the
Offering Memorandum or other materials, if any, approved by the
Representatives.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any Guarantor delivered to the Representatives or to counsel for the
Initial Purchasers shall be deemed a representation and warranty by the Company
to each Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
------------------------------------------------
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Initial Purchaser, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Initial Purchaser,
plus any additional principal amount of Securities which such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of D'Ancona
& Pflaum, 30 North LaSalle Street, Suite 2900, Chicago, Illinois 60602, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 10:00 A.M. on or before the fifth business day after the date hereof (unless
postponed in accordance with the provisions of Section 11), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
Payment shall be made to, or for the benefit of, the Company by wire
transfer of immediately available funds to a bank account designated by the
Company, against delivery to the Representatives for the respective accounts of
the Initial Purchasers of the Securities to be purchased by them. It is
understood that each Initial Purchaser has authorized the Representatives, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Securities which it has agreed to purchase. Merrill
Lynch, individually and not as representative of the Initial Purchasers, may
(but shall not be obligated to) make payment of the purchase price for the
Securities to be purchased by any Initial Purchaser whose funds have not been
received by the Closing Time, but such payment shall not relieve such
15
Initial Purchaser from its obligations hereunder. The certificates representing
the Securities shall be registered in the name of Cede & Co. pursuant to the DTC
Agreement and shall be made available for examination and packaging by the
Initial Purchasers in The City of New York not later than 10:00 A.M. on the last
business day prior to the Closing Time.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a "qualified institutional buyer" within the meaning of Rule 144A under the 1933
Act (a "Qualified Institutional Buyer") and an "accredited investor" within the
meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor").
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the earnings, business affairs or business prospects of the Company
and the Guarantors taken as one entity which (i) make any statement in the
Offering Memorandum false or misleading or (ii) are not disclosed in the
Offering Memorandum. In such event or if during such time any event shall occur
as a result of which it is necessary, in the reasonable opinion of the Company,
its counsel, the Initial Purchasers or counsel for the Initial Purchasers, to
amend or supplement the Final Offering Memorandum in order that the Final
Offering Memorandum not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Final Offering Memorandum by preparing and
furnishing to each Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Final Offering Memorandum (in form and
substance satisfactory in the reasonable opinion of counsel for the Initial
Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering
16
Memorandum and will not effect such amendment or supplement without the prior
written consent of the Initial Purchasers. Neither the consent of the Initial
Purchasers, nor the Initial Purchaser's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect as long as required for the sale of the Securities;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. The Company will notify the Initial
Purchasers promptly of (i) the receipt of any comments from any state securities
commission or any other regulatory authority that relate to the Preliminary
Offering Memorandum or the Offering Memorandum and (ii) the suspension of
qualification of the Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities commission
or any other regulatory authority. The Company shall use its best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of the Securities under any state securities or Blue Sky laws, and, if
at any time any state securities commission or any other regulatory authority
shall issue an order suspending the qualification or exemption of the Securities
under any state securities or Blue Sky laws, the Company shall use every
reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(e) Reports and Information to Initial Purchasers. The Company will, so
long as any of the Securities are outstanding, deliver to the Initial
Purchasers, without charge, a copy of each report or such other publicly
available information furnished to holders of the Securities, or filed with the
Commission, whether or not required by law or pursuant to the Indenture, and
such other publicly available information concerning the Company as the Initial
Purchasers may reasonably request, at the same time as such reports or other
information are furnished to such holders. The Company will furnish, for one
year from the date hereof, to the Initial Purchasers and the Trustee, within 45
days of the end of its first three fiscal quarters and within ninety days of the
end of its fourth fiscal quarter, a report meeting the requirements of Form 10-Q
(or, as to the fourth quarter, Form 10-K) under the Exchange Act.
(f) Rating of Securities. The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc. ("S&P"), Moody's Investors Service, Inc. ("Moody's") and Duff and Phelps
("Duff") to provide their respective credit ratings of the Securities.
(g) DTC. The Company will cooperate with the Representative(s) and use
its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities
17
of DTC and to be designated as "PORTAL Securities" in accordance with the rules
and regulations of the National Association of Securities Dealers, Inc.
("NASD").
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(i) Restriction on Sale of Securities. During a period of 120 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Merrill Lynch, directly or indirectly, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of, any
other debt securities of the Company or securities of the Company that are
convertible into, or exchangeable for, the Securities or such other debt
securities, except for the Exchange Securities, the Private Exchange Securities
and the Covenant Defeasance.
(j) Indiana and Illinois Gaming Boards. Each of the Company and the
Guarantors will use their best efforts to comply with the conditions contained
in the Indiana License and the Illinois License and to comply with the terms and
conditions of such licenses and the rules and regulations of the Illinois Gaming
Board and the Indiana Gaming Board.
(k) Management Approvals. The Company will use its best efforts from time
to time to obtain any required approvals by each of the Indiana Gaming
Commission and the Illinois Gaming Board for itself and for the persons listed
under the caption "Management" in the Offering Memorandum, to the extent
required.
