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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from to
Commission file number 333-0214
HORSESHOE GAMING, L.L.C.
(Exact name of registrant as specified in its charter)
Delaware 88-0343515
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4024 Industrial Road
Las Vegas, Nevada 89103
(Address of principal executive offices)
Registrant's telephone number, including area code: (702) 650-0080
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
The aggregate market value of the equity of Horseshoe
Gaming, L.L.C. held by non-affiliates of Horseshoe Gaming, L.L.C.
is inapplicable as the equity of Horseshoe Gaming, L.L.C. is
privately held.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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HORSESHOE GAMING, L.L.C.
INDEX TO ANNUAL REPORT ON FORM 10-K
For the fiscal year ended December 31, 1997
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PART I
Item 1. Business................................................................................... 3
Item 2. Properties................................................................................. 10
Item 3. Legal Proceedings.......................................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders........................................ 11
PART II
Item 5. Market for Registrant's Common Equity and Related 11
Stockholder Matters........................................................................
Item 6. Selected Financial Data.................................................................... 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results 13
of Operations..............................................................................
Item 8. Financial Statements and Supplementary Data................................................ 17
Item 9. Changes In and Disagreements With Accountants on
Accounting and 17
Financial Disclosure.......................................................................
PART III
Item 10. Directors and Executive Officers of the Registrant......................................... 17
Item 11. Executive Compensation..................................................................... 19
Item 12. Security Ownership of Certain Beneficial Owners and 22
Management.................................................................................
Item 13. Certain Relationships and Related Transactions............................................. 23
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K................................................................................ 23
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PART I
ITEM 1. BUSINESS.
As used in this Annual Report on Form 10-K ("Form 10-K"), unless the
context indicates otherwise, the terms "Company" and "Horseshoe Gaming" refer to
Horseshoe Gaming, L.L.C., a Delaware limited liability company, and its
subsidiaries, including
predecessor companies.
GENERAL
Entities controlled by Mr. Jack B. Binion developed and opened the
Horseshoe Bossier City, which is owned by Horseshoe Entertainment, L.P. ("HE")
and developed and opened the Horseshoe Casino Center, which is owned by Robinson
Property Group L.P. ("RPG"). HE commenced operations on July 9, 1994 and RPG
commenced operations on February 13, 1995. Effective October 1, 1995 the
ownership interests in such entities were transferred to the Company by Mr.
Binion and certain related and unrelated parties in exchange for ownership
interests in the Company (the "Roll-up Transaction"). Mr. Binion, the largest
equity holder of Horseshoe Gaming, is also the majority shareholder, Chairman of
the Board of Directors and Chief Executive Officer of Horseshoe Gaming, Inc., a
Delaware corporation ("HGI"). See "Directors and Executive Officers of the
Registrant." HGI became the manager of the Company as of October 1, 1995 as a
result of the Roll-up Transaction; HGI is also a member of the Company. Pursuant
to the Company's Limited Liability Company Agreement, HGI has exclusive control
over the business of the Company (subject to specified exceptions), including
the power to acquire and sell property, execute documents, make all business
management decisions, and raise equity capital on behalf of the Company. The
Company pays no compensation to HGI, but reimburses HGI for all out-of-pocket
expenses, including employment expenses. As of March 1, 1998, HGI had 35
employees.
Management selected the Bossier City/Shreveport, Louisiana and Tunica,
Mississippi markets for entry into emerging gaming jurisdictions because of the
respective strengths of these markets and the ability to secure what Management
felt were the best sites within those markets.
The principal executive offices of the Company and of HGI are located
at 4024 Industrial Road, Las Vegas, Nevada 89103 and their telephone number is
(702) 650-0080.
THE HORSESHOE CASINO CENTER
Overview
The Horseshoe Casino Center opened February 13, 1995 in Tunica County,
Mississippi at Casino Center, a 70-acre three-casino complex.
Tunica, Mississippi Gaming Market
The Tunica County gaming market consists entirely of dockside casino
operations located on the Mississippi River or its tributaries. Tunica County
benefits from its proximity to several major population centers and to the
popularity of the Memphis region as a vacation destination that offers numerous
attractions, ample hotel and entertainment facilities and excellent
transportation access. Over 2.5 million people live within 90 miles and over
10.7 million people live within 200 miles of the Horseshoe Casino Center. Within
500 miles (eight hours by car or approximately one-hour flight time) the total
population base increases to approximately 54.9 million.
Memphis Area Economy/Tourism
According to the Memphis Convention and Visitors Bureau, more than 3.5
million people visited Memphis and its surrounding areas (Shelby County) in
1994. The non-gaming attractions include the National Civil Rights Museum,
Graceland, Sun Recording Studios, the Memphis Zoo, the Great American Pyramid,
the Beale Street Historic District, Mud Island, the Liberty Bowl, the Kroger St.
Jude Tennis Classic, the FedEx St. Jude Golf Classic and a selection of museums,
art galleries and botanical gardens. Seasonal events such as the Memphis in May
International Festival and the Mid-South Fair make Memphis and its surroundings
a popular vacation area.
Mississippi Gaming Environment
The State of Mississippi legalized casino gaming on the waters of the
Mississippi River and the Mississippi
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Gulf Coast region in June 1990. The Mississippi gaming laws were patterned after
the gaming laws in Nevada. While the Mississippi gaming regulations state that
the casinos must be located on the water, they need not cruise or have engines.
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Other aspects of the Mississippi gaming regulations include: the
relatively low gaming tax rate (8.8% at the State level and approximately 3.2%
plus an annual $82,000 fee at the local level), the ability to offer 24-hour a
day continuous gaming, the ability to offer all types of casino games (other
than bingo and race sports betting), no betting or loss limits, and no space or
size restrictions. Moreover, house credit may be extended to qualified patrons.
While there are no legislative limitations on the number of licenses in Tunica
County, competition is limited by the availability of legal and accessible sites
on the Mississippi River.
In November 1996, the Mississippi County closest to Memphis (DeSoto
County) voted against legal gaming to be conducted aboard vessels located
therein. Legislation passed in 1997 precludes DeSoto County from holding a
subsequent election on the issue until at least October 2004. If gaming were
approved in DeSoto County or in Arkansas or Tennessee, numerous additional sites
closer to Memphis would be available for gaming. Thus, while Tunica County is
currently the closest legalized gaming jurisdiction to the Memphis metropolitan
area, there is no assurance that this situation will not change in the future.
Competition
The Tunica market is presently comprised of nine casinos, two of which
opened in 1996. One of the casinos which opened in 1996 is the largest casino
resort in Tunica County, and located approximately one mile closer than the
Horseshoe Casino Center to Memphis, currently the largest feeder market into
Tunica County.
THE HORSESHOE BOSSIER CITY
Overview
The Horseshoe Bossier City opened on July 9, 1994. According to
statistics published by the Louisiana State Gaming Authorities, the Bossier
City/Shreveport market is the largest market in the State of Louisiana, as
measured by gaming revenues.
Bossier City/Shreveport, Louisiana Gaming Market
The primary appeal of the Bossier City/Shreveport gaming market is its
local population base and its proximity to major population centers in
Louisiana, Texas, Oklahoma and Arkansas. Approximately 350,000 people are
full-time residents of Bossier City/Shreveport. This population includes the
Barksdale Air Force Base which directly employs over 7,000 people. The broad
market for the Horseshoe Bossier City consists of approximately 16.5 million
people residing within 250 miles (approximately four hours driving distance).
The broad market consists of local clientele, day trippers and multi-day
visitors.
Approximately 26% of the Horseshoe Bossier City's customers have been
residents of Bossier City/Shreveport. The Horseshoe's next largest markets are
the Dallas/Ft. Worth and Longview/Marshall areas of Texas, which have accounted
for approximately 13% and 10% of the casino's customers, respectively. In
addition, the casino attracts day-trippers flying in from a short air distance.
Bossier City/Shreveport Area Economy/Tourism
According to the Shreveport-Bossier Convention & Tourist Bureau, there
were approximately 1.8 million overnight visitor/days and approximately 4.7
million day visitor/days in Bossier City/Shreveport in 1997, for a total of
approximately 6.5 million visitor/days for the year. Other amenities and tourist
attractions include Louisiana Downs Racetrack, the American Rose Center (North
America's largest rose garden), the Independence Bowl and the Eighth Air Force
Museum at Barksdale Air Force Base. With approximately 7,600 rooms at 52 area
hotels and motels, Bossier City/Shreveport hosts 250 conventions per year with
approximately 200,000 delegates. Over 30 annual festivals, approximately 400
restaurants and 11 golf courses provide entertainment for locals and visitors.
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Louisiana Gaming Environment
In 1991, the State of Louisiana legalized casino gaming on the water
and in one land location in New Orleans. The State has granted approval to 14 of
the 15 legislatively authorized licenses, five of which have been approved for
the northern region of the State in Bossier City/Shreveport. While the Louisiana
gaming regulations state that riverboat casinos must cruise, the Bossier
City/Shreveport casinos were granted a legislative exemption in June 1993 that
allows them to operate as dockside facilities.
Louisiana permits most types of casino games (other than bingo and
sports betting) and has neither betting nor loss limits. Moreover, house credit
may be extended to qualified patrons. The only significant limitation imposed by
such regulations restricts gaming space on riverboats to no more than 30,000
square feet. The State of Louisiana imposes a fee on gaming revenue at the rate
of 18.5%. The city of Bossier City also imposes a 3.2% tax on gaming revenue
plus an annual fee of $700,000.
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In addition, Legislation was passed in 1996 authorizing the Bossier
Police Jury, the governing body of Bossier Parish, to impose a $.50 boarding fee
with respect to all of the patrons entering riverboat gaming facilities in
Bossier Parish. The passage of such legislation resulted in litigation being
commenced between the Horseshoe Casino and the Isle of Capri Casino in Bossier
City and the Bossier Police Jury, as both Horseshoe and the Isle of Capri Casino
asserted that the Bossier Police Jury had previously contracted away their right
to impose such additional $.50 boarding fee. In January 1997, Horseshoe Casino
separately settled with the Bossier Police Jury, and such lawsuit was dismissed
as it relates to Horseshoe Casino (but not Isle of Capri Casino) and the Bossier
Police Jury. Such settlement resulted in Horseshoe agreeing to pay an additional
1% tax on its gross gaming revenues to Bossier Parish with a minimum annual
payment of $1,500,000, regardless of actual revenue. Under the terms of such
agreement, Horseshoe has the right to receive a credit against gross gaming tax
for the amount of increased property taxes assessed against its property in
Bossier Parish resulting from increased assessments attributable to its major
expansion project to be completed at the end of 1997. Such credit may be taken
up to a maximum of 80% of the tax on gaming revenues, and applies during the
entire ten-year term of the agreement.
In the 1997 Regular Session of the Louisiana Legislature, a law was
passed authorizing the operation of slot machines at three horse racing tracks
in Louisiana, including a racetrack situated in Bossier Parish. The legislation
limits slot machine space at each racetrack to 15,000 square feet. Within the
gaming space, however, there is no numerical limit on the number of slot
machines that can be permissibly installed. Before slot machines can be operated
at the racetrack facilities, passage of companion legislation is required to
establish the tax rate to be levied on slot machine revenue.
Competition
The Horseshoe Bossier City competes directly with Harrah's in
Shreveport and the Isle of Capri and Casino Magic in Bossier City. These four
riverboats together currently comprise the Bossier City/Shreveport market. The
Louisiana Gaming Control Board has recently granted preliminary approval to a
proposal by Hollywood Casinos, Sodak Gaming Corp. and New Orleans Paddlewheels
Company to relocate the license for the New Orleans Flamingo Hilton Casino,
which is now closed, to a new proposed facility to be located adjacent to
Harrah's in Shreveport. The Louisiana Gaming Control Board is accepting
proposals until May 19, 1998 for the remaining fifteenth license. This license,
once granted, may be located in the Bossier City/Shreveport market. While
Management expects that any new competition will affect the Horseshoe Bossier
City's revenues and operating income, Management also believes the expansion of
the Horseshoe Bossier City and the potential addition of two riverboat casinos
and slot machines at the racetrack in the Bossier City/Shreveport market will
increase the size and scope of the overall gaming market, mitigating the
potential adverse impact on future operating levels at the Horseshoe Bossier
City. The impact on operating margins from the overall increase in supply to
this market is uncertain. As only 15 Louisiana riverboats and one land-based
casino in New Orleans are presently authorized by law, potential competition in
Louisiana is presently limited. The Bossier City/Shreveport casinos capture the
Dallas/Ft. Worth market and share the Houston area market with four existing
riverboats in Lake Charles, a land-based casino owned by the Coushatta Indian
Tribe located near Lake Charles and two riverboats in Baton Rouge. If Texas or
Arkansas were to approve gaming, competition would increase and the value of the
Horseshoe Bossier City would be negatively affected.
Management believes that the Bossier City/Shreveport casinos have an
operational advantage over the other Louisiana riverboats because the Bossier
City/Shreveport riverboats do not have to cruise in three-hour increments. The
cruising exemption for the Bossier City/Shreveport market was included in the
Louisiana Gaming Statutes to account for the difficult navigational aspects of
the Red River. The Horseshoe Bossier City casino remains dockside, allowing
passengers to enter and exit as they please and enabling Management to conduct
24-hour a day continuous gaming operations.
COMPETITIVE STRATEGY
The Company's objective is to develop a high volume of traffic through
its casinos and to attract middle income gamblers, tourists and local clientele
as its principal customers. These customers can be divided into the following
market segments: local clientele, day trippers and multi-day visitors. The
Company's strategy consists of offering favorable gaming odds and high limits,
treating every customer as an important player, having a comfortable atmosphere
where players are recognized and treated well by Horseshoe personnel, and
providing high quality food and beverages at reasonable prices. Management
believes that this strategy can be replicated in other emerging jurisdictions
with the right sites and appropriate facility designs.
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While Management's marketing strategy primarily focuses on the middle
income customer, Management believes that the Horseshoe Casinos attract a
substantial number of high income customers with favorable odds and high limits,
and a substantial number of lower income customers with a wide variety of low
minimum table games and slot machines. The Company's competitive strategy also
involves locating the Company's casinos in the most favorable locations
available in favorable markets.
The Horseshoe Casino Center is located in Tunica County, Mississippi,
which is currently the closest legalized gaming jurisdiction to the Memphis
metropolitan area and the largest gaming market in the State of Mississippi. The
Casino Center area is situated off U.S. Highway 61, approximately 30 miles from
downtown Memphis, Tennessee and 25 miles from the Memphis International Airport.
Major highway access to the area is provided by Interstates 40 and 55, and US
Highways 51, 61, 64, 70, 72, 78 and 79. The Horseshoe Casino Center's site is
accessed via the Casino Center Drive turn-off from U.S. Highway 61, the main
artery from metropolitan Memphis. The Horseshoe Casino Center's 100-foot high
neon sign draws the attention of arriving customers to the casino. In addition
to the visual impact of the signage, the Horseshoe Casino Center occupies the
middle site of Casino Center. See " -- The Horseshoe Casino Center -- Tunica,
Mississippi Gaming Market," " -- The Horseshoe Casino Center -- Memphis Area
Economy/Tourism" and " -- The Horseshoe Casino Center -- Mississippi Gaming
Environment."
The Bossier City/Shreveport market is the largest market in the State
of Louisiana as measured by gaming revenues, according to statistics published
by the Louisiana State Gaming Authorities. Five federal highways and two
interstate highways lead to the Horseshoe Bossier City. Interstate 20, an
east-west traffic artery connecting Bossier City/Shreveport to Dallas/Fort
Worth, is heavily traveled by locals and extensively used by travelers. Bossier
City/Shreveport is the closest and most accessible gaming market to Dallas/Fort
Worth (approximately 180 miles or three hours drive time). The Horseshoe Bossier
City is directly accessible and visible from Interstate 20.
REGULATORY MATTERS
The Company is subject to state and Federal laws which regulate
businesses generally and the gaming business specifically. Below is a brief
description of some of the more significant regulations to which the Company is
subject. All laws are subject to change and different interpretations. This is
especially true with respect to current laws regulating the gaming industry,
since in many cases these laws and the regulatory agencies that apply them are
new. Changes in laws or their interpretation may result in the imposition of
more stringent, burdensome or expensive requirements, or the outright
prohibition of an activity.
Mississippi Gaming Regulation
The ownership and operation of casino gaming facilities in Mississippi
are subject to extensive state and local regulation primarily through the
licensing and regulatory control of the Mississippi Gaming Commission and the
Mississippi State Tax Commission. The Company must register and be licensed
under the Mississippi Gaming Control Act (the "Mississippi Act") and its gaming
operations are subject to the regulatory control of the Mississippi Gaming
Commission and various local, city and county regulatory agencies. The
Mississippi Act, which legalized dockside casino gaming in Mississippi, was
enacted on June 29, 1990. Although not identical, the Mississippi Act is similar
to the gaming laws of Nevada. Effective October 29, 1991, the Mississippi Gaming
Commission adopted regulations in furtherance of the Mississippi Act which are
also similar in many respects to the Nevada gaming regulations.
The laws, regulations and supervisory procedures of Mississippi and the
Mississippi Gaming Commission seek to: (i) prevent unsavory or unsuitable
persons from having any direct or indirect involvement with gaming at any time
or in any capacity; (ii) establish and maintain responsible accounting practices
and procedures; (iii) maintain effective control over the financial practices of
licensees, including establishing minimum procedures for internal fiscal affairs
and safeguarding of assets and revenues, providing reliable record keeping and
making periodic reports to the Mississippi Commission; (iv) prevent cheating and
fraudulent practices; (v) provide a source of state and local revenues through
taxation and licensing fees; and (vi) ensure that gaming licensees, to the
extent practicable, employ Mississippi residents. The regulations are subject to
amendment and interpretation by the Mississippi Gaming Commission.
The Mississippi Act provides for legalized dockside gaming at the
discretion of the 14 counties that either border the Gulf Coast or the
Mississippi River but only if the voters in such counties have not voted to
prohibit
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gaming in that county. As of December 31, 1997, dockside gaming was permissible
in nine of the 14 eligible counties in the State and gaming operations had
commenced in Adams, Coahoma, Hancock, Harrison, Tunica, Warren and Washington
counties. The law permits unlimited stakes gaming on permanently moored vessels
on a 24-hour basis and does not restrict the percentage of space which may be
utilized for gaming. There are no limitations on the number of gaming licenses
which may be issued in Mississippi. The legal age for gaming in Mississippi is
21.
Under Mississippi law, gaming vessels in Tunica county must be located
on the Mississippi River or on navigable waters. On May 29, 1993, the
Mississippi Gaming Commission granted site approval to the site. On October 13,
1994, the Horseshoe Casino Center received a gaming operator's license from the
Mississippi Gaming Commission. At the same meeting, certain key principals of
RPG were found suitable. Said license and findings of suitability were renewed
on September 17, 1996 and will be considered for renewal in September 1998.
The Company and RPG are required to submit detailed financial,
operating and other reports to the Mississippi Gaming Commission. Substantially
all loans, leases, sales of securities and similar financing transactions
entered into by the Company and RPG must be reported to or approved by the
Mississippi Gaming Commission. RPG is also required to periodically submit
detailed financial and operating reports to the Mississippi Gaming Commission
and to furnish any other information required thereby.
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Each of the directors, officers and key employees of the Company who
are actively and directly engaged in the administration or supervision of
gaming, or who have any other significant involvement with the activities of the
Company, and each of the officers and directors and certain employees of the
general partner of RPG, must be found suitable therefor, and may be required to
be licensed, by the Mississippi Gaming Commission. The finding of suitability is
comparable to licensing, and both require submission of detailed personal
financial information followed by a thorough investigation. In addition, any
individual who is found to have a material relationship to, or material
involvement with, the Company or RPG may be required to be investigated in order
to be found suitable or to be licensed as a business associate of the Company or
RPG. Key employees, controlling persons or others who exercise significant
influence upon the management or affairs of the Company or RPG may also be
deemed to have such a relationship or involvement. There can be no assurance
that such persons will be found suitable by the Mississippi Gaming Commission.
An application for licensing may be denied for any cause deemed reasonable by
the Mississippi Gaming Commission. Changes in licensed positions must be
reported to the Mississippi Gaming Commission. In addition to its authority to
deny an application for a license, the Mississippi Gaming Commission has
jurisdiction to disapprove a change in corporate position. If the Mississippi
Gaming Commission were to find a director, officer or key employee unsuitable
for licensing or unsuitable to continue having a relationship with the Company
or RPG, the Company or the general partner of RPG would have to suspend, dismiss
and sever all relationships with such person. The Company or RPG would have
similar obligations with regard to any person who refuses to file appropriate
applications. Each gaming employee must obtain a work permit which may be
revoked upon the occurrence of certain specified events.
Mississippi statutes and regulations give the Mississippi Gaming
Commission the discretion to require a suitability finding with respect to
anyone who acquires any security of the Company or RPG, regardless of the
percentage of ownership. The current policy of the Mississippi Gaming Commission
is to require anyone acquiring 5% or more of any voting securities of a public
company with a licensed subsidiary or private company licensee to be found
suitable. If the owner of voting securities who is required to be found suitable
is a corporation, partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
Any owner of voting securities found unsuitable and who holds, directly
or indirectly, any beneficial ownership of equity interests in the Company or
RPG beyond such period of time as may be prescribed by the Mississippi Gaming
Commission may be guilty of a misdemeanor. Any person who fails or refuses to
apply for a finding of suitability or a license within 30 days after being
ordered to do so by the Mississippi Gaming Commission may be found unsuitable.
The Company is subject to disciplinary action if, after it receives notice that
a person is unsuitable to be an owner of or to have any other relationship with
it, the Company or RPG (i) pays the unsuitable persons any dividends or interest
upon any of its securities or any payments or distribution of any kind
whatsoever, (ii) recognizes the exercise, directly or indirectly, of any voting
rights of its securities by the unsuitable person, or (iii) pays the unsuitable
person any remuneration in any form for services rendered or otherwise, except
in certain limited and specific circumstances. In addition, if the Mississippi
Gaming Commission finds any owner of voting securities unsuitable, such owner
must immediately surrender all securities to the Company or RPG, as applicable,
and the Company or RPG must purchase the security so offered for cash at fair
market value within 10 days.