(l) Consummation of Transactions. The Company will use its best efforts
to do and perform all things required to be done and performed under this
Agreement by it prior to or after the Closing Time and to satisfy all conditions
precedent to the delivery of the Securities, the Exchange Securities, the
Private Exchange Securities and the Guarantees.
(m) Redemption of 10 3/4% Notes. The Company will redeem all of the
outstanding 10 3/4% Notes on April 1, 1999.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document incorporated
therein by reference) and of each amendment or supplement thereto, (ii) the
preparation, printing and delivery to the Initial Purchasers of this Agreement,
the Indenture, the Registration Rights Agreement and such other documents as may
be required in connection with the offering, purchase, sale and delivery of the
Securities, the Exchange Securities and the Private Exchange Securities, (iii)
the preparation, issuance and delivery of the certificates for the Securities,
the Exchange Securities and the Private Exchange Securities to the Initial
Purchasers, including any charges of DTC in connection therewith; (iv) the fees
and
18
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith
(but all other fees and expenses of counsel for the Initial Purchasers shall be
borne by the Initial Purchasers) and in connection with the preparation of the
Blue Sky Survey, any supplement thereto, (vi) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, the Exchange Securities and
the Private Exchange Securities, (vii) any fees payable in connection with the
rating of the Securities, and (viii) any fees payable to the review by the NASD
in connection with the initial and continued designation of the Securities as
"PORTAL securities."
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of outside counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
---------------------------------------------
obligations of the Initial Purchasers hereunder are subject to the
representations and warranties of the Company and the Guarantors contained in
Section 1 hereof or in certificates of any officer of the Company or any of the
Guarantors delivered pursuant to the provisions hereof being true and correct,
to the performance by each of the Company and the Guarantors of its covenants
and other obligations hereunder, and to the following further conditions:
(a) Opinion of Counsel for Company. At the Closing Time, the
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of D'Ancona & Pflaum and Ice Miller Donadio & Ryan, each counsel
for the Company, in form and substance satisfactory to counsel for the Initial
Purchasers, together with signed or reproduced copies of such opinion for each
of the other Initial Purchasers, to the effect set forth in Exhibits A and B
hereto, respectively, and to such further effect as counsel to the Initial
Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of Mayer, Brown & Platt, counsel for the Initial Purchasers,
together with signed or reproduced copies of such letter for each of the other
Initial Purchasers with respect to the matters set forth in (i), (ii), (vi)
through (x), inclusive, and (xi) (solely as to due authorization) of Exhibit A
and the penultimate paragraph of Exhibit A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States,
upon the opinions of counsel satisfactory to the Representatives. Such counsel
may also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
19
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and the Guarantors considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the Chief Executive
Officer, President or a Vice President of the Company and of the chief financial
or chief accounting officer of the Company, dated as of the Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the Closing Time,
and (iii) each of the Company and each Guarantor has complied in all material
respects with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers containing statements and information of
the type ordinarily included in accountants' "comfort letters" to Initial
Purchasers with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Representatives
shall have received from Ernst & Young LLP a letter, in form and substance
satisfactory to the Representatives, dated as of the Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this Section, except that the specified date referred to shall
be a date not more than three business days prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities shall be
rated at least B1 by Moody's, B+ by S&P and BB by Duff, and the Company shall
have delivered to the Representatives a letter dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Representatives,
confirming that the Securities have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned to
the Securities or any of the Company's other securities by any nationally
recognized securities rating agency, and no such securities rating agency shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other securities.
(g) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(h) Indenture. The Company and the Trustee shall have entered into the
Indenture.
20
(i) Registration Rights Agreement. The Company and the Initial Purchasers
shall have entered into the Registration Rights Agreement.
(j) Tax Opinion of Counsel for Company. At the Closing Time, the Trustee
shall have received the favorable opinion, dated as of the Closing Time, of
D'Ancona & Pflaum, counsel for the Company, in form and substance satisfactory
to counsel for the Trustee that the holders of the 10 3/4% Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
the Covenant Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(k) Covenant Defeasance. At the Closing Time, the Company shall have (i)
irrevocably deposited with the Trustee, in trust, for the benefit of the holders
of the 10 3/4% Notes, U.S. legal tender or non-callable government securities
(or a combination thereof), in such amounts as are sufficient to pay the
principal of, premium and interest on the 10 3/4% Notes on the Redemption Date
and (ii) effected the Covenant Defeasance, and the Chief Financial Officer of
the Company shall have delivered to the Representatives a certificate to the
effect that such U.S. legal tender or non-callable government securities (or a
combination thereof) has been so deposited with the Trustee and that the
Covenant Defeasance has been effected in accordance with the terms of the 1994
Indenture.
(l) Closing of Credit Facility. At or prior to the Closing Time, the
Company shall have entered into the Credit Facility, which shall be in form and
substance satisfactory to the Representatives.