The Company and RPG will be required to maintain current ownership
ledgers in the State of Mississippi which may be examined by the Mississippi
Gaming Commission at any time. If any securities are held in trust by an agent
or by a nominee, the record holder may be required to disclose the identity of
the beneficial owner to the Mississippi Gaming Commission. A failure to make
such disclosure may be grounds for finding the record holder unsuitable. The
Company and RPG also are required to render maximum assistance in determining
the identity of the beneficial owner. The Company may be required to disclose to
the Mississippi Gaming Commission, upon request, the identities of the holders
of the Senior Notes and the Senior Subordinated Notes. In addition, the
Mississippi Gaming Commission under the Mississippi Act may, in its discretion,
(i) require holders of debt securities, such as the Senior Notes and the Senior
Subordinated Notes, to file applications, (ii) investigate such holders, and
(iii) require such holders to be found suitable to own such debt securities.
Although the Mississippi Gaming Commission generally does not require the
individual holders of obligations such as notes to be investigated and found
suitable, the Mississippi Gaming Commission retains the discretion to do so for
any reason, including but not limited to a default, or where the holder of the
debt instrument exercises a material influence over the gaming operations of the
entity in question. Any holder of the debt securities required to apply for a
finding of suitability must pay all investigative fees and costs of the
Mississippi Gaming Commission in connection with such an investigation.
The regulations provide that a change in control of the Company or RPG
may not occur without the prior
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approval of the Mississippi Gaming Commission. Mississippi law prohibits the
Company from making a public offering or private placement of its securities
without the approval of or waiver of approval by the Mississippi Gaming
Commission if any part of the proceeds of the offering is to be used to finance
the construction, acquisition or operation of gaming facilities in Mississippi,
or to retire or extend obligations incurred for one or more of such purposes.
The Mississippi Gaming Commission has approved the sale of the Senior Notes, the
sale of the Senior Subordinated Notes, the Amended and Restated Credit Facility
and certain other transactions to be consummated in connection therewith.
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The Mississippi Act requires that certificates representing securities
of the Company or RPG bear a legend to the general effect that the securities
are subject to the Mississippi Act and regulations of the Mississippi Gaming
Commission. The Mississippi Gaming Commission, through the power to regulate
licensees, has the power to impose additional restrictions on the holders of the
Company's or RPG's securities at any time.
Neither the Company nor RPG may engage in gaming activities in
Mississippi while also conducting gaming operations outside of Mississippi
without approval of the Mississippi Gaming Commission. Such approvals were
granted by the Mississippi Gaming Commission on October 13, 1994. The failure to
obtain or retain any such approval could have a material adverse effect on the
Company or RPG. See "Risk Factors -- Government Approvals; Gaming Licensing and
Regulation."
The licenses obtained by the Company and RPG are not transferable and
will need to be renewed every two years. There can be no assurance that any
renewal application will be approved. Each issuing agency may at any time
dissolve, suspend, condition, limit or restrict a license or approval to own
equity interests in the Company or RPG for any cause deemed reasonable by such
agency. Substantial fines for each violation of gaming laws or regulations may
be levied against the Company or RPG in Mississippi. A violation under any
gaming license held by the Company or RPG may be deemed a violation of all the
other licenses held by the Company or RPG. Suspension or revocation of any of
the foregoing licenses or of the approval of the Company or RPG would have a
material adverse effect upon the business of the Company.
License fees and taxes, computed in various ways depending on the type
of gaming involved, are payable to the State of Mississippi and to the counties
and cities in which RPG's operations will be conducted. Depending upon the
particular fee or tax involved, these fees and taxes are payable either monthly,
quarterly or annually and are based upon (i) the percentage of the gross gaming
revenues received by the casino operation, (ii) the number of slot machines
operated by the casino, (iii) the number of table games operated by the casino
or (iv) the number of casino patrons.
In October 1994, the Mississippi Gaming Commission adopted a regulation
requiring, as a condition of licensure or license renewal, that a gaming
establishment's site development plan include an approved 500-car parking
facility in close proximity to the casino complex and infrastructure facilities
which will amount to at least 25% of the casino cost. Such facilities may
include any of the following: a 250-room hotel of at least a two-star rating (as
defined by the current edition of the Mobil Travel Guide) a theme park, a golf
course, marinas, a tennis complex, entertainment facilities or any other such
facility as approved by the Mississippi Gaming Commission as infrastructure.
Parking facilities, roads, sewage and water systems or facilities normally
provided by governmental entities are excluded. The Mississippi Gaming
Commission may, in its discretion, reduce the number of hotel rooms required
where it is shown, to the satisfaction of the Mississippi Gaming Commission,
that sufficient rooms are available to accommodate the anticipated visitor load.
Such reduction in the number of rooms does not affect the 25% investment
requirement imposed by the regulation. The Horseshoe Casino Center and related
facilities have complied with such requirements.
The sale of alcoholic beverages, including beer and wine, at the
Horseshoe Casino Center is subject to licensing, control and regulation by the
Alcoholic Beverage Control Division (the "ABC") of the Mississippi State Tax
Commission. The ABC requires that all equity owners and managers file personal
record forms and fingerprint cards for their licensing process. In addition,
owners of more than 5% of RPG's equity and RPG's officers and managers must
submit detailed financial information to ABC for licensing. All such licenses
are revocable and are non-transferable. The ABC has full power to limit,
condition, suspend or revoke any such license, and any such disciplinary action
could (and revocation would) have a material adverse effect on the operations of
the Horseshoe Casino Center.
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Louisiana Gaming Regulation
In July 1991, the Louisiana legislature adopted legislation permitting
certain types of gaming activity on certain rivers and waterways in Louisiana.
The legislation granted authority to supervise riverboat gaming activities to
the Louisiana Riverboat Gaming Commission and the Riverboat Gaming Enforcement
Division of the Louisiana State Police (the "Louisiana Enforcement Division").
The Louisiana Riverboat Gaming Commission was authorized to hear and determine
all appeals relative to the granting, suspension, revocation, condition or
renewal of all licenses, permits and applications. In addition, the Louisiana
Riverboat Gaming Commission was authorized to establish regulations concerning
authorized routes, duration of excursions, minimum levels of insurance,
construction of riverboats and periodic inspections. The Louisiana Enforcement
Division was authorized to investigate applicants and issue licenses,
investigate violations of the statute and conduct continuing reviews of gaming
activities.
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<PAGE> 14
In the 1996 special session of the Louisiana legislature, Louisiana
lawmakers passed a measure which established the Louisiana Gaming Control Board
and provides that the board is the successor to all such prior authorities with
regard to the regulation and supervision of gaming in Louisiana except for the
regulation of horse racing and offtrack betting and the conducting of charitable
gaming operations. Effective May 1, 1996, the powers, duties, functions, and
responsibilities with respect to riverboat gaming of the Louisiana Riverboat
Gaming Commission and the Louisiana Enforcement Division were transferred to the
Louisiana Gaming Control Board. The Louisiana Enforcement Division continues to
provide investigative and enforcement support to the Louisiana Gaming Control
Board.
The statute authorizes issuance of up to 15 licenses to conduct gaming
activities on a riverboat of new construction in accordance with applicable law.
However, no more than six licenses may be granted to riverboats operating from
any one parish.
In issuing a license, the Louisiana Gaming Control Board must find that
the applicant is a person of good character, honesty and integrity and a person
whose prior activities, criminal record, if any, reputation, habits, and
associations do not pose a threat to the public interest of the State of
Louisiana or to the effective regulation and control of gaming, or create or
enhance the dangers of unsuitable, unfair or illegal practices, methods and
activities in the conduct of gaming or the carrying on of business and financial
arrangements in connection therewith. The Louisiana Gaming Control Board will
not grant a license unless it finds that: (i) the applicant is capable of
conducting gaming operations, which means that the applicant can demonstrate the
capability, either through training, education, business experience, or a
combination of the above, to operate a gaming casino; (ii) the proposed
financing of the riverboat and the gaming operations is adequate for the nature
of the proposed operation and from a source suitable and acceptable to the
Louisiana Gaming Control Board; (iii) the applicant demonstrates a proven
ability to operate a vessel of comparable size, capacity and complexity to a
riverboat so as to ensure the safety of its passengers; (iv) the applicant
submits a detailed plan of design of the riverboat in its application for a
license; (v) the applicant designates the docking facilities to be used by the
riverboat; (vi) the applicant shows adequate financial ability to construct and
maintain a riverboat; and (vii) the applicant has a good faith plan to recruit,
train and upgrade minorities in all employment classifications.
Certain persons affiliated with a riverboat gaming licensee, including
directors and officers of the licensee, directors and officers of any holding
company of the licensee involved in gaming operations, persons holding five
percent or greater interests in the licensee, and persons exercising influence
over a licensee ("Affiliated Gaming Persons"), are subject to the application
and suitability requirements of the Louisiana gaming law.
The Louisiana gaming law specifies certain restrictions and conditions
relating to the operation of riverboat gaming, including the following: (i)
gaming is not permitted while a riverboat is docked, other than the forty-five
minutes between excursions, and during times when dangerous weather or water
conditions exist, except that the casinos operating in the Bossier
City/Shreveport area are permitted to operate exclusively at dockside pursuant
to a special exemption; (ii) each roundtrip riverboat cruise may not be less
than three nor more than eight hours in duration, subject to specified
exceptions; (iii) agents of the Louisiana Enforcement Division and the Louisiana
Gaming Control Board are permitted on board at any time during gaming
operations; (iv) gaming devices, equipment and supplies may only be purchased or
leased from permitted suppliers; (v) gaming may only take place in the
designated gaming area while the riverboat is upon a designated river or
waterway; (vi) gaming equipment may not be possessed, maintained or exhibited by
any person on a riverboat except in the specifically designated gaming area, or
a secure area used for inspection, repair or storage of such equipment; (vii)
wagers may be received only from a person present on a licensed riverboat;
(viii) persons under 21 are not permitted in designated gaming areas; (ix)
except for slot machine play, wagers may be made only with tokens, chips or
electronic cards purchased from the licensee aboard a riverboat; (x) licensees
may only use docking facilities and routes for which they are licensed and may
only board and discharge passengers at the riverboat's licensed berth; (xi)
licensees must have adequate protection and indemnity insurance; (xii) licensees
must have all necessary Federal and state licenses, certificates and other
regulatory approvals prior to operating a riverboat; and (xiii) gaming may only
be conducted in accordance with the terms of the license and the rules and
regulations adopted by the Louisiana Enforcement Division and the Louisiana
Gaming Control Board.
An initial license to conduct riverboat gaming operations is valid for
a term of five years. HE was issued an initial operator's license by the
Louisiana Enforcement Division on November 22, 1993. The Louisiana gaming law
provides that a renewal application for each one-year period succeeding the
initial five year term of the operator's license must be made to the Louisiana
Enforcement Division. The application for renewal consists of a statement
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<PAGE> 15
under oath of any and all changes to the information, including financial
information, provided in the previous application.
The transfer of a license or permit or an interest in a license or
permit is prohibited except as permitted by the Louisiana gaming law. The sale,
purchase, assignment, transfer, pledge or other hypothecation, lease,
disposition or acquisition (a "Transfer") by any person of securities which
represent 5% or more of the total outstanding shares issued by a corporation
that holds a license is subject to Louisiana Gaming Control Board disapproval. A
security issued by a corporation that holds a license may generally disclose
these restrictions. Prior Louisiana Gaming Control Board approval is required
for the Transfer of any ownership interest of 5% or more in any non-corporate
licensee or for the Transfer of any "economic interest" of 5% or more in any
licensee or Affiliated Gaming Person. An "economic interest" is defined for
purposes of a Transfer as any interest whereby a person receives or is entitled
to receive, by agreement or otherwise, a profit, gain, thing of value, loan,
credit, security interest, ownership interest or other economic benefit.
Riverboat gaming licensees and their Affiliated Gaming Persons are
required to notify the Louisiana Enforcement Division prior to the receipt by
any such persons of any loans or extensions of credit. The Louisiana Gaming
Control Board is required to investigate the reported loan or extension of
credit and, subject to certain exemptions, to either approve or disapprove the
transaction. If disapproved, the loan or extension of credit cannot be
consummated by the licensee or Affiliated Gaming Person. The Company is an
Affiliated Gaming Person of HE. HE and the Company have submitted all required
disclosures to the Louisiana Gaming Control Board and the Louisiana Enforcement
Division. Any other advances by the Company to HE in the form of loans or other
intercompany indebtedness are subject to the disapproval power of the Louisiana
Gaming Control Board and the Louisiana Enforcement Division.
Fees to the State of Louisiana for conducting gaming activities on a
riverboat include (i) $50,000 per riverboat for the first year of operation and
$100,000 per year per riverboat thereafter plus (ii) 18-1/2% of net gaming
proceeds.
EMPLOYEES
As of March 1, 1998, the Company employed 5,262 persons of which 2,387
are employed at the Horseshoe Casino Center in Tunica, Mississippi, 2,840 are
employed at the Horseshoe Bossier City in Bossier City, Louisiana and 35 are
employed by HGI. At such date, none of the Company's employees were covered by
collective bargaining agreements.
The Company believes that its relationship with its employees is
excellent and is not aware of any threatened labor activity affecting its
employees. The Company has never experienced a work stoppage due to a labor
dispute.
ITEM 2. PROPERTIES.
The Company owns and operates casinos in Tunica County, Mississippi and
Bossier City, Louisiana. All of the Company's real properties are subject to
first priority liens securing the Amended and Restated Credit Facility Agreement
and second priority liens securing the Senior Notes.
15
<PAGE> 16
The Horseshoe Casino Center
The Horseshoe Casino Center is located in Tunica County, Mississippi at
Casino Center, a 70-acre three-casino complex. The Company has just completed
the expansion and renovation of the Tunica facility and has increased the
overall size to approximately 253,000 square feet from 162,000 square feet.
The gaming area comprises approximately 62,000 square feet and contains
1,449 slot machines, 56 table games and 12 poker tables. The casino facility
also includes two specialty restaurants, a newly expanded buffet, bars and
retail outlets. The Horseshoe Casino Center has also added 315 hotel suites in a
14 story tower, to add to its existing 196 room facility, and a multi-level,
1,100 space parking garage. In addition to the parking garage there are
approximately 4,000 lighted parking spaces provided in the Casino Center
complex. The facility includes over 46,000 square feet of expanded
administrative space and over 30,000 square feet of entertainment space,
featuring "Bluesville," a 1,000 seat entertainment venue connected to the casino
and hotel.
The Horseshoe Bossier City
The Horseshoe Bossier City is located on an approximately 30-acre site
on the east side of the Red River, directly facing downtown Shreveport,
Louisiana. The newly expanded development, construction of which is
substantially complete, consists of an approximately 62,400-square foot,
four-deck riverboat with approximately 30,000 square feet of gaming area and an
approximately 55,000-square foot dockside pavilion, including a 606 room, 25
story, all-suite hotel tower and a 1,100 car parking garage. The riverboat and
pavilion are joined via an enclosed, climate-controlled boarding ramp with
handicap access and escalators serving each of the gaming decks.
The entire dockside facility has recently been renovated and expanded.
The newly expanded casino pavilion includes two specialty restaurants, a coffee
shop, an expanded buffet and over 7,800 square feet of specialty retail space.
The expanded facility also includes over 60,000 square feet of administrative
space.
The main, second and third decks of the riverboat feature a total of
1,343 slot machines, 58 table games and a poker room containing 11 poker tables.
The casino area includes a deli/snack bar, one casino bar containing video poker
machines and an entertainment stage. The lowest level of the riverboat contains
the engine room, offices, count rooms, security and surveillance offices and
facilities for the Louisiana State Police.
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<PAGE> 17
Management believes that the new hotel tower and dockside pavilion
offers the largest and most varied hotel and restaurant facilities in the
market. The 25 story, all-suite hotel tower features 606 rooms, a health club
and approximately 4,000 square feet of meeting space. The restaurants have been
designed to offer moderately priced, high quality food in order to attract local
and repeat patrons; this attraction is a hallmark of the marketing strategy at
the Horseshoe Casinos.
ITEM 3. LEGAL PROCEEDINGS.
There are no material legal proceedings pending against the Company or
any of its properties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no established public trading market for the equity interests
in the Company. As of March 6, 1998, the number of record holders of equity
interests in the Company was 55.
The Company has paid tax distributions since October 10, 1995, in an
aggregate amount equal to $37,999,000, which were calculated in accordance with
the Company's debt agreements to enable the holders of equity interests in the
Company to pay state and federal income taxes on their proportionate share of
the Company's income. In addition to these permitted tax distributions, the
Company declared a distribution of $15,000,000 as of December 31, 1997, which
was paid in February 1998. The Company anticipates that an additional
distribution of approximately $5 million will be paid in June 1998. The
Company's debt agreements contain provisions which restrict the ability of the
Company to make distributions to the holders of equity interests, based on the
Company's earnings, the ability of the Company to meet certain restrictions on
borrowing, and certain other criteria.
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<PAGE> 18
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.
The following table summarizes certain selected consolidated financial
data, which should be read in connection with the Company's Consolidated
Financial Statements and notes thereto included elsewhere herein and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The selected consolidated financial data as of and for the years
ended December 31, 1997, 1996, 1995 and 1994 and for the period from inception
through December 31, 1993 have been derived from the Company's audited
consolidated financial statements included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995(c) 1994(b) 1993(a)
---- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (Dollars in Thousands)
Net revenues:
Casino $ 321,236 $ 317,479 $ 283,402 $ 59,230 $ --
Non-casino 13,857 14,258 14,983 4,173
--------- --------- --------- --------- ---------
335,093 331,737 298,385 63,403 --
OPERATING EXPENSES:
Casino 175,394 162,408 133,299 24,339
Non-casino 20,283 20,474 20,131 4,987
Other 48,217 51,980 54,331 26,637 1,742
Corporate expenses(g) 22,490 10,254 3,375
Depreciation and
amortization 19,411 15,989 12,545 2,499
--------- --------- --------- --------- ---------
Operating income (loss) 49,298 70,632 74,704 4,941 (1,742)
Interest (expense) income,
net (15,796) (21,964) (18,735) (6,259) 221
Gain on sale of land 5,242
Other, net (429) 154
--------- --------- --------- --------- ---------
Net income (loss) before
extraordinary loss on
early retirement of debt and
minority interest 33,073 48,822 55,969 3,924 (1,521)
Extraordinary loss on early
retirement of debt (5,243) (7,179)
Minority interest in
(income) loss of subsidiaries (d) (420) (1,861) (8,850) (5,691) 130
--------- --------- --------- --------- ---------
Net income (loss) $ 27,410 $ 46,961 $ 39,940 (1,767) (1,391)
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(f) $ 48,710 $ 79,159 $ 65,541 $ 18,584
Total assets 511,556 377,597 300,088 145,535
Long-term debt, including
current maturities (e) 313,275 232,708 197,603 124,963
Total members' equity 64,595 79,782 52,747 3,633
</TABLE>
(a) Includes the consolidated results of the Company and its subsidiaries
from the date each entity was formed through December 31, 1993,
including subsidiaries involved in development activities only.
(b) The Horseshoe Bossier City opened on July 9, 1994.
(c) The Horseshoe Casino Center opened on February 13, 1995.
(d) Horseshoe Gaming owns less than 100% of certain subsidiaries. Minority
interest represents the share of each subsidiary's income attributable
to those interests not owned by Horseshoe Gaming as well as the 1994
gain on sale of land by RPG of $5,242,000 distributed to some, but not
all, of the Company's members.
(e) Includes deferred interest payable on notes payable to affiliates of
$2,467,000 as of December 31, 1994.
(f) Excludes escrow funds, restricted for expansion of existing facilities,
development of New Projects or repayment of debt, amounting to
approximately $42,235,000 (1996) and $31,316,000 (1995).
(g) Includes non-cash compensation charges relating to redeemable ownership
interests of $15,066,000, $4,340,000 and $2,557,000 for the years ended
December 31, 1997, 1996 and 1995, respectively.
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<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The following discussion and analysis provides information which
Management believes is relevant to an assessment and understanding of the
Company's consolidated financial condition and results of operations. The
discussion should be read in conjunction with "Selected Consolidated Financial
Data" and the Consolidated Financial Statements and notes thereto.
INTRODUCTION
The formation of the Company culminated with the completion of the
Roll-Up Transaction, which was deemed effective October 1, 1995. The Roll-Up
Transaction resulted in the Company (a newly-formed holding company) owning 50%
or more of several entities that were previously owned by Mr. Binion, certain
related parties and certain unrelated parties. Mr. Binion now serves as the
Chairman of the Board of Directors and Chief Executive Officer of HGI, the
manager of the Company.
As a result of the Roll-Up Transaction, the Company initially owned 89%
of HE, the partnership that owns the Horseshoe Bossier City, 100% of RPG, the
partnership that owns the Horseshoe Casino Center and 80% of Horseshoe Ventures,
L.L.C., a Delaware limited liability company ("Horseshoe Ventures"), which was
formed to pursue casino development opportunities in new jurisdictions. As of
December 31, 1995, the Company acquired an additional 2.92% ownership interest
in HE bringing its total ownership to 91.92%. During 1996, the Company entered
into an option agreement to acquire an additional 1% ownership interest in HE.
The consolidated financial statements of the Company include the assets,
liabilities, revenues and expenses for all entities included in the Roll-Up
Transaction, as if such entities were subsidiaries of the Company for all
periods presented. Further, prior to the Roll-Up Transaction, certain expenses
incurred pursuing development of casinos in new jurisdictions were incurred by
Mr. Binion. Mr. Binion was reimbursed for such expenses by Horseshoe Ventures in
October 1995. These expenses are included in the consolidated financial
statements of the Company, for all periods presented, as if they had been
incurred by Horseshoe Ventures.
RESULTS OF OPERATIONS
The Horseshoe Casino Center operates in the competitive Tunica County,
Mississippi, market, which currently consists of nine casinos. Horseshoe Casino
Center has substantially completed a significant expansion of its facilities.
Several of the other existing Tunica casinos, have also substantially completed
or are in the process of completing expansion, including hotel rooms (see
"Liquidity and Capital Resources" section below for additional discussion of
development plans). While management expects that its competitors' expansions
will affect the Horseshoe Casino Center's revenues and operating income,
management also believes they will increase the size and scope of the overall
Tunica gaming market, mitigating the potential adverse impact on future
operating levels at the Horseshoe Casino Center. The impact on operating margins
from the overall increase in supply to this market is uncertain.
The Horseshoe Bossier City is one of four riverboat casinos currently
operating in the Bossier City/Shreveport, Louisiana market. The Louisiana Gaming
Control Board has recently granted preliminary approval for a proposal to
transfer the license for a New Orleans casino, which is now closed, to a new
proposed facility to be located adjacent to an existing competitor's facility in
Shreveport. Additionally, the Louisiana Gaming Control Board is accepting
proposals until May 19, 1998 for the remaining fifteenth license. This license,
once granted, may be located in the Bossier City/Shreveport market. The
Horseshoe Bossier City has substantially completed its major expansion project
(see "Liquidity and Capital Resources" section below for additional discussion
of such project). While Management expects that the possible new competition
from the transferred license and from the fifteenth license (if granted for
Shreveport/Bossier City) will affect the Horseshoe Bossier City's revenues and
operating income, Management also believes the expansion of the Horseshoe
Bossier City and the potential addition of two riverboat casinos and slot
machines at the racetrack in the Bossier City/Shreveport market will increase
the size and scope of the overall gaming market, mitigating the potential
adverse impact on future operating levels at the Horseshoe Bossier City. The
impact on operating margins from the overall increase in supply to this market
is uncertain.