(m) Reorganization. At or prior to the Closing Time, the Company shall
have effected the Reorganization.
(n) Use of Proceeds. The Company shall have applied the net proceeds from
the Offering as described in the Offering Memorandum.
(o) Business Entity Application Form. At the Closing Time, the Company
shall have filed a Business Entity Application Form with respect to its
ownership of Empress Joliet with the Illinois Gaming Board.
(p) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Initial Purchasers.
21
(q) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7 and 8 shall survive any such termination and remain in
full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
-----------------------------------------------
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited Investors or
--------------------------------------------------------------
Qualified Institutional Buyers. Offers and sales of the Securities will be
------------------------------
made only by the Initial Purchasers or Affiliates thereof qualified to do
so in the jurisdictions in which such offers or sales are made. Each such
offer or sale shall only be made (A) in the case of Securities resold or
otherwise transferred pursuant to Rule 144A, to persons whom the offeror or
seller reasonably believes to be qualified institutional buyers (as defined
in Rule 144A under the Securities Act) or (B) to non-U.S. persons outside
the United States to whom the offeror or seller reasonably believes offers
and sales of the Securities may be made in reliance upon Regulation S under
the 1933 Act.
(ii) No General Solicitation. The Securities will be offered by
-----------------------
approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or general advertising (within the meaning of Rule
502(c) under the 1933 Act) will be used in the United States in connection
with the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
---------------------------------
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such purchaser
pursuant to clause (i) above, each third party shall, in the judgment of
the applicable Initial Purchaser, be a Qualified Institutional Buyer or a
non-U.S. person outside the United States.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
---------------------------------
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company, (2)
outside the United States in accordance with Rule 904 of Regulation S, or
(3) inside the United States (x) in accordance with Rule 144A to a person
whom the seller reasonably believes is a
22
Qualified Institutional Buyer that is purchasing such Securities for its
own account or for the account of a Qualified Institutional Buyer to whom
notice is given that the offer, sale or transfer is being made in reliance
on Rule 144A, (y) pursuant to an effective registration statement under the
1933 Act or (z) in accordance with the exemption from registration under
the 1933 Act provided by Rule 144, if available.
(v) Restrictions on Transfer. The transfer restrictions and the
------------------------
other provisions set forth in Section 2.03 of the Indenture, including the
legend required thereby, shall apply to the Securities except as otherwise
agreed by the Company and the Initial Purchasers. Following the sale of the
Securities by the Initial Purchasers to Subsequent Purchasers pursuant to
the terms hereof, the Initial Purchasers shall not be liable or responsible
to the Company for any losses, damages or liabilities suffered or incurred
by the Company, including any losses, damages or liabilities under the 1933
Act, arising from or relating to any resale or transfer of any Security by
such Subsequent Purchaser or any purchaser thereafter.
(vi) Delivery of Offering Memorandum. Each Initial Purchaser will
-------------------------------
deliver to each purchaser of the Securities from such Initial Purchaser, in
connection with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Due Diligence. In connection with the original distribution of
-------------
the Securities, the Company agrees that, prior to any offer or resale of
the Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right to make reasonable
inquiries into the business of the Company and the Guarantors. The Company
also agrees to provide answers to each prospective Subsequent Purchaser of
Securities who so requests concerning the Company and the Guarantors (to
the extent that such information is available or can be acquired and made
available to prospective Subsequent Purchasers without unreasonable effort
or expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the
Securities, as provided in the Offering Memorandum.
(ii) Integration. The Company agrees that it will not and will
-----------
cause its Affiliates not to make any offer or sale of securities of the
Company of any class if, as a result of the doctrine of "integration"
referred to in Rule 502 under the 1933 Act, such offer or sale would render
invalid (for the purpose of (i) the sale of the Securities by the Company
to the Initial Purchasers, (ii) the resale of the Securities by the Initial
Purchasers to Subsequent Purchasers or (iii) the resale of the Securities
by such Subsequent Purchasers to others) the exemption from the
registration requirements of the
23
1933 Act provided by Section 4(2) thereof, by Rule 144A or by Regulation S
thereunder or otherwise.
(ii) Rule 144A Information. The Company agrees that, in order to
---------------------
render the Securities eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Securities, including the Exchange Securities
and Private Exchange Securities, remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act (such information, whether made
available to holders or prospective purchasers or furnished to the
Commission, is herein referred to as "Additional Information").
(iv) Restriction on Repurchases. Until the expiration of two years
--------------------------
after the original issuance of the Securities, the Company will not, and
will cause its Affiliates not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as such
term is defined under Rule 144(a)(3) under the 1933 Act), whether as
beneficial owner or otherwise (except as agent acting as a securities
broker on behalf of and for the account of customers in the ordinary course
of business in unsolicited broker's transactions) unless, immediately upon
any such purchase, the Company or any Affiliate shall submit such
Securities to the Trustee for cancellation.
(v) Legends. The Company will cause each Security to bear the
-------
following legend until such legend shall no longer be necessary or
advisable because the Securities are no longer subject to the restrictions
on transfer described therein:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN
AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR
24
904 OF REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO
(X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF
TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR
ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS
SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE,
IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE
RESTRICTION TERMINATION DATE"), AGREES NOT TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO ISSUER OR
ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) INSIDE
THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
(E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904
OF REGULATION S OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND;
25
PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE TRANSFER
AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER,
SALE OR OTHER TRANSFER, PURSUANT TO CLAUSES (D), (E) OR (F)
ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO THE
COMPANY, THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
(c) Resale Pursuant to Rule 903 of Regulation S or Rule 144A. Each
Initial Purchaser understands that the Securities have not been and will not be
registered under the 1933 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 1933 Act or pursuant to an exemption from
the registration requirements of the 1933 Act. Each Initial Purchaser
represents and agrees, that, except as permitted by Section 6(b) above, it has
offered and sold Securities and will offer and sell Securities (i) as part of
their distribution at any time and (ii) otherwise until forty days after the
later of the date upon which the offering of the Securities commences and the
Closing Time, only in accordance with Rule 903 of Regulation S or Rule 144A
under the 1933 Act. Accordingly, neither the Initial Purchasers, their
affiliates nor any persons acting on their behalf have engaged or will engage in
any directed selling efforts with respect to Securities, and the Initial
Purchasers, their affiliates and any person acting on their behalf have complied
and will comply with the offering restriction requirements of Regulation S.
Each Initial Purchaser agrees that, at or prior to confirmation of a sale of
Securities (other than a sale of Securities pursuant to Rule 144A), it will have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases Securities from it or through it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the United
States 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 and (ii)
otherwise until forty days after the later of the date upon which the
offering of the Securities commenced and the date of closing, except in
either case in accordance with Regulation S or Rule 144A under the
Securities Act. Terms used above have the meaning given to them by
Regulation S."
26
Terms used in the above paragraph have the meanings given to them by Regulation
S.
Each Initial Purchaser severally represents and agrees that it has not
entered and will not enter into any contractual arrangements with respect to the
distribution of the Securities, except with its affiliates or with the prior
written consent of the Company.
SECTION 7. Indemnification.
---------------
(a) Indemnification of Initial Purchasers. The Company agrees and each
Guarantor agrees, jointly and severally, to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum (or any amendment thereto).
(b) Indemnification of Company, Directors and Officers. Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, each
Guarantor and their respective directors, and each person, if any, who controls
the Company or a Guarantor within
27
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Offering Memorandum in reliance upon and in conformity
with written information furnished to the Company by such Initial Purchaser
through Merrill Lynch expressly for use in the Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
--------
however, that counsel to the indemnifying party shall not (except with the
- -------
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. Neither party shall, without the
prior written consent of the other parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 7 or Section 8 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
28
SECTION 8. Contribution. If the indemnification provided for in Section
------------
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses with respect to which such indemnified party would be entitled to
indemnification by the express terms of Section 7, referred to therein, then
each indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Initial Purchasers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, 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 pursuant
to this Agreement were offered pursuant to this Agreement exceeds the amount of
any damages which such Initial Purchaser has otherwise been
29
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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company or a Guarantor and each person, if
any, who controls the Company or a Guarantor within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or the Guarantor. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
-------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and the Guarantors considered as one enterprise, whether or not arising
in the ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ National Market System has been suspended or limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal, New York, Illinois or Indiana authorities.
30
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7 and 8 shall survive such termination and remain in full force and effect.
SECTION 11. Default By One or More of The Initial Purchasers. If one
------------------------------------------------
or more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, but not the
obligation, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Initial Purchasers, or any other Initial Purchasers, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting Initial
Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangement.
SECTION 12. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Christopher
Turner; notices to the Company shall be directed to it at 2300 Empress Drive,
Joliet, IL 60436, attention of Peter A. Ferro, Jr.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon the Initial Purchasers, the Company and the Guarantors and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Initial Purchasers, the Company and the Guarantors and their respective
successors and the controlling persons and officers and directors referred to in
Sections 7 and 8 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Initial
Purchasers, the Company and the Guarantors and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from any Initial Purchaser shall be deemed to be a
successor by reason merely of such purchase.
31
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
32
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Initial Purchasers, the Company and the Guarantors in accordance with its
terms.
Very truly yours,
EMPRESS ENTERTAINMENT, INC.
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
EMPRESS CASINO HAMMOND
CORPORATION
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
HAMMOND RESIDENTIAL, LLC
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
EMPRESS CASINO JOLIET
CORPORATION
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
EMPRESS RIVER CASINO
FINANCE CORPORATION
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: PRESIDENT
S-1
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WASSERSTEIN PERELLA SECURITIES, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Christopher Y. Terrel
-------------------------------
Authorized Signatory
For themselves and as Representatives of the other Initial Purchasers named in
Schedule A hereto.