The Company has not experienced any significant seasonal trends;
however, the Company has a limited
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<PAGE> 20
operating history and may determine in the future that its revenues and income
may be seasonal in nature.
Years Ended December 31, 1997 and 1996
Net revenues of the Company for the year ended December 31, 1997 were
$335.0 million as compared to $331.7 million for the comparable period in 1996.
The overall increase in net revenues of $3.3 million, or 1%, consists of a $3.8
million increase in casino revenues, offset by a slight decrease in non-casino
revenues. The Horseshoe Bossier City incurred a decrease in casino revenues of
$6.8 million, whereas the Horseshoe Casino Center reflects significant
improvements over 1996 in casino revenues of $10.6 million.
The Horseshoe Casino Center
The Horseshoe Casino Center contributed net revenues and operating
profit before corporate expenses, respectively, of $167.2 million and $45.6
million for the year ended December 31, 1997 and $156.9 million and $50.2
million for the year ended December 31, 1996.
The Horseshoe Casino Center's net revenues include casino revenues and
non-casino revenues, respectively, of $161.3 million and $5.9 million for the
year ended December 31, 1997 and $150.7 million and $6.2 million for the year
ended December 31, 1996. The increase in net revenues for the year ended
December 31, 1997 compared to the prior year period is primarily due to an
increase in total volume in slot machine revenue of 10.8%. Casino revenue per
day increased in 1997 to $442,000 from $412,000 for the year ended December 31,
1996 despite disruption related to the property's expansion project.
The Horseshoe Casino Center's margin for operating profit before
corporate expenses for the year ended December 31, 1997 was 27.9% before the
write-off of pre-opening expenses, compared with 32.0% for the year ended
December 31, 1996. The reduction in operating profit before corporate expenses
margin of 4.1 percentage points was primarily caused by three factors: (1) an
increase in bad debt reserves because total gaming receivables increased more
rapidly than revenue, (2) an increase in depreciation and amortization expense
due to the expansion of the casino facility, and (3) increases in promotional
programs and direct marketing programs.
The Horseshoe Bossier City
The Horseshoe Bossier City contributed net revenues and operating
profit before corporate expenses, respectively, of $167.9 million and $27.9
million for the year ended December 31, 1997 and $174.9 million and $36.9
million for the year ended December 31, 1996.
The Horseshoe Bossier City's net revenues include casino revenues and
non-casino revenues, respectively, of $160.0 million and $7.9 million for the
year ended December 31, 1997 and $166.8 million and $8.1 million for the year
ended December 31, 1996. The decrease in net revenues for the year ended
December 31, 1997 compared to the prior year period is due to a decrease in
total casino volume in slot machine revenue of 2.8% as well as decreases in win
percentages in both slots and table games. Casino revenue per day decreased
approximately 3.9% in 1997 to $438,000 from $456,000 for the year ended December
31, 1996. The reduction in total casino volume occurred as a result of increased
competition in the Bossier/Shreveport market as well as the ongoing development
and expansion of the entire operating facility.
The Horseshoe Bossier City's margin for operating profit before
corporate expenses for the year ended December 31, 1997 was 17.7% before the
write-off of pre-opening expenses, compared with 21.1% for year ended December
31, 1996. The reduction in operating profit before corporate expenses margin of
3.4 percentage points was primarily caused by two factors: (1) an increase in
depreciation and amortization due to the property improvements and (2) the
decline in win percentage in slots and table games.
20
<PAGE> 21
Other Factors Affecting Earnings
Development expenses, which are included in operating income, were $1.7
million and $6.6 million for the years ended December 31, 1997 and 1996,
respectively. The 1996 period includes expenses associated with the Company's
failure to obtain a license to conduct gaming in the state of Indiana.
Corporate expenses increased approximately $12.2 million during 1997
primarily due to the non-cash charge to compensation expense to reflect the
increased value of redeemable ownership interests in the Company. Certain of the
Company's employees have ownership interests that are subject to provisions that
require the Company to repurchase these ownership interests in the event of
their termination at a price equal to the then fair market of the Company based
on an independent appraisal.
Interest expense declined approximately $7.3 million in 1997 as
compared to 1996, principally as a result of the capitalization of interest
expense related to the Horseshoe Casino Center and Horseshoe Bossier City
expansion projects. Total interest capitalized for the years ended December 31,
1997 and 1996 was $11.2 and $1.3 million, respectively.
In November 1997, the Company completed the exchange offering of its
$160 million of 9 3/8% Senior Subordinated Notes due June 15, 2007, for publicly
registered notes with identical terms. Proceeds from the original offering of
notes in a private placement in June 1997 were used to extinguish certain
borrowings of the Company and fund a portion of the expansion of the Company's
existing facilities. An extraordinary loss of approximately $5.2 million was
recognized in the second quarter in conjunction with the debt redemption.
Years Ended December 31, 1996 and 1995
The significant improvement in the Company's net revenues for the year
ended December 31, 1996, compared with the prior year is related primarily to
improvements in revenue per day at the Horseshoe Bossier City and the Horseshoe
Casino Center operating for a full year in 1996 compared with a partial year in
1995. Operating results for 1995 include operations for the Horseshoe Casino
Center commencing February 13, 1995.
The Horseshoe Casino Center
The Horseshoe Casino Center contributed net revenues and operating
profit before corporate expenses, respectively, of $156.9 million and $50.2
million for the year ended December 31, 1996 and $137.6 million and $44.4
million for the year ended December 31, 1995.
The Horseshoe Casino Center's net revenues include casino revenues and
non-casino revenues, respectively, of $150.7 million and $6.2 million for the
year ended December 31, 1996 and $132.2 million and $5.4 million for the year
ended December 31, 1995. The increase in net revenues for the year ended
December 31, 1996 compared to the prior year period is primarily due to the
increase in the number of days of operation. The year ended December 31, 1995
only includes 322 days of operations, whereas the 1996 period includes a full
year. Casino revenue per day increased in 1996 to $412,000 from $411,000 for the
year ended December 31, 1995.
The Horseshoe Casino Center's margin for operating profit before
corporate expenses for the year ended December 31, 1996 was 32.0% compared with
37.3%, before the write-off of pre-opening expenses, for the year ended December
31, 1995. The reduction in operating margin of 5.3 percentage points was caused
by an increase in expenses associated with promotional programs and direct
marketing programs, including one-time promotional charges which were incurred
by the Company prior to the opening and during the first month of operations of
a new competing casino facility in the Tunica market. An increase in bad debt
expenses also contributed to the lower operating margins in 1996.
The Horseshoe Bossier City
The Horseshoe Bossier City contributed net revenues and operating
profit before corporate expenses, respectively, of $174.9 million and $36.9
million for the year ended December 31, 1996 and $160.8 million and $38.1
million for the year ended December 31, 1995.
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<PAGE> 22
The Horseshoe Bossier City's net revenues include casino revenues and
non-casino revenues, respectively, of $166.8 million and $8.1 million for the
year ended December 31, 1996 and $151.2 million and $9.6 million for the year
ended December 31, 1995. The increase in net revenues for the year ended
December 31, 1996 compared to the prior year period is due to an increase in
total casino volume of 24.4%. The increase in total volume was offset by a
reduction in overall win percentage. Casino revenue per day increased
approximately 10.1% in 1996 to $456,000 from $414,000 for the year ended
December 31, 1995.
The Horseshoe Bossier City's margin for operating profit before
corporate expenses for the year ended December 31, 1996 was 21.1% compared with
23.7% for year ended December 31, 1995. The reduction in operating margin of 2.6
percentage points was caused by an increase in expenses associated with
promotional programs and direct marketing programs. Depreciation and
amortization increased $2.7 million over the 1995 period due to amortization of
goodwill which began in October, 1995 and an increase in depreciation expense
due to property improvements.
Other Factors Affecting Earnings
Corporate expenses increased approximately $6.9 million in 1996 as
compared to 1995 due to the 1995 period only including corporate expenses for
the three months following the roll-up transaction. Prior to the roll-up
transaction HE and RPG absorbed any expenses associated with the management of
the respective casino operations.
The increase in net interest expense of $3.2 million for the year ended
December 31, 1996, compared with the year ended December 31, 1995, is due to an
increase in the amount of debt outstanding. This was partially offset by a
reduction in the overall interest rate on the Company's long-term debt, which
resulted from the Company's refinancing of substantially all of its existing
indebtedness in October 1995. This refinancing resulted in an extraordinary loss
on early retirement of debt of $7.2 million in 1995.
Development expenses, which are included in operating income, were $6.6
million and $4.4 million for the years ended December 31, 1996 and 1995,
respectively. The increase in development expenses in 1996 over 1995 is due to
the Company's failure to obtain a license to conduct gaming in the state of
Indiana. Total expenses incurred by the Company pursuing its Indiana license
were $3.9 million and $1.7 million for the years ended December 31, 1996 and
1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
In October 1995, the Company refinanced substantially all of its
exiting indebtedness with net proceeds from an initial draw of $93.2 million on
a $100 million credit facility (the "Initial Credit Facility") and from the sale
of $100 million of 12.75% Senior Notes, due September 30, 2000 (the "Senior
Notes"). The Senior Notes were sold with warrants to purchase an additional $50
million of Senior Notes on April 10, 1996, at a price of 98.15% of par value
which, upon exercise, raised approximately $49 million after fees and expenses.
On June 15, 1997, the Company issued $160 million of 9 3/8% Senior
Subordinated Notes ( the "Subordinated Notes") due June 15, 2007. The
Subordinated Notes were issued at 99.899% of par value and have an effective
interest rate of 9.39%. The Subordinated Notes are unsecured and require
semi-annual interest payments. A portion of the proceeds were used to
substantially retire the Initial Credit Facility and to purchase $13 million in
Senior Notes. An extraordinary loss on early retirement of debt of $5,243,000
was recognized in 1997 for prepayment penalties and premium and the write-off of
unamortized discounts and deferred finance charges. The remaining proceeds were
used to fund a portion of the expansion of the Company's existing facilities.
On November 12, 1997, the Company finalized a restructuring of its Initial
Credit Facility. Pursuant to the terms of the amended and restated loan
agreement, CIBC Wood Gundy Securities Corp. agreed to provide a $130 million
Senior Secured Revolving Credit Facility (the "Amended and Restated Credit
Facility"). As of December 31, 1997, the Company had drawn $15.1 million under
the Amended and Restated Credit Facility. An additional $45 million had been
borrowed as of February 13, 1998. The borrowings under the Amended and Restated
Credit Facility has enabled the Company to fund the completion of the expansion
of the Bossier City and Tunica properties.
DEVELOPMENT
22
<PAGE> 23
Tunica, Mississippi
Horseshoe Casino Center has substantially completed the expansion of
its entire casino facility at a cost of approximately $109 million, of which
approximately $99 million had been incurred and placed in service of December
31, 1997. The newly expanded casino complex, which officially opened on January
21, 1998, includes an additional 15,000 square feet of gaming space (the entire
gaming facility features 1,449 slot machines, 56 table games and 12 poker
tables), 312 hotel suites (to add to its existing 195 room hotel facility), a
multi-level, 1,100 space parking garage and Bluesville, an entertainment
facility which will accommodate approximately 1,000 customers. Additional
facilities include a health club, one additional restaurant, a new, relocated
and expanded buffet, a remodeled steak house, meeting room facilities and other
amenities.
Bossier City, Louisiana
Horseshoe Bossier City has substantially completed the expansion of its
entire casino facility at a cost of approximately $210 million, of which
approximately $177 million had been incurred and approximately $110 million had
been placed in service as of December 31, 1997. The newly expanded casino
facility, which officially opened on January 28, 1998, features a new expanded
riverboat casino facility (with approximately 40% more gaming positions and
featuring a total of 1,343 slot machines, 58 table games and 11 poker tables), a
25 story hotel tower with 606 suites, meeting room facilities, a health club,
the renovation and expansion of existing dockside facilities, the addition of
two specialty restaurants, the complete renovation and expansion of the existing
buffet and the recently completed 1,100 space parking garage, administration
building and remodeled existing steak house restaurant.
The Horseshoe Bossier City's new riverboat casino facility replaced the
existing riverboat casino facility (the "Queen of the Red"). The Queen of the
Red, along with related gaming equipment, was transferred to assets held for
sale in January 1998. Management intends to use the Queen of the Red, and the
related gaming equipment, in conjunction with the Company's proposed riverboat
gaming facility set forth below in the Vicksburg, Mississippi discussion.
23
<PAGE> 24
Vicksburg, Mississippi
In August 1997, the Company and Lady Luck Vicksburg, Inc. ("Lady Luck")
signed a Contribution and Sale Agreement with respect to a proposed new limited
liability company, which is intended to develop a riverboat gaming facility,
including a riverboat casino, a hotel of approximately 200 rooms, an 800-car
parking garage and other amenities in Vicksburg, Mississippi. The consummation
of the Contribution and Sale Agreement and the development of the facility are
subject to certain conditions precedent including the mutual determination by
the Company and Lady Luck of the intended scope and cost of the proposed
facility, the obtaining of requisite regulatory approvals, and the arrangement
of appropriate project financing. The facility is to be developed and operated
by a wholly-owned subsidiary of the Company, which will have an equity interest
of 75% in the proposed limited liability company, with Lady Luck holding the
remaining 25% interest. Under the terms of the Contribution and Sale Agreement,
the Company and Lady Luck intend to contribute certain real property and other
previously acquired assets having a combined net book value of approximately $42
million. The total cost of the project, including the value of the contributed
assets, is estimated to be approximately $100 million.
OTHER ITEMS
Cash and cash equivalents totaled $48,710,000 as of December 31, 1997.
Included in accrued expenses at December 31, 1997 is a distribution payable to
the owners of the Company amounting to $15,000,000, which was paid in February,
1998.
Management believes that the Company's cash and cash equivalents on
hand, cash from operations and additional borrowings under its Amended and
Restated Credit Facility will be adequate to meet the Company's existing
obligations when they become due.
The Company has assessed and continues to assess the impact of the Year
2000 Issue on its reporting systems and operations. The Company has not fully
determined which systems are not Year 2000 compliant but this determination is
expected to be completed in 1998. Therefore, the total cost of remediation is
still uncertain. If the Company's remediation plan is not successful, there
could be a significant disruption of the Company's ability to transact business
with its major vendors, as well as possible shutdown of certain
computer-operated functions.
The Company may be required to repurchase ownership interests held by
employees, in the event of termination of their employment, at a price based on
an independent appraisal. The total ownership interest held by employees subject
to buy-out provisions was 9.1% as of December 31, 1997. The value of these
ownership interests, amounting to $51.6 million, has been recorded as a
liability in the accompanying consolidated financial statements as Redeemable
Ownership Interests.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the Index to Consolidated Financial Statements and the Index to
Financial Statement Schedules included at "Item 14. Exhibits, Financial
Statement Schedules, and Reports on Form 8-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Section 6.2 of the Limited Liability Company Agreement of the Company
(the "Company Agreement") provides that the Company shall be managed by a
manager (the "Manager"). Pursuant to Section 6.1 of the Company Agreement, HGI
serves as the Manager of the Company until the occurrence of its "Withdrawal,"
which pursuant to Section 1 of the Company Agreement, means the occurrence of
the bankruptcy (as defined in the Company Agreement), dissolution or liquidation
of HGI, or the withdrawal, resignation or retirement of HGI from the Company for
any reason, and those situations when HGI may no longer continue as a member of
the Company by reason of any law or pursuant to any terms of the Company
Agreement. HGI has only one class of stock outstanding. The outstanding shares
of common stock of HGI are owned 68.52% by Mr. Binion, 15.74% by Peri Howard,
15.74% by Leslie Kenny.
24
<PAGE> 25
The current executive officers and directors of HGI and of HGP, and
certain officers of RPG and HE, are listed below, together with their ages and
all positions and offices held by them.
<TABLE>
<CAPTION>
Age Position
--- --------
<S> <C> <C>
Jack B. Binion 61 Chairman of the Board of Directors and
Chief Executive Officer of HGI, and Sole
Director and Chief Executive Officer of HGP.
Phyllis M. Cope 63 Director of HGI.
Peri Howard 37 Director of HGI.
Paul R. Alanis 49 President of HGI and of HGP.
Walter J. Haybert 55 Treasurer and Chief Financial Officer of
HGI and of HGP.
John J. Schreiber 57 Senior Vice President - Governmental
Relations of HGI and of HGP.
J. Michael Allen 50 Senior Vice President - Operations of HGI
and of HGP.
Loren S. Ostrow 46 Senior Vice President, Secretary and
General Counsel of HGI and of HGP.
Gary Border 48 Senior Vice President - Marketing of HGI
and of HGP.
J. Lawrence Lepinski 51 Senior Vice President and General Manager
of Horseshoe Bossier City.
Bob McQueen 44 Senior Vice President and General Manager
of Horseshoe Casino Center.
</TABLE>
Mr. Binion has served as Chief Executive Officer of HGI since its
inception (under the name New Gaming Capital Corporation) in December 1992 and
as Chief Executive Officer of HGP since its inception immediately prior to the
Roll-Up Transaction. Mr. Binion served as the Chief Executive Officer of Gaming
Consulting, Inc., the general partner of the entity that was the general partner
of RPG, from its inception in May 1993 until it merged into HGI in the Roll-Up
Transaction. Mr. Binion has also been the President and Chief Executive Officer
since 1964 of the Horseshoe Club Operating Company, which owns and operates
Binion's Horseshoe in Las Vegas, Nevada.
Ms. Cope is the wife of Jack Binion. She was elected director of HGI in
January 1997 and will serve until further notice.
Ms. Howard is the daughter of Phyllis Cope. She was elected director of
HGI in January 1997 and will serve until further notice.
Mr. Alanis has served as President of HGI and of HGP since January 1,
1996. Mr. Alanis has served as President of KII-Pasadena, Inc. since December
1988 and President of Koar International, Inc. from 1991 until 1995.
Mr. Haybert became employed by an affiliate of the Company in August
1995, and became employed as the Treasurer and Chief Financial Officer of HGI
and of HGP upon the consummation of the Roll-Up Transaction. From April 1992
until July 1995, Mr. Haybert was the Vice President of Gaming Development of
Harrah's Entertainment, Inc.
Mr. Schreiber has served as Senior Vice President of HGI since the
Roll-Up Transaction and, prior to that, as Senior Vice President of Horseshoe
Club Operating Company since April 1994. From May 1992 through April 1994, Mr.
Schreiber served as President of St. Charles Riverfront Station and as Vice
President of Governmental Affairs for Station Casinos, Inc.
Mr. Allen has served as Senior Vice President of Horseshoe Gaming, Inc.
since the Roll-up Transaction and prior to that as General Manager of the
Horseshoe Casino Center since May 1994. Prior to that, Mr. Allen served as
Principal of Gaming Associates, Inc. from September 1992.
Mr. Ostrow has served as Senior Vice President and General Counsel of
HGI and of HGP since January 1, 1996. Mr. Ostrow has served as Senior Vice
President of KII-Pasadena, Inc., since December 1988, and Senior Vice President
of Koar International, Inc. from 1991 until 1995.
Mr. Border has served as Senior Vice President - Marketing of HGI since
July 1996. Since 1987, Mr. Border served as President and founder of Marketing
Results, Inc.
Mr. Lepinski has served as Senior Vice President and General Manager of
the Horseshoe Bossier City since September 1995. Prior to that, Mr. Lepinski
served as General Manager of Bally's Saloon and Gambling Hall in Tunica,
Mississippi since August 1993.
25
<PAGE> 26
Mr. McQueen has served as Senior Vice President and General Manager of
the Horseshoe Casino Center since July 1996 and prior to that as Vice President
of Casino Operations for Horseshoe Casino Center since June 1994. From April
1992 to June 1994 Mr. McQueen served as a Senior Level Executive with Carnival
Cruise Lines.
26
<PAGE> 27
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth all compensation awarded to, earned by
or paid to the Chief Executive Officer and the other four most highly
compensated executive officers (the "Named Executive Officers") for their
services to the Company for the years ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------------------------
NAME AND PRINCIPAL YEAR SALARY BONUS OTHER ANNUAL RESTRICTED ALL OTHER
POSITION COMPENSATION(1) UNITS(2) COMPENSATION
-------- ---- ------ ----- --------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jack B. Binion 1997 $ $ $ $ $
1996
1995
Paul R. Alanis 1997 500,000 195,000 19,355(6)
1996 494,63 200,000 7,351(6)
1995 110,000(3)
Loren S. Ostrow 1997 287,16 92,500 5,706(6)
1996 271,50 75,000 1,370(6)
1995 55,000(3)
Walter J. Haybert(4) 1997 350,00 9,975(6)
1996 351,79 6,785(6)
1995 94,231 35,138 342,098 1,026,296 4,681(6)
J. Michael Allen(5) 1997 350,00 10,853(6)
1996 367,71 1,792(6)
1995 90,192 67,000 251,052 1,117,342 5,653(7)
</TABLE>
(1) The Company has determined the value of the Units for purposes of this
table based on the appraisal conducted by the investment banking firm
of Houlihan Lokey Howard and Zukin in connection with the Roll-Up
Transaction.
(2) The Company will make Permitted Distributions to its members with
respect to the Units, including those Units that are restricted (see
"Description of New Notes").
(3) While Mr. Alanis and Mr. Ostrow performed policy making functions of
HGI similar to that of officers during fiscal year 1995, they were
employees of KII-Pasadena, Inc., which was party to a consulting
agreement with HGI. The consulting agreement provided for payments to
KII-Pasadena, Inc. of $55,000 per month (See "Related Party
Transactions"). Mr. Alanis and Mr. Ostrow own 67% and 33% of the stock,
respectively of KII-Pasadena, Inc. The amount of compensation to Mr.
Alanis and Mr. Ostrow indicated is equal to their respective share of
the consulting payments to KII-Pasadena, Inc. for the three-month
period ended December 31, 1995.
(4) 375,367 of the 500,489 Units granted to Mr. Haybert in fiscal year 1995
have vested as of December 31, 1997, the remaining units vest pursuant
to the schedule in Mr. Haybert's employment agreement with HGI. (See
"--Employment Agreements.") The value of the unvested units at December
31, 1997 is $341,708.
(5) 986,063 of the 1,316,203 Units granted to Mr. Allen in fiscal year 1995
have vested as of December 31, 1997, the remaining units vest pursuant
to the schedule in Mr. Allen's employment agreement with HGI. (See
"--Employment Agreements.") The value of the unvested units at December
31, 1997 is $901,612.
(6) Premium on insurance policies.
27
<PAGE> 28
(7) Housing and automobile allowance.
28
<PAGE> 29
COMPENSATION OF DIRECTORS; COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Bylaws of HGI provide for a six member board of directors. There
are currently three directors. Directors serve until the next annual meeting of
stockholders and until their successors have been elected and qualified.
Vacancies on the board of directors may be filled by a majority of the remaining
directors. The Chairman of the Board of Directors receives no compensation for
services on the board, Peri Howard receives $150,000 and Phyllis Cope receives
$100,000 per year as compensation for their services on the Board.
Officers serve at the discretion of the Board. The Board has no
Compensation Committee. Mr. Alanis has participated in discussions with Mr.
Binion regarding executive compensation.
EMPLOYMENT AGREEMENTS
Mr. Binion has provided services pursuing, developing and managing
gaming operations for the Company and its Subsidiaries. Mr. Binion has not been
compensated for his services in the past nor is there an existing employment
agreement providing for Mr. Binion to receive compensation for his services in
the future. It is anticipated, however, that Mr. Binion will enter into an
employment agreement with HGI, the Manager of the Company in 1998. Mr. Binion is
not currently compensated for his services to the Company.
Mr. Alanis is party to an employment agreement with HGI, which
agreement contains customary employment terms and provides for a current annual
base salary of $500,000, fringe benefits, participation in such health and
pension plans as HGI shall adopt for all HGI executives, and a bonus of $200,000
which was paid during 1996. The employment agreement provides for a bonus in
1997 and 1998 should the Company in 1996 and 1997 sustain a level of activity
and financial performance equal or greater to the level of activity and
financial performance of the Company during calendar year 1995. The employment
agreement also contains a put/call provision whereby, upon termination of Mr.
Alanis' employment, the Company may, at its option, or must, at Mr. Alanis'
option (with either option exercisable within 30 days of such termination),
purchase Mr. Alanis' ownership interest for cash in an amount equal to its then
fair market value. The employment agreement provides that Mr. Alanis' employment
shall terminate on December 31, 1998, unless earlier terminated as provided
therein. HGI may terminate Mr. Alanis' employment for cause (including upon Mr.
Alanis' disability) or without cause. If, as of December 31, 1997, the
employment of Mr. Alanis had been terminated for cause, $41,667 would have been
payable to Mr. Alanis, and $700,000 would have been payable if his employment
had been terminated without cause. The employment agreement also includes
confidentiality provisions.
Mr. Ostrow is party to an employment agreement with HGI, which
agreement contains customary employment terms and provides for a current annual
base salary of $300,000, fringe benefits, participation in such health and
pension plans as HGI shall adopt for all HGI executives, and a bonus. The
employment agreement also contains a put/call provision whereby, upon
termination of Mr. Ostrow's employment, the Company may, at its option, or must,
at Mr. Ostrow's option (with either option exercisable within 30 days of such
termination), purchase Mr. Ostrow's ownership interest for cash in an amount
equal to its then fair market value. The employment agreement provides that Mr.
Ostrow's employment shall terminate on December 31, 1998, unless earlier
terminated as provided therein. HGI may terminate Mr. Ostrow's employment for
cause (including upon Mr. Ostrow's disability) or without cause. If, as of
December 31, 1997, the employment of Mr. Ostrow had been terminated for cause,
$25,000 would have been payable to Mr. Ostrow and $300,000 would have been
payable if his employment had been terminated without cause. The employment
agreement also includes confidentiality provisions.
Mr. Haybert is party to an employment agreement with HGI, which
agreement contains customary employment terms and provides for a current annual
base salary of $350,000, fringe benefits, and participation in such health and
pension plans as HGI shall adopt for all HGI executives. The employment
agreement also provides Mr. Haybert with 500,489 Units in the Company, subject
to a specified divestiture schedule. Under such schedule, 25% is subject to
divestiture upon Mr. Haybert's termination or voluntary resignation prior to
July 31, 1998. HGI also agreed to make available, within ten (10) days after a
request by Mr. Haybert, a personal loan of up to $200,000, bearing interest at
the rate of 10% per annum to be secured by the pledge of Mr. Haybert's Units in
the Company. The employment agreement also contains a put/call provision
whereby, upon termination of Mr. Haybert's employment, the Company may, at its
option, or must, at Mr. Haybert's option (with either option exercisable within
90 days of such termination), purchase that portion of Mr. Haybert's ownership
interest that is not subject to divestiture for cash in an amount equal to the
amount the fair market value exceeds $1,366,923. If
29
<PAGE> 30
Mr. Haybert is terminated without cause, his ownership interest shall no longer
be subject to divestiture. The employment agreement provides that Mr. Haybert's
employment shall terminate on July 31, 1998, unless earlier terminated as
provided therein. HGI may terminate Mr. Haybert's employment for cause
(including upon Mr. Haybert's disability) or without cause. Upon the termination
of Mr. Haybert's employment for any reason (including a failure to renew his
employment agreement or to enter into a new employment agreement), the Company
shall immediately pay Mr. Haybert a severance benefit in cash as follows: (a) if
such termination is for cause, then $1,025,192 is payable if Mr. Haybert is
terminated on or before July 20, 1998 and $1,366,923 is payable thereafter, or
(b) if such termination is by Mr. Haybert or is by the Company without cause,
then $1,366,923 is payable. The aforementioned severance benefit shall be
increased by the difference between the ordinary income tax rate and the capital
gains tax rate (expressed as a percentage) in effect at the time of termination.
The employment agreement also provides that all of Mr. Haybert's ownership
interest shall become fully vested, and his severance benefit shall become fully
vested and paid, immediately upon the occurrence of any transaction whereby Mr.
Binion (including any entities through which he holds his ownership interest in
the Company), family members of Mr. Binion and/or trusts established for the
benefit of Mr. Binion's heirs transfer a controlling interest in the Company to
a third party in a transaction other than a public offering. The employment
agreement also includes confidentiality provisions. The assignment agreement
whereby the Company issued the ownership interest to Mr. Haybert provides that,
for purposes of determining the fair market value of Mr. Haybert's ownership
interest, prior to any Subsidiary being granted a license to own and/or operate
a gaming business, the value of such Subsidiary shall be limited to the amount
of the Company's capital investment therein. Because it originally was
contemplated that Mr. Haybert would receive his ownership interest and the share
of Net Profits to which it would entitle him in July 1995, and Mr. Haybert did
not in fact receive his ownership interest until the October 1, 1995 effective
date of the Roll-Up Transaction, HGI paid Mr. Haybert a one time bonus in an
amount equal to the $35,138 in Net Profits to which he would have been entitled.
Mr. Allen is party to an employment agreement with HGI, which agreement
contains customary employment terms and provides for a current annual base
salary of $350,000, fringe benefits, participation in such health and pension
plans as HGI shall adopt for all HGI executives, and a one time bonus of $67,000
which was paid during 1995. The employment agreement also increased Mr. Allen's
ownership interest in the Company by 500,489 Units, subject to a specified
divestiture schedule. Under such schedule, 45% of Mr. Allen's ownership interest
vested fully upon execution of the employment agreement, an additional 15%
vested on May 15, 1996 and May 15, 1997; and the remaining 25% vests as follows:
an additional 15% vests and shall not be subject to divestiture beginning on May
15, 1998; and the remaining 10% vests and shall not be subject to divestiture
beginning on May 11, 1999. The employment agreement also contains a put/call
provision whereby, upon termination of Mr. Allen's employment, the Company may,
at its option, or must, at Mr. Allen's option (with either option exercisable
within 30 days of such termination), purchase that portion of Mr. Allen's
ownership interest that is not subject to divestiture for cash in an amount
equal to the amount the fair market value exceeds $1,366,923. The employment
agreement provides that Mr. Allen's employment shall terminate on May 11, 1999,
unless earlier terminated as provided therein. HGI may terminate Mr. Allen's
employment solely for cause (including upon Mr. Allen's disability). Upon the
termination of Mr. Allen's employment for any reason (including a failure to
renew his employment agreement or to enter into a new employment agreement), the
Company shall immediately pay Mr. Allen a severance benefit in cash as follows:
(i) $486,630 is payable if Mr. Allen is terminated on or before May 15, 1998;
(ii) $1,025,606 is payable if Mr. Allen is terminated on or before May 15, 1999
and (iii) $1,366,923 is payable thereafter. The aforementioned severance benefit
shall be increased by the difference between the ordinary income tax rate and
the capital gains tax rate (expressed as a percentage) in effect at the time of
termination. The employment agreement also provides that all of the ownership
interest shall become fully vested, and his severance benefit shall become fully
vested and paid, immediately upon the occurrence of any transaction whereby Mr.
Binion (including any entities through which he holds his ownership interest in
the Company), family members of Mr. Binion and/or trusts established for the
benefit of Mr. Binion's heirs transfer a controlling interest in the Company to
a third party in a transaction other than a public offering. The employment
agreement also includes confidentiality provisions. The assignment agreement
whereby the Company issued the ownership interest to Mr. Allen provides that,
for purposes of determining the fair market value of Mr. Allen's ownership
interest, prior to any Subsidiary being granted a license to own and/or operate
a gaming business, the value of such Subsidiary shall be limited to the amount
of the Company's capital investment therein.
30
<PAGE> 31
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding beneficial
ownership of membership interests in the Company ("Units"), as of December 31,
1997, by each person who is known by the Company to own beneficially more than
5% of the Units, by each director of the Company, each of the executive officers
and by all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME(1) NUMBER OF PERCENTAGE OF
------- UNITS UNITS
----- -----
<S> <C> <C>
Jack B. Binion ................. 80,999,065(2) 80.704818%
Phyllis M. Cope................. 6,555,882(3) 6.532066%
Hanwa........................... 7,017,220(4) 6.991728%
HGI............................. 30,715,128(5) 30.603548%
Peri Howard..................... 9,027,039(6) 8.994246%
Paul Alanis..................... 3,155,935 3.144470%
J. Michael Allen................ 1,316,203 1.311422%
Walter J. Haybert............... 500,489 *
Loren S. Ostrow................. 1,577,967 1.572235%
Directors and executive
officers as a group (5 persons). 87,799,904 87.480951%
</TABLE>
- ----------------
* Less than 1%.
(1) The persons named in this table have sole voting power and investment
power with respect to all shares of capital stock shown as beneficially
owned by them, subject to community property laws where applicable and
the information contained in this table and these notes.
(2) Includes (a) the 17,366,247 Units held by Mr. Binion as an individual;
(b) the 30,715,128 Units owned by HGI, of which Mr. Binion is
President, Chairman of the Board of Directors and the majority
shareholder; (c) the 6,555,882 Units owned by Phyllis M. Cope; (d) the
9,027,039 Units owned by Peri Howard; and (e) 17,334,769 Units held by
members of Mr. Binion's family or trusts for the benefit of members of
Mr. Binion's family. Mr. Binion expressly disclaims beneficial
ownership of the 63,632,818 Units which are held of record by HGI or by
members of Mr. Binion's family or by trusts established for the benefit
of certain members of the families of Mr. Binion or Phyllis M. Cope,
for purposes of Sections 13(d) and 13(g) of the Exchange Act.
(3) Includes 3,277,941 Units held by Phyllis M. Cope, as Trustee
of the Ted J. Fechser Trust, and 3,277,941 Units held by Phyllis M.
Cope, as Trustee of the Fancy Ann Fechser Trust. Phyllis M. Cope
expressly disclaims beneficial ownership of any Units held by her as
trustee of such trusts, which are trusts established for the benefit of
certain members of the families of Mr. Binion or Phyllis M. Cope, for
purposes of Sections 13(d) and 13(g) of the Exchange Act.
(4) Issuable upon Hanwa's exercise of Company Warrants.
(5) Includes 7,017,220 Units to be surrendered upon Hanwa's exercise of
Company Warrants.
(6) Includes 945,059 Units held by Peri Howard, as Trustee of the Ted J.
Fechser Trust, 945,059 Units held by Peri Howard, as Trustee of the
Fancy Ann Fechser Trust, 945,059 Units held by Peri Howard, as Trustee
of the James Christopher Fechser Trust, 945,059 Units held by Peri
Howard, as Trustee of the Robert Daniel Fechser Trust, 945,059 Units
held by Peri Howard, as Trustee of the Katie O'Neill Trust, 945,059
Units held by Peri Howard, as Trustee of the Kellie O'Neill Trust,
945,059 Units held by Peri Howard, as Trustee of the Rachel Fechser
Trust, 945,059 Units held by Peri Howard, as Trustee of the Ben E.
Johnson Trust, 189,013 Units held by Peri Howard, as Trustee of the
Bonnie Binion Trust, and 189,013 Units held by Peri Howard, as Trustee
of the Benny Behnen Trust; 189,013 Units held by Peri Howard, as
Trustee of the Jack Behnen Trust, 231,779 Units held by Robinson
Property Group, Inc. (of which Peri Howard is the sole shareholder,
director and officer), 289,724 Units held by Jerry Howard, and 378,025
Units held by Peri
31
<PAGE> 32
Howard as an individual. Peri Howard expressly disclaims beneficial
ownership of any Units held by her as trustee of such trusts, which are
trusts established for the benefit of certain members of the families
of Mr. Binion or Phyllis M. Cope, for purposes of Sections 13(d) and
13(g) of the Exchange Act.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In 1995 the Company engaged certain placement agents, including Onyx
Partners, Inc. ("Onyx") to offer the Senior Notes and Warrants and agreed to pay
the placement agents a fee equal to 2.0% of the gross proceeds. The Company also
engaged Onyx to arrange the Credit Facility and agreed to pay Onyx an additional
fee for those services. Onyx has in the past and may in the future perform
financial advisory services for the Company for a fee. The Company has agreed to
indemnify the placement agents and their controlling persons against certain
liabilities in connection with the offer and sale of the Senior Notes and
Warrants and the arrangement of the Credit Facility, including liabilities under
the Securities Act, and to contribute to payments that the placement agents may
be required to make in respect thereof. Affiliates of Onyx, who were owners of
limited partnership interests and warrants for the purchase of limited
partnership interests in NGCP and RPG, exercised their warrants and rolled their
ownership interests into the Company.
The Company retained the services of KII-Pasadena, Inc. ("KII"), a
California corporation owned by Paul Alanis and Loren Ostrow, pursuant to a
consulting agreement (the "Consulting Agreement") that originally was entered
into between Koar International, Inc., a California corporation that was owned
by Messrs. Alanis and Ostrow, and Mr. Binion (who later assigned his rights and
obligations to HE and RPG). Pursuant to the Consulting Agreement, KII acted on
behalf of the Company as developer of the Horseshoe Bossier City and the
Horseshoe Casino Center and has provided consulting services to the Company
related to new gaming developments. The total amount paid pursuant to the
Consulting Agreement, which was canceled December 31, 1995, since its inception
in March 1993 was $1,255,000, as well as reimbursements for out-of-pocket
expenditures. Onyx has agreed to pay KII or its principals for introducing to
Onyx the opportunity of providing financing services to the Company, a finder's
fee equal to 30% of the net fees, commissions and other compensation received by
Onyx for its services in placing the Senior Notes and arranging the Credit
Facility after deduction for all relevant unreimbursed expenses. The total fee
paid to KII, or its principals, by Onyx, including the amount payable with
respect to the sale of Senior Notes upon the exercise of the warrants was
approximately $1,151,000. In the Roll-Up Transaction, Messrs. Alanis and Ostrow
exchanged limited partnership interests in NGCP and RPG for Units in the
Company. On January 1, 1996, Paul Alanis and Loren Ostrow became officers of the
Company.
The Company conducts a portion of its marketing through an entity that
is owned by the wife of an officer. Amounts paid to this company for fees and
reimbursable expenses totaled $2,648,000, $1,633,000, $1,029,000 and $84,000 for
the years ended December 31, 1997, 1996, 1995 and 1994, respectively.
The Company has made loans to various employees with ownership
interests in the Company. The amount outstanding under these notes was
$2,214,000 and $1,715,000 as of December 31, 1997 and 1996, respectively. The
notes to employees are secured by their ownership interests in the Company. The
notes have various due dates through October 1999 and interest rates ranging
from 7% to 10%.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
(a)(1) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:
HORSESHOE GAMING L.L.C. AND SUBSIDIARIES...............................................................F-2
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY ........................................................F-20
ROBINSON PROPERTY GROUP, L.P. ........................................................................F-33
(a)(2) INDEX TO FINANCIAL STATEMENT SCHEDULES:
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS........................................................S-2
</TABLE>
All other schedules are omitted as the required information is
inapplicable or not present in amounts
32
<PAGE> 33
sufficient to require submission of the schedule, or because the information is
presented in the consolidated financial statements or related notes thereto.
The exhibits listed on the accompanying Exhibit Index are filed as part
of this Form 10-K.
(b) REPORTS ON FORM 8-K:
None.
33
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Las Vegas, State of Nevada, on March 30, 1998.
Horseshoe Gaming, L.L.C.,
a Delaware limited liability company
By: Horseshoe Gaming, Inc.,
a Nevada corporation
Its: Manager
By: /s/ Jack B. Binion
-------------------------
Jack B. Binion
Its: Chief Executive
Officer and Chairman
of the Board of
Directors
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Jack B. Binion Chief Executive Officer March 30, 1998
- --------------------------- and Chairman of the Board
Jack B. Binion of Directors (Principal
Executive Officer) of
Horseshoe Gaming, Inc.
Chief Financial Officer March 30, 1998
/s/ Walter J. Haybert and Treasurer
- --------------------------- (Principal Financial
Walter J. Haybert and Accounting Officer)
of Horseshoe Gaming, Inc.
</TABLE>
34
<PAGE> 35
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Sequentially
Number ----------- Numbered
------ --------
Page
<S> <C> <C>
3.1* Certificate of Formation of Horseshoe Gaming, L.L.C.
3.2** Limited Liability Company Agreement of Horseshoe Gaming, L.L.C., as
amended to date.
3.3* Articles of Incorporation of Horseshoe Gaming, Inc. (formerly New
Gaming Capital Corporation), as amended to date.
3.4* Bylaws of Horseshoe Gaming, Inc. (formerly New Gaming Capital
Corporation).
3.5* Certificate of Limited Partnership of Robinson Property Group
Limited Partnership, as amended to date.
3.6* Second Amended and Restated Limited Partnership Agreement of
Robinson Property Group Limited Partnership, as amended to date.
3.7* Articles of Incorporation of Horseshoe GP, Inc., as amended to date.
3.8* Bylaws of Horseshoe GP, Inc.
4.3* Exchange Offer Letters dated October 10, 1995 by and between
Horseshoe Gaming, L.L.C., Horseshoe Riverboat Casinos, LLC,
Horseshoe Entertainment and Robinson Property Group Limited
Partnership, on the one hand, and each of the holders of 14.00%
Senior Secured Notes due April 15, 2000 and/or 14.00% Subordinated
Notes due April 15, 2001 issued by Horseshoe Riverboat Casinos, LLC
on the other hand.
4.7* Mortgage, Security Agreement and Assignment of Leases and Rents
executed by Horseshoe Entertainment, as Mortgagor, in favor of
Horseshoe Gaming, L.L.C., as Mortgagee.
4.8* First Preferred Ship Mortgage on the whole of the Queen of the Red
executed by Horseshoe Entertainment, as Owner and Mortgagor, in
favor of Horseshoe Gaming, L.L.C., as Mortgagee.
4.9* Bossier City Security Agreement and Assignment thereof.
4.10* Deed of Trust Security Agreement and Assignment of Leases and Rents from
Robinson Property Group Limited Partnership, as Grantor, to Rowan H.
Taylor, Jr., an individual, as Trustee for the benefit of Horseshoe
Gaming, L.L.C., and Hanwa American Corp., Yewdale Holdings Limited
and debis Financial Services, Inc., as Beneficiaries.
4.11* First Preferred Ship Mortgage on the whole of the Horseshoe Casino
and Hotel, Tunica executed by Robinson Property Group Limited
Partnership, as Owner and Mortgagor, in favor of Horseshoe Gaming,
L.L.C. and Chemical Trust Company of California, as Mortgagee.
4.12* Tunica County Security Agreement and Assignment thereof.
4.14* Note Assignment, dated as of October 10, 1995, from Horseshoe
Gaming, L.L.C., in favor of the Holders of Senior Secured Credit
Facility Notes due September 30, 1999, issued by Horseshoe Gaming,
L.L.C. and United States Trust Company of New York for the ratable
benefit of the Holders of 12.75% Senior Notes due September 30, 2000
issued by Horseshoe Gaming, L.L.C.
4.15* Intercompany Senior Secured Note due September 30, 2000, executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.16* Intercompany Senior Secured Note due September 30, 2000, executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
Exhibit Description Sequentially
Number ----------- Numbered
------ --------
<S> <C> <C>
4.20* 12.75% Senior Notes due 2000 Senior Note Purchase Agreement by and
among Horseshoe Gaming, L.L.C., Robinson Property Group Limited
Partnership, as Guarantor, and the Purchasers thereof.
4.21* Form of Senior Note of Horseshoe Gaming, L.L.C. 12.75% Senior Notes
due 2000.
4.22* Indenture, dated as of October 10, 1995, by and among Horseshoe
Gaming, L.L.C., U.S. Trust Company of California, N.A., as Trustee,
and Robinson Property Group Limited Partnership, as Guarantor, with
respect to the 12.75% Senior Notes due 2000.
4.23* Collateral Agency Agreement, dated as of October 6, 1995, by and
among Horseshoe Gaming, L.L.C., Robinson Property Group Limited
Partnership, B&O Development Limited Partnership, JBB Gaming
Investments, L.L.C. (formerly Worldwide Gaming Investments, L.L.C.),
and Jack Binion, as Grantors, the Purchasers of the 12.75% Senior
Notes due 2000, and United States Trust Company of New York, as
Collateral Agent.
4.24* Exchange and Registration Rights Agreement, dated as of October 10,
1995, by and among Horseshoe Gaming, L.L.C., Robinson Property Group
Limited Partnership, as Guarantor, and the Purchasers of the 12.75%
Notes due 2000 issued under the Indenture.
4.25* Second Pledge Agreement, dated as of October 10, 1995, from Jack
Binion, B&O Development Limited Partnership, and JBB Gaming
Investments, L.L.C. (formerly Worldwide Gaming Investments, L.L.C.)
in favor of United States Trust Company of New York, as Collateral
Agent for the benefit of the Holders of 12.75% Senior Notes due
September 30, 2100 issued by Horseshoe Gaming, L.L.C.