S-2
SCHEDULE A
Principal
Amount of
Name of Initial Purchaser Securities
------------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . $75,000,000
Wasserstein Perella Securities, Inc. . . . . . . . . . . . . . . .
$75,000,000
------------
Total . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . $150,000,000
============
Sch A - 1
SCHEDULE B
Empress Entertainment, Inc.
$150,000,000 Senior Subordinated Notes Due 2006
1. The initial public offering price of the Securities shall be 100% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.625% of the principal amount thereof.
3. Merrill Lynch shall also receive an advisory fee of $356,250 to be
paid by the Company out of the proceeds of the offering.
4. The interest rate on the Securities shall be 8 1/8% per annum.
5. The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after July 1, 2002, at the following
redemption prices (expressed as percentages of the principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the date of
redemption, if redeemed during the 12-month period commencing July 1 of the
years indicated below:
Year Percentage
---- ----------
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.063%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.708%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.354%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
5. On or prior to July 1, 2001, the Company may, at its option, use the
net proceeds of an Equity Offering (as defined in the Indenture) to redeem up to
35% of the originally issued aggregate principal amount of the Securities, at a
redemption price in cash equal to 108 1/8% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of redemption;
provided, however, that not less than $97.5 million in aggregate principal
amount of Securities is outstanding following such redemption. Notice of any
such redemption must be given not later than 60 days after the consummation of
the related Equity Offering.
6. The Securities will be redeemable, in whole or in part, at any
time, at 100% of the principal amount thereof, plus accrued and unpaid interest
to the redemption date, (i) pursuant to, and in accordance with, any order of
any Governmental Authority (as defined in the Indenture) with appropriate
jurisdiction and authority relating to a Gaming License (as defined in the
Indenture) (a "Gaming Authority"), or (ii) to the extent necessary in the
reasonable, good faith judgment of the Board of Directors of the Company to
prevent the loss, failure to obtain or material impairment or to secure the
reinstatement of, any Gaming License, which if lost, impaired or not obtained or
reinstated would reasonably be expected to have a material adverse effect on the
Company and its Restricted Subsidiaries (as defined in the Indenture),
considered as a whole, or would restrict the ability of the Company or any of
its Restricted Subsidiaries to conduct business in any Gaming Jurisdiction (as
defined in the Indenture), in the case of each of (i) and (ii) where such
redemption or acquisition is required because the Holder or beneficial owner of
such Note is required to be found suitable, or otherwise qualify, under any
Gaming Laws and is not found suitable or so qualified.
EXHIBIT A
Legal Opinion of D'Ancona & Pflaum
Based upon the foregoing and subject to the further qualifications and
limitations hereafter expressed, we are of the opinion that:
1. Each of the Company, Empress Joliet, Empress Hammond and Finance is validly
existing as a corporation and in good standing under the laws of the state of
its incorporation. Hammond Residential has been duly organized and is validly
existing as a limited liability company in good standing under the laws of the
State of Indiana.
2. Each of the Company, Empress Joliet, Empress Hammond, Finance and Hammond
Residential has the requisite power and authority to enter into and perform its
obligations under the Operative Documents, the Credit Facility and the Fourth
Supplemental Indenture to the 1994 Indenture to the extent each is a party
thereto and to consummate the Reorganization and the Covenant Defeasance to
the extent each is a party thereto.
3. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in the States of Illinois and Indiana, and
Finance is duly qualified as a foreign corporation to transact business and is
in good standing in the State of Illinois. To our knowledge, Empress Hammond and
Empress Joliet are not qualified to do business in any foreign jurisdiction.
4. Based solely upon our review of the Company's corporate minute book and
stock ledger, all of the issued and outstanding capital stock of the Company has
been duly authorized and validly issued, and to our knowledge, are fully paid
and nonassessable, and to our knowledge, none of the outstanding shares of
capital stock of the Company were issued in violation of the preemptive or other
rights of any security holder of the Company.
5. To our knowledge, (a) all of the issued and outstanding capital stock of
each of Empress Joliet, Empress Hammond and Finance has been duly authorized and
validly issued, (b) is fully paid and non-assessable, and (c) based solely upon
our review of the organizational documents, corporate minute book and stock
ledger of each of Empress Joliet, Empress Hammond and Finance, is owned by the
Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity other than (i) liens under the Credit Facility;
(ii) restrictions contained in the Company's Amended and Restated Stockholders'
Agreement; and (iii) applicable restrictions of Gaming Authorities. Based solely
on our review of the organizational documents of Hammond Residential, Hammond
Residential is wholly owned by Empress Hammond.
6. The Purchase Agreement has been duly authorized, executed and delivered
by each of the Company and the Guarantors.