4.26* Second Pledge Agreement, dated as of October 10, 1995, from
Horseshoe Gaming, L.L.C. in favor of United States Trust Company of
New York, for the ratable benefit of the Holders of 12.75% Senior
Notes due September 30, 2000 issued by Horseshoe Gaming, L.L.C.
4.27* Second Ship Mortgage on the whole of the Queen of the Red by
Horseshoe Entertainment owner and mortgagor in favor of Horseshoe
Gaming, L.L.C., as Mortgagee.
4.28* Bossier City Second Security Agreement and Assignment thereof.
4.29* Second Deed of Trust, Security Agreement and Assignment of Leases
and Rents from Robinson Property Group Limited Partnership, as
Grantor, to Rowan H. Taylor, Jr., an individual, as Trustee for the
benefit of Horseshoe Gaming, L.L.C. and United States Trust Company
of New York, as Collateral Agent for the Senior Note Holders, as
beneficiaries.
4.30* Second Ship Mortgage on the whole of the Horseshoe Casino and Hotel,
Tunica executed by Robinson Property Group Limited Partnership, as
Owner and Mortgagor, in favor of Horseshoe Gaming, L.L.C. and United
States Trust Company of New York, as Collateral Agent for the
ratable benefit of the Senior Note Holders.
4.31* Tunica County Second Security Agreement and Assignment thereof.
4.37+ Amendment No. 1 to Indenture, dated as of July 19, 1996, by and among Horseshoe
Gaming, L.L.C., Robinson Property Group Limited Partnership and U.S.
Trust Company of California, N.A., as Trustee under the Indenture.
4.40+++ Intercompany Senior Secured Note due September 30, 2000 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.41+++ Intercompany Senior Secured Note due September 30, 2000 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
<S> <C>
4.42# Purchase Agreement for 9-3/8% Series A Senior Subordinated Notes by and among
Horseshoe Gaming, L.L.C. and Robinson Property Group Limited Partnership, as
guarantor, and Wasserstein Perella Securities, Inc. as Initial Purchaser
4.43# Form of 9-3/8% Senior Subordinated Note due 2007 of Horseshoe Gaming, L.L.C.
4.44# Indenture, dated as of June 15, 1997, by and among Horseshoe Gaming, L.L.C., U.S.
Trust Company of Texas, N.A. as Trustee, and Robinson Property Group Limited
Partnership, as guarantor, with respect to the 9-3/8% Senior Subordinated Notes due
2007.
4.45# Exchange and Registration Rights Agreement, dated as of June 25, 1997, by and
among Horseshoe Gaming, L.L.C., Robinson Property Group Limited Partnership and
Wasserstein Perella Securities, Inc.
4.46# Intercompany Senior Secured Note due June 15, 2007 executed by Robinson Property
Group Limited Partnership in favor of Horseshoe Gaming, L.L.C.
4.47# Intercompany Senior Secured Note due June 15, 2007 executed by Horseshoe
Entertainment in favor of Horseshoe Gaming, L.L.C.
4.48### Intercompany Senior Secured Note due June 15, 2000 executed by Robinson Property
Group Limited Partnership in favor of Horseshoe Gaming, L.L.C.
4.49### Intercompany Senior Secured Note due June 15, 2000 executed by Horseshoe
Entertainment in favor of Horseshoe Gaming, L.L.C.
4.50### Amended and Restated Credit Facility Agreement, dated as of November 12, 1997, by
and among Horseshoe Gaming, L.L.C. and Canadian Imperial Bank of Commerce as agent
for the lenders
4.51### Form of Revolving Note between Horseshoe Gaming, L.L.C. and Lender pursuant to the
Amended and Restated Credit Facility Agreement.
4.52### Form of Swingline Note between Horseshoe Gaming, L.L.C. and Canadian Imperial Bank of
Commerce pursuant to the Amended and Restated Credit Facility Agreement
4.53### Security Agreement made as of November 12, 1997 by the Company in favor of Canadian
Imperial Bank of Commerce (the "Bank").
4.54### Guarantee and Security Agreement made by Horseshoe Gaming, Inc. as of November 12,
1997 in favor of the Bank.
4.55### Guarantee and Security Agreement made by Horseshoe GP, Inc. as of November 12, 1997
in favor of the Bank.
4.56### Amended and Restated Guarantee and Security Agreement made by Robinson Property
Group LP as of November 12, 1997 in favor of the Bank.
4.57### Guarantee and Security Agreement made by New Gaming Capital Partnership as of
November 12, 1997 in favor of the Bank.
4.58### Guarantee and Security Agreement made by Horseshoe Ventures as of November 12, 1997 in
favor of the Bank.
4.59### Amended and Restated Note Assignment made by the Company as of November 12, 1997 in
favor of the Bank.
4.60### Amended and Restated Pledge Agreement of the Company as of November 12, 1997 in favor
of the Bank.
4.61### Amended and Restated Pledge Agreement of JBB Gaming Investments as of November 12, 1997
in favor of the Bank.
</TABLE>
<PAGE> 38
<TABLE>
<CAPTION>
<S> <C>
4.62### Amended and Restated Intercreditor Agreement dated as of November 12, 1997 by and
between Horseshoe Gaming, L.L.C. and Canadian Imperial Bank of Commerce.
10.1* Employment Agreement dated January 1, 1996 by and between Horseshoe Gaming, Inc. and
Paul Alanis.
10.2** Employment Agreement dated as of October 1, 1995 by and between Horseshoe Gaming, Inc.
and Walter J. Haybert.
10.3** Assignment Agreement dated as of October 1, 1995 by and between Horseshoe Gaming,
L.L.C. and Walter J. Haybert.
10.4** Employment Agreement dated as of October 1, 1995 by and between Horseshoe Gaming, Inc.
and John J. Schreiber.
10.5** Assignment Agreement dated as of October 1, 1995 by and between Horseshoe Gaming,
L.L.C. and John J. Schreiber.
10.6** Employment Agreement dated as of October 1, 1995 by and between Horseshoe Gaming, Inc.
and John Michael Allen.
10.7** Assignment Agreement dated as of October 1, 1995 by and between Horseshoe Gaming,
L.L.C. and John Michael Allen.
10.8* Consulting Agreement dated March 10, 1993 by and between Jack Binion and Koar
International, Inc. (ultimately assigned to Horseshoe Gaming, Inc. and KII-Pasadena,
Inc.)
10.9* Warrant to purchase 1,941,981 Horseshoe Gaming Units, dated as of October 10, 1995,
issued to Hanwa American Corp.
10.10* Warrant to purchase 1,941,980 Horseshoe Gaming Units, dated as of October 10, 1995,
issued to Yewdale Holdings Limited.
10.11* Warrant to purchase 1,566,629 Horseshoe Gaming Units, dated as of October 10, 1995,
issued to Hanwa American Corp.
10.12* Warrant to purchase 1,566,630 Horseshoe Gaming Units, dated as of October 10, 1995,
issued to Yewdale Holdings Limited.
10.13** Registration Rights Agreement dated as of October 10, 1995 by and between Horseshoe
Gaming, L.L.C., on the one hand, and Yewdale Holdings Limited, Post Balanced Fund, L.P.,
Capital Fund Foundation, Raymond Zimmerman, as Trustee for the Charles N. Mathewson
Charitable Remainder Uni Trust, Hanwa American Corp., Onyx Partners, Inc., Alpine
Associates, Janless Corp., Andrew Astrachan, and Donald Schupak, on the other hand.
10.14* Assignment and Purchase Agreement dated as of October 1, 1995 between Jack Binion and
Horseshoe Gaming, L.L.C.
10.15* Promissory Note dated October 10, 1995 by Horseshoe Gaming, L.L.C.
in favor of Jack B. Binion in the principal amount of $500,000.
10.16* Purchase Agreement dated as of October 1, 1995 between B&O
Development Limited Partnership and Horseshoe Gaming, L.L.C.
10.17* Assignment Agreement dated as of October 1, 1995 between KR, Inc. and Horseshoe
Ventures, L.L.C.
10.18* Promissory Note dated October 10, 1995 by Horseshoe Ventures,
L.L.C., in favor of KR, Inc. in the principal amount of
$4,769,016.47.
10.19* Option Agreement dated as of October 10, 1995 between Horseshoe
Gaming, L.L.C., on the one hand, and Hanwa American Corp. and
Yewdale Holdings Limited, on the other hand.
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
<S> <C>
10.20* Letter Agreement dated as of October 10, 1995 between Horseshoe Gaming, L.L.C. and
Hanwa American Corp.
10.21* Letter Agreement dated as of October 10, 1995 between Horseshoe Gaming, L.L.C. and
Yewdale Holdings Limited.
10.22** Purchase and Sale Agreement dated as of November 15, 1995 by and between Frank
Pernici and New Gaming Capital Partnership, with Horseshoe Gaming, L.L.C., as Guarantor.
10.23* Employment Agreement dated January 1, 1996 by and between Horseshoe Gaming, L.L.C. and
Loren S. Ostrow.
10.24* 401(k) Plan of Robinson Property Group Limited Partnership.
10.25** Limited Partnership Agreement of Horseshoe Entertainment, a Louisiana limited
partnership, dated April 20th, 1993.
10.26** Second and Amended and Restated Limited Partnership Agreement of New Gaming Capital
Partnership, a Nevada limited partnership, dated as of October 1, 1995.
10.27** Limited Liability Company Agreement of Horseshoe Ventures, L.L.C., a Delaware limited
liability company, dated as of October 1, 1995.
10.30** Amendment No. 1 to Option Agreement, dated as of April 15, 1996, between Horseshoe
Gaming, L.L.C., on the one hand, and Hanwa American Corp. and Yewdale Holdings
Limited, on the other hand.
10.32** Agreement to Purchase and Sell Real Estate, dated March 13, 1996, by and between Le
Bossier, L.L.C., as Seller, and Horseshoe Entertainment, as Buyer.
10.33++ Amended Employment Agreement dated October 1, 1995 by and between Horseshoe Gaming,
Inc. and John Michael Allen.
10.34++ Employment Agreement dated July 1, 1996 by and between Horseshoe Gaming, Inc. and Gary
Border.
10.35++ Amended Employment Agreement dated October 1, 1995 by and between Horseshoe Gaming,
Inc. and Walter J. Haybert.
10.36++ Amended Employment Agreement dated October 1, 1995 by and between Horseshoe Gaming,
Inc. and John J. Schreiber.
10.37# Second Amended and Restated Employment Agreement dated as of October 1, 1995 by and
between Horseshoe Gaming, Inc. and John Michael Allen.
10.38# Second Amended and Restated Employment Agreement dated as of October 1, 1995 by and
between Horseshoe Gaming, Inc. and Walter J. Haybert.
10.39# Second ,Amended and Restated Employment Agreement dated as of October 1, 1995, by and
between Horseshoe Gaming, Inc. and John J. Schreiber.
10.40# 1997 Unit Option Plan of Horseshoe Gaming, L.L.C.
10.41# Unit Option Agreement dated as of February 1, 1997 by and between Horseshoe Gaming,
L.L.C. and Larry Lepinski.
10.42# Agreement Between Owner and Contractor for the Construction of a Hotel between
Horseshoe Entertainment and Manhattan Construction Company and Whitaker Construction
Company d.b.a. Manhattan/Withtaker, a Joint Venture.
10.43# Vessel Construction Agreement dated as of March 6, 1997 between Levac Shipyards, Inc.
and Horseshoe Entertainment.
</TABLE>
<PAGE> 40
<TABLE>
<CAPTION>
<S> <C>
10.44# Contract for Construction dated as of August 6, 1996 between
Robinson Property Group Limited Partnership and Charles N. White
Construction Company, together with Change Orders Numbered 1 through
6.
10.45## Contribution and Sale Agreement dated as of August 26, 1997 by and
between Lady Luck Vicksburg, Inc. and Horseshoe Gaming, L.L.C.
21.1### Subsidiaries of Horseshoe Gaming, L.L.C.
27.1### Financial Data Schedule-Horseshoe Gaming L.L.C. and Subsidiaries.
</TABLE>
- -----------
* Filed as an Exhibit to Registration Statement on Form S-4 (No.
333-0214) filed on January 8, 1996.
** Filed as an Exhibit to Amendment No. 1 to Registration Statement filed
on April 26, 1996.
*** Filed as an Exhibit to Amendment No. 2 to Registration Statement filed
on May 9, 1996.
+ Filed as an Exhibit to Form 10-Q for the Quarter Ended June 30, 1996,
filed on August 13, 1996.
++ Filed as an Exhibit to Form 10-K for the Year Ended December 31, 1996,
filed on March 31, 1997.
+++ Filed as an Exhibit to Form 10-Q for the Quarter Ended March 31, 1997,
filed on May 7, 1997.
# Filed as an Exhibit to Registration Statement on Form S-4 (No.
333-33145) filed on August 7, 1997.
## Filed as an Exhibit to Amendment No. 1 to Registration Statement filed
on October 8, 1997.
### Filed herewith.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material has been sent to security holders
during the fiscal year ended December 31, 1997.
<PAGE> 41
<TABLE>
<CAPTION>
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Horseshoe Gaming, L.L.C. and Subsidiaries Page
- ----------------------------------------- ----
<S> <C>
Report of Independent Public Accountants F-2
Consolidated Financial Statements:
Balance sheets as of December 31, 1997 and 1996 F-3
Statements of operations for the years ended December 31, 1997, 1996 and 1995 F-4
Statements of members' equity for the years ended December 31, 1997, 1996 and 1995 F-5
Statements of cash flows for the years ended December 31, 1997, 1996 and 1995 F-6
Notes to consolidated financial statements F-7
New Gaming Capital Partnership and Subsidiary
Report of Independent Public Accountants F-20
Consolidated Financial Statements:
Balance sheets as of December 31, 1997 and 1996 F-21
Statements of operations for the years ended December 31, 1997, 1996 and 1995 F-22
Statements of partners' capital for the years ended December 31, 1997, 1996 and 1995 F-23
Statements of cash flows for the years ended December 31, 1997, 1996 and 1995 F-24
Notes to consolidated financial statements F-25
Robinson Property Group, L.P.
Report of Independent Public Accountants F-33
Financial Statements:
Balance sheets as of December 31, 1997 and 1996 F-34
Statements of operations for the years ended December 31, 1997, 1996 and 1995 F-35
Statements of partners' capital for the years ended December 31, 1997, 1996 and 1995 F-36
Statements of cash flows for the years ended December 31, 1997, 1996 and 1995 F-37
Notes to financial statements F-38
</TABLE>
F-1
<PAGE> 42
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Horseshoe Gaming, L.L.C.:
We have audited the accompanying consolidated balance sheets of Horseshoe
Gaming, L.L.C. (a Delaware limited liability company) and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, members' equity and cash flows for each of the three years in the
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Horseshoe Gaming, L.L.C. and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada,
February 13, 1998.
F-2
<PAGE> 43
<TABLE>
<CAPTION>
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31,
-------------------------------
1997 1996
--------- ---------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 48,710 $ 79,159
Accounts receivable, net of allowance for doubtful
accounts of $8,965 and $3,452 13,518 8,026
Inventories 2,958 1,435
Prepaid expenses and other 2,102 1,639
--------- ---------
Total current assets 67,288 90,259
--------- ---------
Property and Equipment:
Land 14,688 10,225
Buildings, boat, barge and improvements 276,936 121,807
Furniture, fixtures and equipment 68,194 41,572
Less: accumulated depreciation (42,769) (26,493)
--------- ---------
317,049 147,111
Construction in progress 67,428 38,644
--------- ---------
Net property and equipment 384,477 185,755
--------- ---------
Other Assets:
Escrow funds -- 42,235
Goodwill, net 37,960 39,226
Other 21,831 20,122
--------- ---------
$ 511,556 $ 377,597
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 1,674 $ 11,060
Accounts payable 8,784 3,184
Construction payables 27,984 14,106
Accrued expenses and other 46,601 23,751
--------- ---------
Total current liabilities 85,043 52,101
Long-term Debt, less current maturities 311,601 221,648
Minority Interest (1,317) (827)
Commitments and Contingencies (Notes 7 and 8)
Redeemable Ownership Interests, net of deferred
compensation of $1,954 and $3,033 51,634 24,893
Members' Equity 64,595 79,782
--------- ---------
$ 511,556 $ 377,597
The accompanying notes are an integral part of these
consolidated financial statements.
F-3
</TABLE>
<PAGE> 44
<TABLE>
<CAPTION>
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
Year Ended December 31,
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Casino $ 321,236 $ 317,479 $ 283,402
Food and beverage 29,990 26,947 24,299
Hotel 8,773 7,919 7,289
Retail and other 4,305 4,425 4,092
--------- --------- ---------
364,304 356,770 319,082
Promotional allowances (29,211) (25,033) (20,697)
--------- --------- ---------
Net revenues 335,093 331,737 298,385
--------- --------- ---------
Expenses:
Casino 175,394 162,408 133,299
Food and beverage 10,981 12,317 12,741
Hotel 7,877 6,798 5,662
Retail and other 1,425 1,359 1,728
General and administrative 43,600 45,351 42,923
Development 1,653 6,629 4,387
Depreciation and amortization 19,411 15,989 12,545
Preopening 2,964 -- 7,021
--------- --------- ---------
Total expenses 263,305 250,851 220,306
--------- --------- ---------
Operating Profit Before Corporate Expenses 71,788 80,886 78,079
Corporate expenses 22,490 10,254 3,375
--------- --------- ---------
Operating Income 49,298 70,632 74,704
Other Income (Expense):
Interest expense (20,792) (28,090) (20,188)
Interest and other income 4,996 6,126 1,453
Other, net (429) 154 --
Minority interest in income of subsidiaries (420) (1,861) (8,850)
--------- --------- ---------
Income Before Extraordinary
Loss on Early Retirement of Debt 32,653 46,961 47,119
Extraordinary Loss on Early Retirement of Debt (5,243) -- (7,179)
--------- --------- ---------
Net Income $ 27,410 $ 46,961 $ 39,940
========= ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
F-4
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
Members' Contributions
Equity Receivable Total
-------- -------- --------
<S> <C> <C> <C>
Balance at December 31, 1994 $ 3,633 $ -- $ 3,633
Contributions 1,273 (1,150) 123
Distributions:
Cash (21,222) -- (21,222)
Payable (1,857) -- (1,857)
Increase in redeemable ownership interests (13,963) -- (13,963)
Capital accounts of minority interests purchased 4,543 -- 4,543
Step-up in basis of assets due to purchase
of minority interests 41,755 (205) 41,550
Net income 39,940 -- 39,940
-------- -------- --------
Balance at December 31, 1995 54,102 (1,355) 52,747
Collection of contributions receivable -- 1,355 1,355
Cash distributions (18,853) -- (18,853)
Increase in redeemable ownership interests (2,428) -- (2,428)
Net income 46,961 -- 46,961
-------- -------- --------
Balance at December 31, 1996 79,782 -- 79,782
Distributions:
Cash (11,056) -- (11,056)
Payable (15,000) -- (15,000)
Increase in redeemable ownership interests (16,541) -- (16,541)
Net income 27,410 -- 27,410
-------- -------- --------
Balance at December 31, 1997 $ 64,595 $ -- $ 64,595
======== ======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year Ended December 31,
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 27,410 $ 46,961 $ 39,940
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest in income of subsidiaries 420 1,861 8,850
Depreciation and amortization 19,411 15,989 12,545
Amortization of debt discount,
deferred finance charges and other 2,313 3,032 2,849
Loss on disposal of land and other assets 389 1,011 --
Provision for doubtful accounts 7,556 4,388 2,186
Increase in redeemable ownership
interests 15,066 4,546 6,003
Extraordinary loss on early retirement of debt 5,243 -- 7,179
Preopening expenses -- -- 3,819
Net change in assets and liabilities (6,482) (8,390) 7,746
--------- --------- ---------
Net cash provided by operating activities 71,326 69,398 91,117
--------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment (215,576) (58,824) (18,986)
Increase (decrease) in construction payables 13,879 10,906 (84)
Proceeds from sale of land -- 1,400 --
Purchase of land held for sale -- -- (1,344)
Net decrease (increase) in escrow funds 42,235 (10,919) (31,316)
Net increase in other assets (1,717) (8,024) (6,588)
--------- --------- ---------
Net cash used in investing activities (161,179) (65,461) (58,318)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from debt and warrants 175,438 49,073 200,772
Payments on debt (97,877) (15,547) (149,879)
Capital contributions -- -- 123
Capital distributions (11,056) (20,710) (21,222)
Contributions from minority holders -- -- 600
Distributions to minority holders (910) (1,560) (6,069)
Deferred interest payable -- -- (2,467)
Debt issue costs and commitment fees (6,191) (1,575) (7,700)
--------- --------- ---------
Net cash provided by financing activities 59,404 9,681 14,158
--------- --------- ---------
Net change in cash and cash equivalents (30,449) 13,618 46,957
Cash and cash equivalents, beginning of period 79,159 65,541 18,584
--------- --------- ---------
Cash and cash equivalents, end of period $ 48,710 $ 79,159 $ 65,541
========= ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
F-6
</TABLE>
<PAGE> 47
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
General
Horseshoe Gaming, L.L.C. (the "Company") was formed in Delaware in August 1995
to acquire, through a roll-up transaction effective October 1, 1995, entities
under the control of Mr. Jack B. Binion ("Mr. Binion"), which conduct gaming,
hotel and other related operations in Bossier City, Louisiana, and Tunica
County, Mississippi, and are actively involved in efforts to develop gaming
operations in new jurisdictions. Because of the integrated nature of these
operations, the Company is considered to be engaged in one industry segment. A
description of each entity is as follows:
- - New Gaming Capital Partnership ("NGCP") is a Nevada limited partnership
which was formed on February 4, 1993. NGCP is 100% owned by the Company
and its subsidiary Horseshoe GP, Inc. As of December 31, 1997 and 1996,
NGCP owned 91.92% of Horseshoe Entertainment, L.P. ("HE"), a Louisiana
limited partnership which owns and operates the Horseshoe Bossier City
(see Note 8).
- - Robinson Property Group, L.P. ("RPG") is a Mississippi limited
partnership which was formed on June 7, 1993. RPG owns and operates the
Horseshoe Casino Center located in Tunica County, Mississippi, and is
100% owned by the Company and its subsidiary Horseshoe GP, Inc.
- - Horseshoe Ventures, L.L.C. ("Horseshoe Ventures") is a Delaware limited
liability company which was formed in August 1995 to pursue the
development of casinos in new jurisdictions and is 80% owned and
managed by the Company.
NGCP and RPG
The Company obtained its ownership interest in NGCP and RPG by exchanging
ownership interests in the Company for partnership interests in NGCP and RPG.
The exchange of ownership interests between the Company and Mr. Binion and
certain affiliates of Mr. Binion has been accounted for at historical cost
similar to that in pooling of interests accounting. On the effective date of the
roll-up transaction, Mr. Binion and certain affiliates of Mr. Binion owned 80.0%
and 82.7% of NGCP and RPG, respectively. The exchange for the remaining
partnership interests of NGCP and RPG, other than ownership interests issued
pursuant to employee compensation arrangements (see Note 7), have been accounted
for as a purchase of minority interests based on fair value as determined by an
independent appraisal. The total cost of the minority interests in NGCP and RPG
acquired by the Company, based on the fair value of the ownership interests
exchanged, was $17,729,000 and $24,026,000, respectively, which has been
allocated as follows (in thousands):
<TABLE>
<CAPTION>
NGCP RPG Total
------- ------- -------
<S> <C> <C> <C>
Land $ 149 $ 2,231 $ 2,380
Gaming licenses 154 76 230
Goodwill 17,426 21,514 38,940
Contribution receivable -- 205 205
------- ------- -------
Total $17,729 $24,026 $41,755
======= ======= =======
</TABLE>
F-7
<PAGE> 48
1 ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
Gaming licenses are amortized over the remaining term of each license, which is
approximately two and one-half years for NGCP and approximately twelve months
for RPG. Goodwill is amortized on a straight-line basis over 25 years, which
management estimates is the related benefit period (see discussion of the
Company's accounting policy for long-lived assets below). Management regularly
evaluates whether or not the future undiscounted cash flows of NGCP and RPG are
sufficient to recover the carrying amount of the goodwill associated with each
entity. Additionally, management continually monitors such factors as the status
of new or proposed legislation, the competitive environment and the general
economic conditions of the markets in which it operates. If the estimated future
undiscounted cash flows are not sufficient to recover the carrying amount of
goodwill and, accordingly, an impairment has occurred, management intends to
write down the carrying amount of goodwill to its estimated fair value based on
discounted cash flows. The amount of amortization expense recorded for the years
ended December 31, 1997 and 1996 and for the three months in 1995 following the
roll-up transaction was $1,624,000, $1,668,000 and $418,000, respectively.
The financial statements for NGCP and RPG are consolidated for all periods
presented. Prior to the roll-up transaction, the ownership interests not owned
by Mr. Binion and certain affiliates of Mr. Binion, other than ownership
interests issued pursuant to employee compensation arrangements (see Note 7),
are included in minority interests in the accompanying consolidated financial
statements. Such minority interests represented 15.4% of NGCP and 15.1% of RPG
for all periods prior to the roll-up transaction. Subsequent to October 1, 1995,
minority interests represent the limited partners of HE, which owned 11% of HE
at the time of the roll-up transaction and 8.08% at December 31, 1997 and 1996
(see Note 8).
Horseshoe Ventures
The Company and JBB Gaming Investments, L.L.C. ("JBB"), a Delaware limited
liability company owned by Mr. Binion and an affiliate of Mr. Binion, formed
Horseshoe Ventures to pursue the development of casinos in new jurisdictions.
The Company is the manager of Horseshoe Ventures and contributed a note for
$400,000, plus a commitment to provide future financing, in exchange for an 80%
membership interest. The note was paid in full on October 26, 1995. JBB
contributed $100,000 in cash in exchange for a 20% membership interest.
Horseshoe Ventures reimbursed Mr. Binion for the total costs and expenses
incurred pursuing the development of casinos in new jurisdictions in the form of
a note for $4,269,000, which was paid in full on October 26, 1995. Since these
costs and expenses were reimbursed to Mr. Binion, such amounts are included in
the accompanying consolidated financial statements as if they were incurred by
the Company and its subsidiaries. The amount of Horseshoe Ventures' net loss,
which is included in development expenses in the accompanying consolidated
statements of operations, was $1,558,000, $2,183,000 and $2,663,000 for the
years ended December 31, 1997, 1996 and 1995, respectively. There is no minority
interest in these losses reflected in the accompanying consolidated statements
of operations, because the Company funded 100% of such losses and is obligated
to fund 100% of future losses.
F-8
<PAGE> 49
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
all of its subsidiaries (see Note 1), since the Company either holds more than a
50% ownership interest or has the ability to control such subsidiaries in its
capacity as manager. All significant intercompany accounts and transactions have
been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include commercial paper, amounts held in mutual funds
and other investments with original maturities of 90 days or less when
purchased.
Inventories
Inventories are stated at the lower of cost, as determined on a first-in,
first-out basis, or market value and consist primarily of food, beverage, retail
merchandise, kitchen smallwares and employee wardrobe.
Property and Equipment
Property and equipment are stated at cost. The costs of normal repairs and
maintenance are expensed as incurred while major expenditures that extend the
useful lives of assets are capitalized.
Depreciation is provided on the straight-line basis over the estimated useful
lives as follows:
Buildings, boat, barge and improvements 15 to 30 years
Furniture, fixtures and equipment 3 to 10 years
Capitalized Interest
The Company capitalizes interest for associated borrowing costs of major
construction projects. Capitalization of interest ceases when the asset is
substantially complete and ready for its intended use. Interest capitalized
during the years ended December 31, 1997, 1996 and 1995 was $11,191,000,
$1,272,000 and $651,000, respectively.
Deferred Finance Charges
Deferred finance charges, which are included in other assets, consists of fees
and expenses incurred to obtain the Company's debt. The deferred finance charges
are being amortized over the term of the debt using the effective interest
method (see Note 5).
Casino Revenues
In accordance with industry practice, casino revenues represent the net win from
gaming activities, which is the difference between gaming wins and losses.
F-9
<PAGE> 50
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Casino Promotional Allowances
Casino promotional allowances consist primarily of the retail value of
complimentary food and beverage, rooms and other services furnished to guests
without charge. Such amounts are included in gross revenues and deducted as
promotional allowances. The estimated costs of providing such complimentary
services, which are substantially included in casino department expenses, are as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Food and beverage $24,967 $22,055 $17,165
Hotel 3,360 3,034 2,665
Other operating expenses 664 619 486
------- ------- -------
$28,991 $25,708 $20,316
======= ======= =======
</TABLE>
Advertising Costs
The Company expenses all costs associated with advertising as incurred, and such
amounts are included in general and administrative expenses in the accompanying
consolidated statements of operations.
Development and Preopening Expenses
Until all necessary approvals to proceed with the development of a new casino
project are obtained from the appropriate regulatory authorities, the related
development costs are expensed as incurred. Preopening costs incurred after the
receipt of necessary approvals are deferred as incurred and expensed upon the
opening of the related casino. Preopening costs of $7,021,000 were expensed in
connection with the opening of the Horseshoe Casino Center in February 1995.
Preopening costs incurred during the expansion and development of existing
casino properties are expensed as incurred. Total preopening costs of $2,964,000
were expensed during 1997 in conjunction with the expansion efforts at the
Horseshoe Bossier City and Horseshoe Casino Center.
Corporate Expenses
The Company is managed by Horseshoe Gaming, Inc. ("HGI"), which owns
approximately 30.6% of the Company and is owned by Mr. Binion and certain
affiliates of Mr. Binion. Mr. Binion is the Chief Executive Officer of HGI. The
Company reimburses HGI for expenses associated with the management of the
Company but does not compensate HGI for services as manager. HGI's sole purpose
is to manage the Company; accordingly, all expenses incurred by HGI are charged
to the Company as corporate expenses and are reflected in the accompanying
consolidated statements of operations in the period such expenses are incurred
by HGI.
Included in corporate expenses for the years ended December 31, 1997, 1996 and
for the three months in 1995 following the roll-up transaction are normal
operating expenses of HGI. Also included in corporate expenses is the non-cash
compensation expenses related to ownership interest in the Company issued to
employees pursuant to employment agreements (see Note 7).
F-10
<PAGE> 51
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company is organized as a limited liability company under Delaware laws. The
Internal Revenue Service will classify a limited liability company as a
partnership for federal income tax purposes if the limited liability company
lacks certain characteristics of corporations. Management believes that the
Company lacks the corporate characteristics and will be classified as a
partnership for federal income tax purposes. Accordingly, no provision is made
in the accounts of the Company for federal income taxes, as such taxes are
liabilities of the members. The Company's income tax return and the amount of
allocable taxable income are subject to examination by federal taxing
authorities. If an examination results in a change to taxable income, the income
tax reported by the members may also change. The tax bases in the Company's
assets and liabilities were in excess of the amounts reported in the
accompanying consolidated financial statements by $1,613,000 and $7,754,000 at
December 31, 1997 and 1996, respectively. Taxable income was in excess of net
income reported in the accompanying consolidated statements of operations for
all periods presented.
Redeemable Ownership Interests
The Company is obligated to repurchase ownership interests held by certain
employees in the event of their termination at a price equal to the then fair
market value, based on an independent appraisal. The fair value of such
ownership interests is reported outside of members' equity in the accompanying
consolidated balance sheets for all periods presented. The ownership interests
issued to employees pursuant to employment contracts is recorded as deferred
compensation in the accompanying consolidated balance sheets and expensed at
fair market value over the vesting period (see Note 7).
In addition, certain individuals obtained ownership interests in the Company or
its subsidiaries prior to becoming employees of the Company. Upon becoming an
employee, each individual entered into an employment agreement which includes,
among other things, a put/call provision in the event of the employee's
termination at a price equal to the then fair market value, based on an
independent appraisal. These individuals became employees of the Company between
October 1, 1995, and January 1, 1996, and held ownership interests in the
Company totaling 5.1% as of December 31, 1997 and 1996. The fair value of these
ownership interests of $32,931,000 and $16,391,000 has also been classified
outside of members' equity in the accompanying consolidated balance sheets as of
December 31, 1997 and 1996, respectively.
Capital Distributions
The Company's debt agreements contain covenants that limit capital distributions
to the members. Capital distributions to the members are to be based upon
taxable income and the federal and state corporate statutory tax rates in
effect. Such distributions are to be paid quarterly based upon estimated taxable
income. After filing by the Company and its subsidiaries of their annual tax
returns, each member is to reimburse the Company for overpayments of capital
distributions or the Company is to withhold such amounts from future
distributions to the members. On December 31, 1997, the Company declared a
distribution of $15,000,000, which is included in accrued expenses in the
accompanying consolidated balance sheets. The dividend was paid in February
1998.
F-11
<PAGE> 52
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of Long-Lived Assets
In accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," management continually evaluates whether events or changes in
circumstances indicate that the carrying amount of long-lived assets may not be
recoverable. Based on management's evaluations, no significant impairments of
long-lived assets have occurred during the three years ended December 31, 1997.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities, at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain reclassifications were made to prior period financial statements to
conform to current year presentation.
3. CONSOLIDATED STATEMENTS OF CASH FLOWS
Non-cash investing and financing activities consist of the following:
Cash payments made for interest, excluding amounts capitalized, totaled
$29,524,000, $24,799,000 and $19,848,000 for the years ended December
31, 1997, 1996 and 1995, respectively.
Distributions totaling $15,000,000, which were accrued at December 31,
1997 were paid in February 1998.
Purchases of property and equipment financed through payables totaled
$17,817,000 for the year ended December 31, 1995.
A capital contribution of $1,150,000 was made through the issuance of a
contribution receivable during the year ended December 31, 1995. The
Company received land in satisfaction of the receivable during 1996.
Distributions totaling $1,857,000, which were accrued at December 31,
1995, were paid during 1996. Additionally, in 1995, the Company recorded
a payable for the purchase of an employee's ownership in the Company in
the amount of $3,306,000, of which $1,653,000 was paid during 1996 and
1997.
F-12
<PAGE> 53
3. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
The net change in assets and liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
(Increase) decrease in assets:
Accounts receivable $(13,091) $ (7,207) $ (6,327)
Inventories (1,523) 46 (142)
Prepaid expenses and other (493) (281) (335)
Increase (decrease) in liabilities:
Accounts payable 5,600 (726) (24)
Accrued expenses and other 3,025 (222) 14,574
-------- -------- --------
$ (6,482) $ (8,390) $ 7,746
======== ======== ========
</TABLE>
4. ACCRUED EXPENSES AND OTHER
Accrued expenses and other consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
1997 1996
------- -------
<S> <C> <C>
Payroll and related tax liabilities $ 8,814 $ 2,811
Vacation and other employee benefits 3,050 3,969
Accrued interest 5,165 5,283
Gaming, sales, use and property taxes 2,542 2,400
Progressive slot and slot club liabilities 4,681 4,325
Distributions payable 15,000 --
Other accrued expenses 7,349 4,963
------- -------
$46,601 $23,751
======= =======
</TABLE>
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1997 1996
-------- --------
(in thousands)
<S> <C> <C>
Revolving Senior Secured Credit Facility, secured by substantially all
of the assets of the Company, $130 million borrowing capacity, due
June 15, 2000, interest at 200
basis points above the Eurodollar rate (7.91%) $ 15,100 $ --
9.38% Senior Subordinated Notes (effective interest of
9.39%), due June 15, 2007, net of unamortized
discount of $152,000 159,848 --
12.75% Senior Notes (effective interest rate of 13.01%),
due September 30, 2000, net of unamortized
discount of $1,522,000 and $2,272,000 135,478 147,728
</TABLE>
F-13
<PAGE> 54
5. LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
December 31,
----------------------
1997 1996
--------- ---------
(in thousands)
<S> <C> <C>
Senior Secured Credit Facility; variable interest at LIBOR plus 3%
(weighted average interest rate of 9.68% during
1996); retired June 1997 (see below) -- 79,303
Notes Payable, interest ranging from 6% to
8.25%, due in various installments through
January 1999 2,849 5,677
--------- ---------
313,275 232,708
Less: current maturities (1,674) (11,060)
--------- ---------
$ 311,601 $ 221,648
========= =========
</TABLE>
In April 1994, Horseshoe Riverboat Casinos, LLC ("HRC"), which was owned 50% by
HE and 50% by RPG, completed a private placement of debt securities which were
used for the construction of the Horseshoe Bossier City and the Horseshoe Casino
Center. The total amount of Senior Notes and Subordinated Notes (collectively,
the "Old Notes") issued by HRC was $38,000,000 and $32,000,000, respectively,
and was loaned to HE and RPG on identical terms. These notes were retired in
October 1995 with the proceeds from the New Senior Notes and Senior Secured
Credit Facility (see discussion below).
On October 10, 1995, the Company retired the Old Notes, senior vessel financing
and certain notes payable to affiliates with a portion of the proceeds from a
$150,000,000 Senior Secured Credit Facility due September 30, 1999 (the "Credit
Facility") and a private placement of $100,000,000 of 12.75% senior notes (with
an effective interest rate of approximately 13.01%) due September 30, 2000 (the
"New Senior Notes"). Senior equipment financing was retired in December 1995. An
extraordinary loss on early retirement of debt of $7,179,000 was recognized in
1995 for prepayment penalties and the write-off of the unamortized discounts and
deferred finance charges.
The New Senior Notes were issued at 98% of par value and included warrants to
purchase an additional $50,000,000 of New Senior Notes at a price of 98.15% of
par value. These warrants were exercised on April 10, 1996, and the Company
received proceeds of $49,073,000. The New Senior Notes and the related interest
are guaranteed unconditionally by RPG and are secured by a second pledge of the
Company's ownership interest in all present and future subsidiaries with the
exception of NGCP's ownership interest in HE. The New Senior Notes are also
secured by (i) a second lien position on substantially all of the assets of
Horseshoe Casino Center other than certain gaming equipment; (ii) a second lien
position on all intercompany notes received by the Company from its
subsidiaries, in each case secured by a second lien on the casino and real
property of each subsidiary; and (iii) a second pledge of the minority interest
in all present and future subsidiaries owned by Mr. Binion and certain
affiliates of Mr. Binion.
The New Senior Notes are not redeemable prior to September 30, 1999, except
prior to September 30, 1998, the Company may redeem up to 35% of the aggregate
principal amount at 110% of the par value with the net cash proceeds of a public
offering of the Company's stock.
F-14
<PAGE> 55
5. LONG-TERM DEBT (CONTINUED)
On June 15, 1997, the Company issued $160,000,000 of 9 3/8% Senior Subordinated
Notes ("Subordinated Notes") due June 15, 2007. The Subordinated Notes were
issued at 99.899% of par value and have an effective interest rate of 9.39%. The
Subordinated Notes are unsecured and require semi-annual interest payments on
June 15 and December 15. A portion of the proceeds were used to retire the
Credit Facility, as well as, purchase $13 million in New Senior Notes. An
extraordinary loss on early retirement of debt of $5,243,000 was recognized in
1997 for prepayment penalties and premium, and the write-off of unamortized
discounts and deferred finance charges. The remaining proceeds were used to fund
a portion of the expansion of the Company's existing facilities.
On November 12, 1997, the Company finalized a restructuring of its Senior
Secured Credit Facility. Pursuant to the terms of the amended and restated loan
agreement, CIBC Wood Gundy Securities Corp. has agreed to provide a $130 million
Senior Secured Revolving Credit Facility (the "Amended and Restated Credit
Facility"). As of December 31, 1997, the Company had drawn $15,100,000 under the
Amended and Restated Credit Facility. An additional $45,000,000 had been
borrowed as of February 13, 1998. The borrowings under the Amended and Restated
Credit Facility has enabled the Company to fund the completion of the expansion
of the Bossier City and Tunica properties.
The Amended and Restated Credit Facility and the related interest are guaranteed
unconditionally by RPG and are secured by a first pledge of the Company's
ownership interest in all present and future subsidiaries with the exception of
NGCP's ownership interest in HE. The Amended and Restated Credit Facility is
also secured by (i) a first lien position on substantially all of the assets of
Horseshoe Casino Center other than certain gaming equipment; (ii) a first lien
position on all intercompany notes received by the Company from its
subsidiaries, in each case secured by a first lien on the casino and real
property of each subsidiary; and (iii) a first pledge of the minority interest
in all present and future subsidiaries owned by Mr. Binion and certain
affiliates of Mr. Binion.
The New Senior Notes and the Amended and Restated Credit Facility contain
covenants that, among other things, (i) limit the amount of additional
indebtedness which may be incurred by the Company and its subsidiaries; (ii)
prohibit any consolidation or merger of the Company or its subsidiaries with an
affiliate or third party, any sale of substantially all of the Company or its
subsidiaries' assets, or any payment of subordinated indebtedness prior to its
scheduled maturity; and (iii) require the Company and its subsidiaries to invest
excess funds in cash equivalents, as defined, and government securities with a
maturity of one year or less.
As of December 31, 1997 the five year maturities for long-term debt are
$1,674,000 (1998), $1,175,000 (1999), $152,100,000 (2000), $0 (2001) and $0
(2002).
As of December 31, 1997 and December 31, 1996 the fair market value of the New
Senior Notes, based on quoted market prices was $151,385,000 and $162,750,000,
respectively. As of December 31, 1997, the fair market value of the Senior
Subordinated Notes, based on quoted market prices was $168,000,000. The fair
market value of the Company's other long-term debt approximated its carrying
value as of December 31, 1997 and 1996 based on the borrowing rates currently
available for debt with similar terms.
F-15
<PAGE> 56
6. TRANSACTIONS WITH RELATED PARTIES
Mr. Binion has provided services pursuing, developing and managing gaming
operations for the Company and its subsidiaries. Mr. Binion has not been
compensated for his services in the past nor is there an existing employment
agreement providing for Mr. Binion to receive compensation for his services in
the future; however, the Company and Mr. Binion may enter into such an
employment agreement during 1998.
KII-Pasadena, Inc., which is owned by two individuals that became executive
officers of HGI on January 1, 1996, has acted on behalf of the Company as
developer for the Horseshoe Bossier City and the Horseshoe Casino Center and has
provided consulting services to the Company related to pursuing new gaming
developments. Total fees paid to KII-Pasadena, Inc. for such services were
$660,000 for the year ended December 31, 1995. Additionally, one of the
placement agents for the New Senior Notes and Credit Facility discussed in Note
5 agreed to pay the principals of KII-Pasadena, Inc. a finders' fee equal to 30%
of the net fees, commissions and other compensation received, or to be received,
by the placement agent for its services related to these financing transactions.
The total fees paid to KII-Pasadena, Inc., or its principals, by the placement
agent was $0, $260,000 and $891,000 during the years ended December 31, 1997,
1996 and 1995, respectively.
The principals of the placement agent referred to above own approximately 3.9%
of the Company. In connection with the sale of the New Senior Notes and the
arrangement of the Credit Facility, the Company paid fees to the placement agent
of $3,210,000 and indemnified the placement agent and its principals against
certain liabilities, including liabilities under the Securities Act of 1933. In
connection with the exercise of the warrants to purchase an additional
$50,000,000 of New Senior Notes, the Company paid fees to the placement agent of
$981,000. These fees were recorded as deferred finance charges in the
accompanying financial statements. Additional fees were paid to the placement
agent during 1997 and 1996 for various financial advisory services totaling
$600,000 and $510,000, respectively.
Included in other assets in the accompanying consolidated balance sheets are
notes receivable from employees with ownership interests in the Company and
limited partners of HE totaling $6,844,000 and $4,643,000 as of December 31,
1997 and 1996, respectively. The notes to employees are secured by their
ownership interests in the Company, and the notes to the limited partners are
secured by their ownership interests in HE. The notes have various due dates
ranging from February 1998 through October 1999 and interest rates ranging from
7% to 10%.
In November 1995, HE canceled a legal service retainer agreement it had entered
into in 1993 with an individual for a one-time fee of $600,000, which is
included in general and administrative expenses in 1995. Two relatives of such
individual are limited partners in HE, holding an aggregate ownership interest
of 5.08%.
The Company conducts a portion of its marketing through an entity that is owned
by the wife of an officer. Fees and expenses paid to this company totaled
$2,648,000, $1,632,000 and $1,029,000 for the years ended December 31, 1997,
1996 and 1995, respectively.
Payments to other parties affiliated with the Company totaled $36,000, $63,000
and $671,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
These transactions included payments for consulting fees and various operating
expenses.
F-16
<PAGE> 57
7. EMPLOYEE COMPENSATION AND BENEFITS
Employment Agreements
HE and RPG have employment agreements with certain key employees that provide
certain benefits in the event such employees are terminated. These employees
also received ownership interests in NGCP and RPG, which were subsequently
exchanged for membership interests in the Company and vest over the term
specified in the various employment agreements, which is generally five years.