7. The Credit Facility has been duly authorized by each of the Company,
Empress Hammond and Empress Joliet and has been executed and delivered by each
of the Company, Empress Hammond and Empress Joliet and (assuming the due
authorization, execution and delivery thereof by the Banks) constitutes a valid
and binding agreement of each of the Company, Empress Hammond and Empress
Joliet, enforceable against each of them in accordance with its terms, subject,
as to Empress Joliet, to the approval of the Illinois Gaming Board.
8. The Indenture has been duly authorized, executed and delivered by the
Company and each of the Guarantors and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes a valid and binding
agreement of the Company and each of the Guarantors, enforceable against each of
them in accordance with its terms.
9. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and each Guarantor and (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers) constitutes a valid
and binding agreement of the Company and each Guarantor, enforceable against
the Company and each Guarantor in accordance with its terms.
10. The Reorganization has been duly authorized by the Company and each
Guarantor to the extent each is a party thereto, and has been duly effected in
the manner described in the Offering Memorandum.
11. The Covenant Defeasance has been duly authorized by Empress Finance, the
Company and each other Guarantor to the extent each is a party thereto. The
Covenant Defeasance has been duly effected in compliance with the terms of the
1994 Indenture as described in the Offering Memorandum.
12. The Fourth Supplemental Indenture to the 1994 Indenture has been duly
authorized, executed and delivered by the Company and each of the Guarantors and
constitutes a valid and binding agreement of the Company and each of the
Guarantors enforceable against the Company and each of the Guarantors in
accordance with its terms.
13. The Securities are in the form contemplated by the Indenture, have been
duly authorized by the Company, and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and delivered against payment of the purchase price therefor, will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, and the holders thereof will be entitled to the
benefits of the Indenture.
14. The Guarantees are in the form contemplated by the Indenture, have been
duly authorized by each of the Guarantors, and, when executed by each of the
Guarantors and authenticated by the Trustee in the manner provided in the
Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee), will constitute valid and binding obligations of
each of the Guarantors, enforceable against each of the Guarantors in accordance
with their terms, and the holders thereof will be entitled to the benefits of
the Indenture.
15. The Exchange Securities and the Private Exchange Securities have been duly
authorized by the Company and, when executed by the Company and authenticated in
the manner provided for in the Indenture and delivered in exchange for the
Securities in accordance with the terms of the Registration Rights Agreement,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, and the holders thereof will
be entitled to the benefits of the Indenture.
16. Empress Joliet has all requisite approvals from all Federal and state
governmental authorities (including, without limitation, the Illinois Gaming
Board, but excluding any blue sky qualifications and approvals and the filing of
a Form D with the Securities and Exchange Commission) (a) to offer and sell the
Securities and to enter into and perform its Guarantee, as contemplated in the
Offering Memorandum, (b) to execute, deliver and perform its obligations under
the Operative Documents and the Fourth Supplemental Indenture to the 1994
Indenture, to the extent it is a party thereto, and (c) to consummate the
Reorganization, the Covenant Defeasance and the transactions contemplated
thereby, to the extent it is a party thereto.
17. The Company has such permits, licenses, approvals, consents and other
authorizations from, and no filings are required that have not already been made
with, Federal and state governmental authorities (other than the filing of a
Form D with the Securities and Exchange Commission and blue sky qualifications
and approvals) as are necessary (a) to offer and sell the Securities as
contemplated in the Offering Memorandum, (b) to execute, deliver and perform its
obligations under the Operative Documents and the Fourth Supplemental Indenture
to the 1994 Indenture, to the extent it is a party thereto, (c) to consummate
the Reorganization, the Covenant Defeasance and the transactions contemplated
thereby and (d) to execute, deliver and perform the Credit Agreement.
18. To our knowledge, except for regulations adopted by the Illinois Gaming
Board which are applicable to all Illinois riverboat operators, the Illinois
Gaming Board has not issued any order or decree impairing, restricting or
prohibiting and has not otherwise impaired, restricted or prohibited (i) the
payment of dividends or distributions by Empress Joliet or any other Guarantor
or (ii) the commencement or continuation of the business of the Company or any
other Guarantor as presently or proposed to be conducted.
19. No holder or beneficial owner of the Securities, the Exchange Securities or
the Private Exchange Securities must be licensed, qualified or found suitable
under Illinois gaming laws solely by virtue of holding or beneficially owning
any principal amount of the Securities, the Exchange Securities or the Private
Exchange Securities.
20. To our knowledge, except as disclosed in the Offering Memorandum, there is
not pending or threatened any action, suit or proceeding to which the Company or
any Guarantor is a party, or to which the property of the Company or any
Guarantor is subject, before or brought by any court or governmental agency or
body, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the Covenant Defeasance, the transactions
contemplated in the Operative Documents or the performance by the Company or any
Guarantor of its obligations under any of the Operative Documents.