These employment agreements include a put/call provision which, if exercised by
the employee, would require the Company to repurchase these ownership interests
in the event of termination at the then fair market value based on an
independent appraisal. Accordingly, these compensation agreements are accounted
for as variable stock purchase plans. Compensation expense is recorded each
period equal to the change in the fair market value of ownership interests
issued pursuant to these agreements.
During the fourth quarter of 1995, certain employees of HGI received ownership
interests in the Company, vesting generally over three years, pursuant to
similar employment agreements which also include put/call provisions in the
event of termination. As stated in Note 1, the Company is required to reimburse
HGI for all expenses incurred related to the operations of the Company and would
be required to fund any repurchase of HGI employees' ownership interests in the
Company, pursuant to these employment agreements. Accordingly, the deferred
compensation and related compensation expense associated with the HGI employees
are included in the accompanying consolidated financial statements of the
Company.
The total ownership interest in the Company issued to employees pursuant to such
employment agreements was 4.0% as of December 31, 1997 and 1996, of which 3.1%
and 2.4% was vested, respectively. The amount of compensation expense recorded
in the accompanying consolidated statements of operations related to these
ownership interests was $15,066,000, $4,340,000 and $6,272,000 for the years
ended December 31, 1997, 1996 and 1995, respectively.
During September 1995, one of the HE employees who had entered into an
employment agreement during 1993 resigned from HE. Pursuant to a settlement
agreement with the employee, HE agreed to pay severance benefits of $230,000
which was expensed in 1995. In addition, the Company agreed to acquire the
employee's vested ownership interest in the Company of .95% for $3,306,000 based
on an independent appraisal, which is included in the 1995 compensation expense
amount discussed above. Such amount was paid in two equal installments on April
1, 1997 and 1996, including interest at 9%.
Some of the employment agreements also include a guaranteed severance payment in
the event of termination. The amount of such liability was $5,795,000 and
$3,289,000 at December 31, 1997 and 1996, respectively. Of the total liability
at December 31, 1997, $4,658,000 is included in accrued expenses which
represents the liability associated with employment agreements that expire
during 1998. The remaining $1,137,000 and the balance at December 31, 1996 of
$3,289,000 are included in redeemable ownership interests in the accompanying
consolidated balance sheets.
F-17
<PAGE> 58
7. EMPLOYEE COMPENSATION AND BENEFITS (CONTINUED)
Unit Option Plan
During 1997, HGI approved the Company's 1997 Unit Option Plan which provides for
certain employees to be granted options to purchase membership units in the
Company at a fixed price of $3.47 per unit. The options vest in three equal
annual installments beginning one year subsequent to the date of the option
holder's employment and expire after 10 years. At December 31, 1997, 631,225
units had been granted, of which 378,735 had vested.
Any units purchased by employees upon exercise of the options may be repurchased
by the Company at a price equal to the then fair market value of the units.
Accordingly, the unit option plan is accounted for as a variable stock purchase
plan. Compensation expense is recorded each period equal to the change in the
fair market value of the membership units in the Company, provided such value
exceeds the exercise price of the options. During 1997, the Company recognized
compensation expense of $1,107,000 related to this option plan.
401(k) Savings Plan
Effective January 1, 1995, a 401(k) savings plan was established for RPG whereby
eligible employees may contribute up to 15% of their salary. An identical 401(k)
savings plan was established on January 1, 1996 for employees of the Company and
its subsidiaries other than RPG. The Company matches 50% of the employees'
contributions up to a maximum of 6% of their salary, and the employees vest in
the matching contribution over six years. Employees are eligible to participate
in the plan on the first day of the next calendar quarter following six months
of service. The Company's matching contributions were $716,000, $667,000 and
$158,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
8. COMMITMENTS AND CONTINGENCIES
Litigation
The Company and its subsidiaries, during the normal course of operating its
business, become engaged in various litigation. In the opinion of the Company's
management, the ultimate disposition of such litigation will not have a material
impact on the Company's operations.
Minority Interest Purchase Commitments
In February 1996, NGCP entered into an option agreement to purchase an
additional 1% limited partnership interest in HE for $1,541,000, of which
approximately $514,000 was paid at closing. The option expires on December 31,
1998. In September 1996, NGCP loaned the limited partner $900,000, which is
included in other assets in the accompanying consolidated balance sheet as of
December 31, 1997 and 1996. The note, including interest at 7%, is due December
31, 1998.
F-18
<PAGE> 59
8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Effective December 31, 1995, NGCP purchased a 2.92% limited partnership interest
in HE for $4,473,000, of which $1,473,000 was paid at closing during January
1996, with the remaining $3,000,000 evidenced by a 6% per annum promissory note,
payable in three annual installments of $1,000,000, plus accrued interest,
beginning January 2, 1997. The limited partner remitted to HE approximately
$123,000, which was equal to his negative capital balance at the time of
closing. The purchase agreement allocated $2,384,000 of the purchase price to a
non-compete agreement with the remaining $2,089,000 allocated to the purchase of
the limited partner's interest. The asset related to the non-compete agreement
is being amortized over the life of the agreement (three years). The purchase
price of the limited partnership interest is included in goodwill and is being
amortized over an estimated benefit period of approximately 25 years. The
Company has agreed to pay additional consideration of up to $500,000 a year for
three years based on certain earnings criteria which will be added to the
purchase price and amortized accordingly. At December 31, 1997 and 1996, the
earnings criteria were met and additional consideration was recorded. Of the
additional consideration recorded, $534,000 was allocated to the non-compete
agreement, and the remaining $466,000 was allocated to goodwill. The unamortized
balance of the non-compete agreement is included in other assets in the
accompanying consolidated balance sheets and was $1,229,000 and $1,851,000 as of
December 31, 1997 and 1996, respectively.
The Company is also required to purchase the minority ownership interests in any
new projects developed by Horseshoe Ventures following 36 months of operations.
The purchase price is to be based on earnings during the 36-month period and is
payable in cash or ownership interests in the Company.
Construction Commitments
The Company is nearing the completion of the expansion efforts at both of its
existing casino properties. As of December 31, 1997, the Horseshoe Casino Center
was substantially complete, the total amount incurred and placed in service was
$98,841,000 with remaining commitments of $10,355,000. As of December 31, 1997
the Horseshoe Bossier City had incurred a total of $176,981,000 with remaining
commitments of $33,326,000. Of the total amount incurred, $109,553,000 had been
placed in service as of December 31, 1997.
F-19
<PAGE> 60
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of New Gaming Capital Partnership:
We have audited the accompanying consolidated balance sheets of New Gaming
Capital Partnership (a Nevada partnership) and subsidiary as of December 31,
1997 and 1996, and the related consolidated statements of operations, partners'
capital and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Gaming Capital Partnership
and subsidiary as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada,
February 13, 1998
F-20
<PAGE> 61
<TABLE>
<CAPTION>
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31,
-----------------------------
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 16,143 $ 14,913
Accounts receivable, net of allowance for doubtful
accounts of $2,410 and $803 2,589 1,901
Inventories 1,535 957
Prepaid expenses and other 1,329 1,102
--------- ---------
Total current assets 21,596 18,873
--------- ---------
Property and Equipment:
Land 10,579 6,115
Buildings, boat and improvements 145,781 71,554
Furniture, fixtures and equipment 34,914 24,125
Less: accumulated depreciation (23,452) (15,028)
--------- ---------
167,822 86,766
Construction in progress 67,428 18,482
--------- ---------
Net property and equipment 235,250 105,248
--------- ---------
Other Assets:
Goodwill, net 18,290 18,788
Other 12,137 11,269
$ 287,273 $ 154,178
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Current maturities of long-term debt $ 15,003 $ 11,854
Accounts payable 3,568 1,882
Due to affiliates 12,796 2,536
Construction payables 18,757 7,161
Accrued expenses and other 9,793 8,373
--------- ---------
Total current liabilities 59,917 31,806
Long-term Debt, less current maturities 199,989 97,837
Minority Interest (1,317) (827)
Commitments and Contingencies (Note 8)
Partners' Capital 28,684 25,362
--------- ---------
$ 287,273 $ 154,178
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
F-21
</TABLE>
<PAGE> 62
<TABLE>
<CAPTION>
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
Year Ended December 31,
-------------------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Casino $ 159,956 $ 166,768 $ 151,210
Food and beverage 16,389 15,573 14,618
Hotel 4,726 4,431 4,197
Retail and other 1,741 1,650 1,863
--------- --------- ---------
182,812 188,422 171,888
Promotional allowances (14,918) (13,559) (11,106)
--------- --------- ---------
Net revenues 167,894 174,863 160,782
--------- --------- ---------
Expenses:
Casino 90,709 89,713 78,071
Food and beverage 6,728 8,484 9,246
Hotel 4,679 3,429 3,600
Retail and other 473 597 1,035
General and administrative 25,034 26,414 24,549
Development -- 500 --
Depreciation and amortization 10,553 8,855 6,162
Preopening 1,819 -- --
--------- --------- ---------
Total expenses 139,995 137,992 122,663
--------- --------- ---------
Operating Profit Before Corporate Expenses 27,899 36,871 38,119
Corporate Expenses 11,245 4,676 1,853
--------- --------- ---------
Operating Income 16,654 32,195 36,266
Other Income (Expense):
Interest expense (13,124) (11,436) (10,235)
Interest income 893 867 664
Other, net (18) 418 --
Minority interest in income of subsidiary (420) (1,861) (2,580)
--------- --------- ---------
Income Before Extraordinary Loss
on Early Retirement of Debt 3,985 20,183 24,115
Extraordinary Loss on Early Retirement
of Debt -- -- (4,081)
--------- --------- ---------
Net Income $ 3,985 $ 20,183 $ 20,034
========= ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
F-22
</TABLE>
<PAGE> 63
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
Balance at December 31, 1994 $ 6,522
Net income 20,034
Contributions 123
Distributions:
Cash (8,137)
Payable (1,857)
Step-up in basis of assets due to purchase
of minority interest 17,729
--------
Balance at December 31, 1995 34,414
Net income 20,183
Cash distributions (29,235)
--------
Balance at December 31, 1996 25,362
Net income 3,985
Cash distributions (663)
--------
Balance at December 31, 1997 $ 28,684
========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F-23
<PAGE> 64
<TABLE>
<CAPTION>
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year Ended December 31,
-----------------------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,985 $ 20,183 $ 20,034
Adjustments to reconcile net income
to net cash provided by operating activities:
Minority interest in income of subsidiary 420 1,861 2,580
Depreciation and amortization 10,553 8,855 6,162
Provision for doubtful accounts 1,646 987 930
Amortization of debt discounts,
deferred finance costs and other 1,266 708 3,171
Loss (gain) on disposal of land and other assets 38 (96) --
Extraordinary loss on early retirement of debt -- -- 4,081
Change in assets and liabilities (33) (2,359) 2,144
--------- --------- ---------
Net cash provided by operating activities 17,875 30,139 39,102
--------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment (138,597) (37,326) (13,788)
Increase (decrease) in construction payables 11,596 3,961 (84)
Proceeds from sale of land held for sale -- 1,440 --
Purchase of land held for sale -- -- (1,344)
Increase in other assets (934) (4,379) (4,895)
--------- --------- ---------
Net cash used in investing activities (127,935) (36,304) (20,111)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from long-term debt 120,900 40,000 81,600
Payments on long-term debt (15,599) (8,821) (70,925)
Capital contributions -- -- 123
Capital distributions (663) (31,092) (8,137)
Distributions to minority interests (910) (1,560) (3,460)
Increase (decrease) in due to affiliates 10,167 (3,128) (259)
Debt issue costs and commitment fees (2,605) (1,346) (2,524)
--------- --------- ---------
Net cash provided by (used in)
financing activities 111,290 (5,947) (3,582)
--------- --------- ---------
Net change in cash and cash equivalents 1,230 (12,112) 15,409
Cash and cash equivalents, beginning of period 14,913 27,025 11,616
--------- --------- ---------
Cash and cash equivalents, end of period $ 16,143 $ 14,913 $ 27,025
========= ========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
F-24
</TABLE>
<PAGE> 65
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
New Gaming Capital Partnership (the "Partnership") was formed as a Nevada
limited partnership on February 4, 1993. The Partnership is 100% owned, directly
and indirectly, by Horseshoe Gaming, L.L.C. ("Gaming"), and is the 89% general
partner of Horseshoe Entertainment, L.P. ("HE"), a Louisiana limited
partnership, which owns and operates the Horseshoe Bossier City (the "Casino"),
a dockside riverboat casino located in Bossier City, Louisiana. Effective
December 31, 1995, the Partnership purchased a 2.92% limited partnership
interest from one of the minority owners (see Note 8). The minority interest
amounts in the accompanying consolidated financial statements represent the
remaining 8.08% of HE owned by limited partners. HE was formed on February 4,
1993 and the Casino opened on July 9, 1994. Consistent with Louisiana state law,
the gaming license granted to HE is for a five year period, after which it must
be renewed. HE's license is up for renewal in July 1998.
On October 1, 1995, Gaming completed a roll-up transaction which resulted in the
acquisition by Gaming of approximately 15% of the Partnership's ownership
interests (the "Roll-up"). The total cost of the Partnership interests purchased
by Gaming, based on the fair value of the ownership interests in Gaming
exchanged, was $17,729,000, of which $149,000 was allocated to land, $154,000
was allocated to gaming licenses and $17,426,000 was allocated to goodwill. The
purchase price allocation was based on an independent appraisal of the
individual assets, and these amounts were pushed down to the accompanying
financial statements of the Partnership.
The gaming license is amortized over its remaining term, which is approximately
two and one-half years. Goodwill, which represents various intangibles with
indeterminate values, is amortized on a straight-line basis over 25 years, which
management estimates is the related benefit period (see discussion of the
Company's accounting policy for long-lived assets below). Management intends to
regularly evaluate whether or not the future undiscounted cash flows of the
Partnership are sufficient to recover the carrying amount of the goodwill
associated with each entity. Additionally, management continually monitors such
factors as the status of new or proposed legislation, the competitive
environment and the general economic conditions of the market in which it
operates. If the undiscounted cash flows are not sufficient to recover the
carrying amount of goodwill and, accordingly, an impairment has occurred,
management intends to write down the carrying amount of goodwill to its
estimated fair value based on discounted cash flows. The amount of amortization
expense recorded in the years ended December 31, 1997, 1996, and for the three
months in 1995 following the roll-up transaction was $755,000, $748,000 and
$187,000, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Partnership
and HE. All significant intercompany accounts and transactions have been
eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include commercial paper, amounts held in mutual funds
and other investments with original maturities of 90 days or less when
purchased.
F-25
<PAGE> 66
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inventories
Inventories are stated at the lower of cost, as determined on a first-in,
first-out basis, or market value and consist primarily of food, beverage, retail
merchandise, kitchen smallwares and employee wardrobe.
Property and Equipment
Property and equipment are stated at cost. The costs of normal repairs and
maintenance are expensed as incurred while major expenditures that extend the
useful lives of assets are capitalized.
Depreciation is provided on the straight-line basis over the estimated useful
lives of the assets as follows:
Buildings, boat and improvements 15 to 30 years
Furniture, fixtures and equipment 3 to 10 years
Capitalized Interest
The Partnership capitalizes interest for associated borrowing costs of major
construction projects. Capitalization of interest ceases when the asset is
substantially complete and ready for its intended use. Interest capitalized
during the years ended December 31, 1997, 1996 and 1995, was $7,777,000,
$667,000 and $0, respectively.
Deferred Finance Charges
Deferred finance charges consists of fees and expenses incurred by Gaming in
connection with its corporate borrowings. Gaming charges the Partnership its
pro-rata share of the total deferred finance charges as funds are borrowed by
the Partnership from Gaming. Deferred finance charges of $4,344,000 and
$3,005,000 as of December 31, 1997 and 1996, respectively, are included in other
assets and are being amortized over the period from the initial funding of the
debt through the latest date for repayment using the effective interest method.
Capital Distributions
Gaming's debt agreements contain covenants that limit capital distributions to
the limited partners of HE equal to the limited partners' share of taxable
income for each period. Such distributions are to be paid quarterly based upon
estimated taxable income. Promptly after filing by HE of its annual tax returns,
each limited partner of HE is to reimburse HE for overpayments of capital
distributions or HE is to withhold such amounts from future distributions to the
limited partners. Distributions to limited partners are a component of minority
interest in the accompanying consolidated balance sheets. All required
distributions to the limited partners for 1997, 1996 and 1995 were made in full
prior to the end of each year.
F-26
<PAGE> 67
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Casino Promotional Allowances
Casino promotional allowances consist primarily of the retail value of
complimentary food and beverage, rooms and other services furnished to guests
without charge. Such amounts are included in gross revenues and deducted as
promotional allowances. The estimated costs of providing such complimentary
services are substantially included in casino department expenses as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Food and beverage $11,648 $10,276 $ 6,921
Hotel 1,396 1,631 1,663
Other operating expenses 191 112 85
------- ------- -------
$13,235 $12,019 $ 8,669
======= ======= =======
</TABLE>
Casino Revenues
In accordance with industry practice, casino revenues represent the net win from
gaming activities, which is the difference between gaming wins and losses.
Advertising Costs
The Partnership expenses all costs associated with advertising as incurred, and
such amounts are included in general and administrative expenses in the
accompanying consolidated statements of operations.
Preopening Expenses
Preopening costs incurred during the expansion of the existing casino property
are expensed as incurred and were $1,819,000 during 1997.
Corporate Expenses
The Partnership reimburses Gaming for its share of expenses incurred associated
with the management of Gaming and related entities. Included in corporate
expenses are normal operating costs, as well as, the non-cash compensation
expense relating to ownership interests in Gaming issued to employees pursuant
to employment contracts (see Note 7).
Income Taxes
No provision is made in the accounts of the Partnership for federal and state
income taxes, as such taxes are liabilities of the members of Gaming. The
Partnership's income tax return and the amount of allocable taxable income are
subject to examination by federal and state taxing authorities. If an
examination results in a change to Partnership income, the income tax reported
by the members of Gaming may also change. The tax bases in the Partnership's
assets and liabilities were in excess of the amounts reported in the
accompanying consolidated financial statements by $3,461,000 and $4,677,000 at
December 31, 1997 and 1996, respectively. Taxable income was in excess of net
income reported in the accompanying consolidated statements of operations for
all periods presented.
F-27
<PAGE> 68
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of Long-Lived Assets
In accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," management continually evaluates whether events or changes in
circumstances indicate that the carrying amount of long-lived assets may not be
recoverable. Based on management's evaluations, no significant impairments of
long-lived assets have occurred during the three years in the period ended
December 31, 1997.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain reclassifications were made to prior period financial statements to
conform to current year presentation.
3. CONSOLIDATED STATEMENTS OF CASH FLOWS
The net change in assets and liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
(Increase) decrease in assets:
Accounts receivable $(2,334) $(1,063) $(1,849)
Inventories (578) 106 187
Prepaid expenses and other (227) 123 (653)
Increase (decrease) in liabilities:
Accounts payable 1,686 643 (1,828)
Accrued expenses and other 1,420 (2,168) 7,957
Deferred interest payable -- -- (1,670)
------- ------- -------
$ (33) $(2,359) $ 2,144
======= ======= =======
</TABLE>
Cash payments made for interest, excluding amounts capitalized, totaled
$19,378,000, $10,530,000 and $12,999,000 for the three years ended December 31,
1997, 1996 and 1995.
F-28
<PAGE> 69
4. ACCRUED EXPENSES AND OTHER
Accrued expenses and other consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
------------------------
1997 1996
------ ------
<S> <C> <C>
Payroll and related tax liabilities $2,154 $1,479
Vacation and other employee benefits 1,424 2,173
Accrued interest 372 181
Gaming, sales, use and property taxes 1,090 1,349
Outstanding chip and token liabilities 1,190 614
Progressive slot and slot club liabilities 1,225 1,896
Other accrued expenses 2,338 681
------ ------
$9,793 $8,373
====== ======
</TABLE>
5. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
-------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Notes payable to Gaming:
9.39%, due June 15, 2007, semi-annual payments of
interest only on June 15 and December 15 $ 50,000 $ --
9.39%, due June 15, 2000, semi-annual payments of
interest only on June 15 and December 15 (available
borrowing of $100,000,000) 24,000 --
13.31%, due in semi-annual installments of 5% of the
outstanding principal balance, including interest
through September 30, 2000 138,492 106,191
6% Promissory Note Payable, due in annual installments
through January 1999 (see Note 8) 2,500 3,500
--------- ---------
214,992 109,691
Less: current maturities (15,003) (11,854)
--------- ---------
$ 199,989 $ 97,837
========= =========
</TABLE>
HE's notes with Gaming are Senior obligations of the Partnership and also serve
as collateral for the repayment of the debt obligations of Gaming, which totaled
$315,462,000 including accrued interest, at December 31, 1997.
The Company's debt agreements contain covenants that, among other things, (i)
limit the amount of additional indebtedness which may be incurred by Gaming and
its subsidiaries; (ii) prohibit any consolidation or merger of Gaming or its
subsidiaries with an affiliate or third party, any sale of substantially all of
Gaming or its subsidiaries' assets, or any payment of subordinated indebtedness
prior to its scheduled maturity; and (iii) require Gaming and its subsidiaries
to invest excess funds in cash equivalents and government securities with a
maturity of one year or less.
F-29
<PAGE> 70
5. LONG-TERM DEBT (CONTINUED)
As of December 31, 1997, the five year maturities for long-term debt are
$15,003,000 (1998), $13,186,000 (1999), $136,803,000 (2000), $0 (2001) and $0
(2002).
6. TRANSACTIONS WITH RELATED PARTIES
At December 31, 1997 and 1996, the due to affiliates balance relates primarily
to costs and expenses of the Partnership and HE paid for by Gaming.
Initial funding to HE was provided by loans from affiliates of the Partnership.
Such notes payable to affiliates accrued interest at 10% and had a scheduled
maturity of April 15, 2004. The notes payable to affiliates, and the related
deferred interest payable balances, were repaid in October 1995 with proceeds
from the intercompany loan from Gaming discussed in Note 5.
Included in other assets in the accompanying consolidated balance sheets are
notes receivable from limited partners of HE totaling $4,630,000 and $2,954,000
as of December 31, 1997 and 1996, respectively. The notes are secured by their
ownership interests in HE and are due in December 1998 with interest at 10%.
In November 1995, HE canceled a legal service retainer agreement it had entered
into in 1993 with an individual for a one-time fee of $600,000, which is
included in general and administrative expenses in 1995. Two relatives of such
individual are limited partners in HE holding an aggregate ownership interest of
5.08%. The original agreement covered legal services for a period of five years
commencing December 1, 1993, and ending November 30, 1998, and required sixty
monthly payments of $16,667. The amounts paid under this contract for legal
services amounted to $167,000 for the year ended December 31, 1995. He has no
further obligations under the legal service retainer agreement.