21. The information in the Offering Memorandum under "Description of the
Notes", "Plan of Distribution", "Illinois Regulatory Matters" and "Description
of Certain Other Indebtedness" to the extent that it constitutes matters of law,
summarises of legal matters, the Company's or any Guarantor's charter or bylaws
or legal proceedings, or legal conclusions, has been reviewed by us and is
correct in all material respects.
22. To our knowledge, neither the Company nor any Guarantor is in violation of
its charter or bylaws and no default by the Company or any of the Guarantors
exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument that is described
or referred to in the Offering Memorandum.
23. Based upon the representations of the Initial Purchasers contained in the
Purchase Agreement, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers in the manner contemplated
by the Purchase Agreement and the Offering Memorandum to register any of the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act.
24. The execution, delivery and performance of each of the Operative Documents,
the Credit Facility and the Fourth Supplemental Indenture to the 1994 Indenture
by the Company and each Guarantor and the consummation of the Reorganization,
the Covenant Defeasance or of the transactions contemplated in the Operative
Documents or the Credit Facility and compliance by the Company and each
Guarantor with its obligations under the Operative Documents, the Credit
Facility and the Fourth Supplemental Indenture to the 1994 Indenture does not,
whether with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(iii) of the Purchase Agreement) under any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any Guarantor is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any Guarantor is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect and except as contemplated in connection with the
Refinancing), nor does such action result in any violation of the provisins of
the charter or by-laws of the Company or any Guarantor, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Guarantor or any of their respective
properties, assets or operations (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect).
25. Neither the Company nor any Guarantor is an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
1940 Act.
26. Nothing has come to our attention that would lead us to believe that the
Offering Memorandum (except for financial statements and schedules and other
financial data included or incorporated by reference therein as to which we
render no opinion), contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Offering Memorandum or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included or incorporated by reference therein, as to
which we render no opinion), at the time the Offering Memorandum was issued, at
the time any such amended or supplemented Offering Memorandum was issued or at
the Closing Time, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
EXHIBIT B
Legal Opinion of Ice Miller Donadio & Ryan
See the attached.
[LETTERHEAD OF ICE MILLER DONADIO & RYAN APPEARS HERE]
June 18, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith, Incorporated
Wasserstein Perella Securities , Inc.
as Representatives of the several Initial Purchasers
c/o merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner, & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have acted as special Indiana regulatory for empress Entertainment, Inc.
("Company") and Empress Casino Hammond Corporation ("Empress Hammond") in
connection with the issuance and sale by the Company of $150,000,000 aggregate
principal amount of Senior Subordinated Notes due 2006 ("Original Notes"), to be
issued under an Indenture, dated as of June 18,1998, by and among the
Company, as Issuer, and Empress Hammond as one of Subsidiary Guarantors,
the other Subsidiary Guarantors, and U.S. Bank Trust, National Association as
Trustee ("Indenture"). The Company and you have advice us that you will purchase
the Securities, and thereafter the Company will register Exchange Securities and
you will thereafter resell Private Exchange Securities (Notes"). This option is
delivered to you pursuant to Section 5(a) of the Purchase Agreement by and among
you, for yourselves and as Representative of the other Initial Purchasers, the
Company, Empress Hammond and the other subsidiary Guarantors, dated June 11,1998
("Purchase Agreement"). Unless specifically otherwise defined herein, terms
define in the Purchase Agreement shall have the same meaning herein.
In connection with this option, we have examined copies of the following
documents;
(i) the Purchase Agreement;
(ii) the Indenture;
(iii) the Registration Rights Agreement.
Merrill Lynch & Co.
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June 18, 1998
(iv) the Preliminary Offering Memorandum dated June 1, 1998, and a Final
Offering 'memorandum dated June 17, 1998 ("Offering Memorandum"); and
(v) Resolution 1998-16, which was approved by the Indiana Gaming
Commission on May 6, 1998.
The Indenture, the Purchase Agreement, and the Registration Rights
Agreement are hereinafter referred to as Transaction Documents.
ASSUMPTIONS
-----------
In rendering our opinion, we have assumed, with your permission, without
investigation or verification of any kind:
(a) the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such copies;
(b) each party to the Transaction Documents has been duly organized and is
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization;
(c) each party to the Transaction Documents has full internal corporate
power and authority to enter into, execute, deliver, receive and perform its
obligations under each of the Transaction Documents; the entry into, execution,
delivery, receipt, and performance thereof by such parties have been duly
authorized by all requisite action on the part of such parties; and each of the
Transaction Documents has been duly entered into, executed, received and
delivered by such parties; and
(d) each of the Transaction Documents is enforceable against each party
thereto.
OPINIONS
--------
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that
1. Each of the Company and Empress Hammond has such permits
licenses, approvals, consents and other authorizations from
the Indiana Gaming Commission as are necessary to (a) offer
and sell the Securities, the Exchange Securities, the
Private Exchange Securities and the Guarantees, as
Merrill Lynch & Co.
Page 3
June 18, 1998
contemplated in the Offering Memorandum, and (b) execute,
deliver and perform their respective obligations under the
Operative Documents, the Credit Facility and the Fourth
Supplemental Indenture to the 1994 Indenture, and no other
permits, licenses, approvals or other authorizations of the
State of Indiana or any agencies thereof (other than those
that may be required under the Blue Sky laws or Blue Sky
regulations of the State of Indiana) are required for the
Company and Empress Hammond to offer and sell the Notes.
2. No holder or beneficial owner of the Notes must be licensed,
qualified or found suitable under Indiana Gaming Laws solely
by virtue of holding or beneficially owning any principal
amount of the Securities, the Exchange Securities or the
Private Exchange Securities. The term "Indiana Gaming Laws"
means the Riverboat Gambling Act in Article 33 of the Title
4 of the Indiana Code and rules of the Indiana Gaming
Commission.
3. The Indiana Gaming Commission has not issued any order or
decree, other than rules applicable to all riverboat owner
licensees, impairing, restricting or prohibiting and, to
such counsel's knowledge, has not issued an order or decree
applicable solely to Empress Hammond or the Company that
would otherwise impair, restrict or prohibit (i) the payment
of dividends or distributions by Empress Hammond or the
Company or (ii) the commencement or continuation of the
business of the Company or Empress Hammond as presently or
proposed to be conducted.
4. The information in the Offering Memorandum under "Regulatory
Matters--Indiana" insofar as such statements purport to
summarize certain provisions of laws and regulations of the
State of Indiana, fairly summarize the matters therein
described.
LIMITATIONS, QUALIFICATIONS AND EXCEPTIONS
------------------------------------------
The opinions expressed herein are subject to, qualified and limited by, and
based on the following:
A. Notwithstanding anything herein to the contrary, the exercise of
certain remedies by the Company or Empress Hammond or the holder of a Note(s),
other than the judicial remedy of foreclosure under the Transaction Documents
that constitute real estate and fixtures (other than fixtures that may be
considered gaming equipment) and which is not operated after foreclosure and
title transfer thereof as a gaming operation, is subject to the prior compliance
with any and all
Merrill Lynch & Co.
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June 18, 1998
applicable application, licensing, approval and other requirements of the State
of Indiana including, without limitation, receipt of all consents, approvals and
authorizations which are required from the IGC.
B. The qualification "to our knowledge" means that during the course of
our representation in connection with the transactions contemplated by the
Transaction Documents no information has come to the attention of the attorneys
who participated in the representation which would give us actual knowledge of
such facts. However, except to the extent otherwise described herein, we have
not undertaken any independent review or investigation to determine the
existence or absence of such facts or circumstances which you have advised us
that we are entitled to rely upon, and no inference as to the existence or
absence of such facts or circumstances should be drawn from our representation.
C. Notwithstanding any statements contained elsewhere in this letter, we
express no opinion and make no statements concerning or with respect to the
possible application of or compliance by the Company or Empress Hammond with
various building codes, zoning ordinances, building permit requirements,
environmental laws and other similar statutes, laws, ordinance, codes and
regulations affecting the development, construction, condition, use and/or
occupancy of the Property; provided, however, this paragraph C is not intended
to qualify or limit the opinion contained in paragraph 1.
D. The opinion expressed in paragraph 3 are limited and qualified by the
Indiana Gaming Commission rule at 68 IAC 15-3 which rule prohibits a riverboat
licensee, including Empress Hammond, from making distributions to its partners,
shareholders, itself, or any affiliate, if the distribution will impair the
financial viability of the riverboat gambling operation. This rule at 68 IAC 15-
3 does not prohibit distributions to partners or shareholders for the payment of
federal or state taxes, or both.
E. The opinions expressed in this letter speak as to the documents,
facts, and the law in existence as of the date hereof and at not time subsequent
hereto. We express no opinion as to the effect of prior or subsequent activities
of the parties to the Transaction Documents in or with respect to the State of
Indiana, other than those described herein.
The opinions expressed herein are matters of professional judgment and are
not a guarantee of result. We are qualified to practice law only in the State of
Indiana and do not express any opinion concerning any law other than the
internal laws of the State of Indiana. No expansion of our opinions may be made
by implication or otherwise. We express no opinions other than as herein
expressly set forth. We do not undertake to advise you of any matter within the
scope of this letter that comes to
Merrill Lynch & Co.
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June 18, 1998
our attention after the date of this letter and disclaim any responsibility to
advise you of any future changes in law or fact that may affect the opinions set
forth herein.
The opinions expressed in this letter are rendered to you in connection
with the transactions described above and may not be relied upon by you in any
other context or for any other purpose. The opinions expressed in this letter
may not be relied upon by any person other than the addressees without our prior
written consent. This letter may not be quoted in whole or in part nor may
copies thereof (other than transcript copies) be furnished or delivered to any
other person (other than your counsel) without our prior written consent.
Very truly yours,
/s/ ICE, Miller, Donadio and Ryan