The Partnership conducts a portion of its marketing through an entity that is
owned by the wife of an officer of Gaming. Fees and expenses paid to this
company totaled $1,594,000, $393,000 and $413,000 for the years ended December
31, 1997, 1996 and 1995, respectively.
Payments to other parties affiliated with the Partnership totaled $5,000,
$18,000 and $305,000 for the years ended December 31, 1997, 1996 and 1995,
respectively. These transactions included payments for consulting fees and
various operating expenses.
7. EMPLOYEE COMPENSATION AND BENEFITS
Employment Agreements
HE has employment agreements with certain key employees that provide certain
benefits in the event such employees are terminated. These employees also
received ownership interests in the Partnership, which were subsequently
exchanged for membership interests in Gaming and vest over terms specified in
the various employment agreements, which is generally five years. These
employment agreements include a put/call provision which, if exercised by the
employee, would require Gaming to repurchase these ownership interests in the
event of termination at the then fair market value based on an independent
appraisal. Accordingly, these compensation agreements are accounted for as
variable stock purchase plans. Compensation expense is recorded each period
equal to the change in the fair market value of ownership interests issued
pursuant to these agreements. NGCP reimburses Gaming for the expense related to
these
F-30
<PAGE> 71
7. EMPLOYEE COMPENSATION AND BENEFITS (CONTINUED)
ownership interests; therefore, there is no deferred compensation reported in
the accompanying consolidated balance sheet at December 31, 1997 and 1996.
Prior to the roll-up transaction discussed in Note 1, the Partnership recorded
the compensation expense related to employee ownership interests in general and
administrative expenses. Included in general and administrative expenses in 1995
for the period prior to the Roll-up is $2,103,000 of compensation expense from
employee ownership interests. Subsequent to the Roll-up, these amounts are
included in corporate expenses. Corporate expenses for the years ended December
31, 1997 and 1996 and for the three months ended December 31, 1995 include
compensation expense related to employee ownership interests of $7,533,000,
$1,720,000 and $1,444,000, respectively.
During September 1995, one of HE's employees who had entered into an employment
agreement during 1993 resigned. Pursuant to a settlement agreement with the
employee, HE agreed to pay severance benefits of $230,000 which was expensed in
1995. In addition, Gaming agreed to acquire the employee's vested ownership
interest in HE for $3,306,000 based on an independent appraisal which is
included in the 1995 compensation expense amount discussed above. Such amount
was paid in two equal installments on April 1, 1997 and 1996, including interest
at 9%.
401(k) Savings Plan
Effective January 1, 1996, a 401(k) savings plan was established whereby
eligible employees of HE may contribute up to 15% of their salary. HE matches
50% of the employees' contributions up to a maximum of 6% of their salary.
Employees vest in HE's matching contribution over six years. Employees are
eligible to participate in the Plan on the first day of the next calendar
quarter following six months of service. HE's matching contributions were
$341,000 and $368,000 for the years ended December 31, 1997 and 1996.
8. COMMITMENTS AND CONTINGENCIES
Litigation
The Partnership and its subsidiary, during the normal course of operating its
business, become engaged in various litigation. In the opinion of the
Partnership's management, the ultimate disposition of such litigation will not
have a material impact on the Partnership's operations.
Minority Interest Purchase Commitment
In February 1996, the Partnership entered into an option agreement to purchase
an additional 1% limited partnership interest in HE for $1,541,000, of which
approximately $514,000 was paid at closing. The option expires on December 31,
1998. In September 1996, the Partnership loaned the limited partner $900,000,
which is included in other assets in the accompanying consolidated balance sheet
as of December 31, 1997 and 1996. The note, including interest at 7%, is due on
December 31, 1998.
F-31
<PAGE> 72
8. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Effective December 31, 1995, the Partnership purchased a 2.92% limited
partnership interest in HE for $4,473,000, of which $1,473,000 was paid at
closing during January 1996, with the remaining $3,000,000 evidenced by a 6% per
annum promissory note, payable in three annual installments of $1,000,000, plus
accrued interest, beginning January 2, 1997. The limited partner agreed to remit
to the partnership approximately $123,000, which was equal to his negative
capital balance at the time of closing. The purchase agreement allocated
$2,384,000 of the purchase price to a non-compete agreement with the remaining
$2,089,000 allocated to the purchase of the limited partner's interest. The
asset related to the non-compete agreement is being amortized over the life of
the agreement (three years). The purchase price of the limited partnership
interest is included in goodwill and is being amortized over an estimated
benefit period of approximately 25 years. The Partnership has agreed to pay
additional consideration of up to $500,000 a year for three years based on
certain earnings criteria. At December 31, 1997 and 1996, the earnings criteria
were met and additional consideration was recorded. Of the additional
consideration recorded, $534,000 was allocated to the non-compete agreement and
the remaining $466,000 was allocated to goodwill. The unamortized balance of the
non-compete agreement is included in other assets in the accompanying
consolidated balance sheets and was $1,229,000 and $1,851,000 as of December 31,
1997 and 1996, respectively.
Construction Commitments
The Partnership is nearing the completion of the expansion of its casino and
hotel facilities. The total estimated cost of the project was $210,307,000, of
which $176,981,000 had been incurred as of December 31, 1997 and $109,553,000
had been placed in service.
F-32
<PAGE> 73
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Robinson Property Group, L.P.:
We have audited the accompanying balance sheets of Robinson Property Group, L.P.
(a Mississippi limited partnership) as of December 31, 1997 and 1996, and the
related statements of operations, partners' capital and cash flows for each of
the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robinson Property Group, L.P.
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada,
February 13, 1998.
F-33
<PAGE> 74
<TABLE>
<CAPTION>
ROBINSON PROPERTY GROUP, L.P.
BALANCE SHEETS
(IN THOUSANDS)
December 31,
-------------------------------
1997 1996
--------- ---------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 23,159 $ 22,858
Accounts receivable, net of allowance for doubtful
accounts of $6,555 and $2,649 10,718 5,883
Inventories 1,424 478
Prepaid expenses and other 505 275
--------- ---------
Total current assets 35,806 29,494
--------- ---------
Property and Equipment:
Land 4,110 4,110
Buildings, barge and improvements 131,154 50,253
Furniture, fixtures and equipment 32,670 16,933
Less: accumulated depreciation (19,066) (11,370)
--------- ---------
148,868 59,926
Construction in progress -- 20,162
--------- ---------
Net property and equipment 148,868 80,088
--------- ---------
Other Assets:
Goodwill, net 19,670 20,438
Other 4,739 3,857
--------- ---------
$ 209,083 $ 133,877
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $ 4,941 $ 1,274
Construction payables 9,228 6,945
Due to affiliates 10,315 1,736
Accrued expenses and other 9,901 8,503
--------- ---------
Total current liabilities 34,385 18,458
Long-term Debt 85,400 43,000
Commitments and Contingencies (Note 8)
Partners' Capital 89,298 72,419
--------- ---------
$ 209,083 $ 133,877
========= =========
The accompanying notes are an integral
part of these financial statements.
F-34
</TABLE>
<PAGE> 75
<TABLE>
<CAPTION>
ROBINSON PROPERTY GROUP, L.P.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
Year Ended December 31,
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Casino $ 161,280 $ 150,711 $ 132,192
Food and beverage 13,601 11,374 9,681
Hotel 4,047 3,488 3,092
Retail and other 2,564 2,775 2,229
--------- --------- ---------
181,492 168,348 147,194
Promotional allowances (14,293) (11,474) (9,591)
--------- --------- ---------
Net revenues 167,199 156,874 137,603
--------- --------- ---------
Expenses:
Casino 84,685 72,695 55,228
Food and beverage 4,253 3,833 3,495
Hotel 3,198 3,369 2,062
Retail and other 952 762 693
General and administrative 18,566 18,937 18,376
Depreciation and amortization 8,838 7,114 6,376
Preopening expenses 1,144 -- 7,021
--------- --------- ---------
Total 121,636 106,710 93,251
--------- --------- ---------
Operating Profit Before Corporate Expenses 45,563 50,164 44,352
Corporate Expenses 11,245 5,578 1,522
--------- --------- ---------
Operating Income 34,318 44,586 42,830
Other Income (Expense):
Interest expense (4,088) (6,190) (8,381)
Interest and other income 569 797 445
Other, net (356) (6) --
--------- --------- ---------
Income Before Extraordinary Loss on
Early Retirement of Debt 30,443 39,187 34,894
Extraordinary Loss on Early Retirement
of Debt -- -- (3,098)
--------- --------- ---------
Net Income $ 30,443 $ 39,187 $ 31,796
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
F-35
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
ROBINSON PROPERTY GROUP, L.P.
STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
Partners' Contributions
Capital Receivable Total
-------- -------- --------
<S> <C> <C> <C>
Balance at December 31, 1994 $ 1,413 $ -- $ 1,413
Net income 31,796 -- 31,796
Contributions 1,150 (1,150) --
Cash distributions (16,953) -- (16,953)
Step-up in basis of assets due to purchase
of minority interest 24,026 (205) 23,821
-------- -------- --------
Balance at December 31, 1995 41,432 (1,355) 40,077
Net income 39,187 -- 39,187
Collection of contributions receivable -- 1,355 1,355
Cash distributions (8,200) -- (8,200)
-------- -------- --------
Balance at December 31, 1996 72,419 -- 72,419
Net income 30,443 -- 30,443
Cash distributions (13,564) -- (13,564)
-------- -------- --------
Balance at December 31, 1997 $ 89,298 $ -- $ 89,298
======== ======== ========
The accompanying notes are an integral
part of these financial statements.
F-36
</TABLE>
<PAGE> 77
<TABLE>
<CAPTION>
ROBINSON PROPERTY GROUP, L.P.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year Ended December 31,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 30,443 $ 39,187 $ 31,796
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,838 7,114 6,376
Amortization of debt discount,
deferred finance charges and other 651 482 2,931
Loss on disposal of assets 351 -- --
Provision for doubtful accounts 5,910 3,401 1,256
Preopening expenses -- -- 3,819
Extraordinary loss on early retirement of debt -- -- 3,098
Change in assets and liabilities (6,856) (7,302) 1,480
-------- -------- --------
Net cash provided by operating activities 39,337 42,882 50,756
-------- -------- --------
Cash flows from investing activities:
Purchases of property and equipment (76,882) (21,007) (1,690)
Increase (decrease) in construction payables 2,283 6,945 (3,284)
Increase in other assets (503) (257) (1,411)
-------- -------- --------
Net cash used in investing activities (75,102) (14,319) (6,385)
-------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt 42,400 5,000 72,987
Payments on long-term debt -- (32,000) (75,592)
Capital distributions (13,564) (8,200) (15,875)
Increase (decrease) in due to affiliates 8,486 (3,042) 2,204
Debt issue costs and commitment fees (1,256) (169) (2,355)
-------- -------- --------
Net cash provided by (used in)
financing activities 36,066 (38,411) (18,631)
-------- -------- --------
Net change in cash and cash equivalents 301 (9,848) 25,740
Cash and cash equivalents, beginning of period 22,858 32,706 6,966
-------- -------- --------
Cash and cash equivalents, end of period $ 23,159 $ 22,858 $ 32,706
======== ======== ========
The accompanying notes are an integral
part of these financial statements.
F-37
</TABLE>
<PAGE> 78
ROBINSON PROPERTY GROUP, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
Robinson Property Group, L.P. (the "Partnership") was formed as a Mississippi
limited partnership on June 7, 1993 and is 100% owned, directly and indirectly,
by Horseshoe Gaming, L.L.C. ("Gaming"). The Partnership owns and operates the
Horseshoe Casino Center (the "Casino"), a permanently moored vessel consisting
of a casino and hotel located in Tunica County, Mississippi, which opened on
February 13, 1995. Consistent with state law, the gaming license granted to the
Partnership in the State of Mississippi is for a two-year period and must be
renewed. In September 1996, the Partnership renewed its license for an
additional two-year period.
On October 1, 1995, Gaming completed a roll-up transaction which resulted in the
acquisition by Gaming of approximately 15% of the Partnership's ownership
interest held by minority interests (the "Roll-up"). The total cost of the
Partnership interests purchased by Gaming, based on the fair value of the
ownership interests in Gaming exchanged, was $24,026,000, of which $2,231,000
was allocated to land, $76,000 was allocated to gaming licenses, $205,000 was
allocated to contribution receivable and $21,514,000 was allocated to goodwill.
The purchase price allocation was based on an independent appraisal of the
individual assets, and these amounts were pushed down to the accompanying
financial statements of the Partnership.
The gaming license was amortized over its initial remaining term, and at
December 31, 1996 was fully amortized. Goodwill is amortized on a straight-line
basis over 25 years, which management estimates is the related benefit period
(see discussion of the Partnership's accounting policy for long-lived assets
below). Management regularly evaluates whether or not the future undiscounted
cash flows of the Partnership are sufficient to recover the carrying amount of
the goodwill. Additionally, management continually monitors such factors as the
status of new or proposed legislation, the competitive environment and the
general economic conditions of the market in which it operates. If the estimated
future undiscounted cash flows are not sufficient to recover the carrying amount
of goodwill and accordingly, an impairment has occurred, management intends to
write down the carrying amount of goodwill to its estimated fair value based on
discounted cash flows. The amount of amortization expense recorded in 1997, 1996
and for the three months in 1995 following the roll-up transaction was $869,000,
$920,000 and $231,000, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash and cash equivalents include commercial paper, amounts held in mutual funds
and other investments with original maturities of 90 days or less when
purchased.
Inventories
Inventories are stated at the lower of cost, as determined on a first-in,
first-out basis, or market value and consist primarily of food, beverage, retail
merchandise, kitchen smallwares and employee wardrobe.
F-38
<PAGE> 79
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at cost. The costs of normal repairs and
maintenance are expensed as incurred while major expenditures that extend the
useful lives of assets are capitalized.
Depreciation is provided on a straight-line basis over the estimated useful
lives as follows:
Buildings, barge and improvements 15 to 30 years
Furniture, fixtures and equipment 3 to 10 years
Capitalized Interest
The Partnership capitalizes interest for associated borrowing costs of major
construction projects. Capitalization of interest ceases when the asset is
substantially complete and ready for its intended use. Interest capitalized
during the years ended December 31, 1997, 1996 and 1995 was $3,413,000, $620,000
and $651,000, respectively.
Deferred Finance Charges
Deferred finance charges consists of fees and expenses incurred by Gaming in
conjunction with its corporate borrowings. Gaming charges the Partnership its
pro-rata share of the total deferred finance charges as funds are borrowed by
the Partnership from Gaming. Deferred finance charges of $2,529,000 and
$1,924,000 as of December 31, 1997 and 1996, respectively, are included in other
assets and are being amortized over the period from the initial funding of the
debt through the latest date for repayment using the effective interest method.
Impairment of Long-Lived Assets
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," management continually evaluates whether events or changes in
circumstances indicate that the carrying amount of long-lived assets may not be
recoverable. Based on management's evaluations, no significant impairments of
long-lived assets have occurred during the three years ended December 31, 1997.
Casino Revenues
In accordance with industry practice, casino revenues represent the net win from
gaming activities, which is the difference between gaming wins and losses.
F-39
<PAGE> 80
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Casino Promotional Allowances
Casino promotional allowances consist primarily of the retail value of
complimentary food and beverage, rooms and other services furnished to guests
without charge. Such amounts are included in gross revenues and deducted as
promotional allowances.
The estimated costs of providing such complimentary services, which are
substantially included in casino department expenses, are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Food and beverage $13,319 $11,779 $10,244
Hotel 1,964 1,403 1,002
Other operating expenses 473 507 401
------- ------- -------
$15,756 $13,689 $11,647
======= ======= =======
</TABLE>
Advertising Costs
The Partnership expenses all costs associated with advertising as incurred, and
such amounts are included in general and administrative expenses in the
accompanying statements of operations.
Preopening Expenses
Preopening costs incurred after the receipt of necessary approvals were deferred
as incurred and expensed upon the opening of the related casino. Preopening
costs of $7,021,000 were expensed in connection with the opening of the Casino
in February 1995. Preopening costs incurred during the expansion of the existing
casino property are expensed as incurred. Total preopening costs of $1,144,000
were expensed during 1997 in conjunction with the expansion efforts at the
casino.
Corporate Expenses
The Partnership reimburses Gaming for its share of expenses incurred associated
with the management of Gaming and related entities. Included in corporate
expenses are normal operating costs, as well as, the non-cash compensation
expense relating to ownership interests in Gaming issued to employees pursuant
to employment contracts (see Note 7).
Income Taxes
No provision is made in the accounts of the Partnership for federal and state
income taxes, as such taxes are liabilities of the members of Gaming. The
Partnership's income tax return and the amount of allocable taxable income are
subject to examination by federal and state taxing authorities. If an
examination results in a change to Partnership income, the income tax reported
by the individual partners may also change. The tax bases in the Partnership's
assets and liabilities were greater than the amounts reported in the
accompanying financial statements by $1,848,000 and $3,077,000 at December 31,
1997 and 1996, respectively. In 1997 and 1995 taxable income was in excess of
net income reported in the accompanying statements of operations and in 1996,
taxable income was less than net income reported in the accompanying statements
of operations.
F-40
<PAGE> 81
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain reclassifications were made to the prior period financial statements to
conform with current year presentation.
3. STATEMENTS OF CASH FLOWS
Non-cash financing and investing activities consist of the following:
Property and equipment was acquired through the issuance of debt totaling
$17,817,000 for the year ended December 31, 1995.
A capital contribution of $1,150,000 was made through the issuance of a
contribution receivable during the year ended December 31, 1995. The
Partnership received land in satisfaction of the receivable during 1996.
Cash payments for interest, excluding amounts capitalized, totaled
$6,727,000, $8,436,000 and $8,271,000 for the years ended December 31,
1997, 1996 and 1995, respectively.
The net change in assets and liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
(Increase) decrease in assets:
Accounts receivable $(10,745) $ (6,140) $ (4,400)
Due from affiliates -- -- 2,214
Interest receivable - related party -- 305 32
Inventories (946) (60) (329)
Prepaid expenses and other (230) (109) 215
Increase (decrease) in liabilities:
Accounts payable 3,667 (1,397) 2,100
Accrued expenses and other 1,398 99 2,445
Deferred interest payable - related party -- -- (797)
-------- -------- --------
$ (6,856) $ (7,302) $ 1,480
======== ======== ========
</TABLE>
F-41
<PAGE> 82
4. ACCRUED EXPENSES AND OTHER
Accrued expenses and other consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
1997 1996
------ ------
<S> <C> <C>
Payroll and related tax liabilities $1,879 $1,225
Vacation and other employee benefits 1,611 1,793
Gaming, sales, use and property taxes 1,450 1,051
Outstanding chip and token liabilities 1,053 939
Progressive slot and slot club liabilities 3,451 2,429
Other accrued expenses 457 1,066
------ ------
$9,901 $8,503
====== ======
</TABLE>
5. LONG-TERM DEBT
RPG's original note payable to Gaming of $125,000,000 bears interest at 13.31%
and requires the Partnership to apply 100% of its available cash flow, as
defined, towards the outstanding principal balance with the balance due in full
on September 30, 2000. Interest is payable semi-annually on March 31 and
September 30. There are no material restrictions on the amount of cash or other
assets which the Partnership may distribute to Gaming, and the Partnership may
prepay the outstanding balance of the intercompany note at any time prior to
maturity without premium or penalty. The last borrowing under this note occurred
in April 1997. The total amount due under this note was $49,400,000 and
$43,000,000 as of December 31, 1997 and 1996, respectively.
Additional borrowings have been evidenced by new notes payable to Gaming in the
amounts of $25,000,000 and $50,000,000, bear interest at 9.39%, are due June 15,
2007 and June 15, 2000, respectively, and require semi-annual interest payments
on June 15 and December 15. The total amount due under the notes were
$25,000,000 and $11,000,000, respectively, as of December 31, 1997.
Substantially all of the assets of the Partnership serve as collateral for the
repayment of the debt obligations of Gaming. The Partnership guarantees such
debt, which totaled $315,462,000 including accrued interest, at December 31,
1997.
The Company's debt agreements contain covenants that, among other things, (i)
limit the amount of additional indebtedness which may be incurred by Gaming and
its subsidiaries; (ii) prohibit any consolidation or merger of Gaming or its
subsidiaries with an affiliate or third party, any sale of substantially all of
Gaming or its subsidiaries' assets or any payment of subordinated indebtedness
prior to its scheduled maturity; and (iii) require Gaming and its subsidiaries
to invest excess funds in cash equivalents and government securities with a
maturity of one year or less.
As of December 31, 1997, the five year maturities for long-term debt are $0
(1998), $0 (1999), $60,400,000 (2000), $0 (2001) and $0 (2002).
F-42
<PAGE> 83
6. TRANSACTIONS WITH RELATED PARTIES
At December 31, 1997 and 1996, the due to affiliates balance relates primarily
to costs and expenses of the Partnership paid for by Gaming.
Initial funding to the Partnership was provided by loans from affiliates of the
Partnership. Such notes payable to affiliates accrued interest at 10% and were
due April 15, 2004. The notes had an outstanding balance of $5,605,000 as of
December 31, 1994. These notes payable to affiliates, and the related deferred
interest payable balance, were repaid in October 1995 with proceeds from the
intercompany loan from Gaming discussed in Note 5.
The Partnership conducts a portion of its marketing through an entity that is
owned by the wife of an officer of Gaming. Fees and expenses paid to this
company totaled $1,047,000, $736,000 and $606,000 for the years ended December
31, 1997, 1996 and 1995, respectively.
Payments to other parties affiliated with the Partnership totaled $366,000 for
the year ended December 31, 1995 which included payments for consulting fees and
various operating expenses.
7. EMPLOYEE COMPENSATION AND BENEFITS
Employment Agreements
The Partnership has employment agreements with certain key employees that
provide certain benefits in the event such employees are terminated. These
employees also received ownership interests in the Partnership, which were
subsequently exchanged for membership interests in Gaming, and vest over terms
specified in the various employment agreements, which is generally five years.
These employment agreements include a put/call provision which, if exercised by
the employee, would require Gaming to repurchase these ownership interests in
the event of termination at the then fair market value based on an independent
appraisal. Accordingly, these compensation arrangements are accounted for as
variable stock purchase plans. Compensation expense is recorded each period
equal to the change in the fair market value of ownership interests issued
pursuant to these agreements. The Partnership reimburses Gaming for the expense
related to these ownership interests; therefore, there is no deferred
compensation reported in the accompanying balance sheet as of December 31, 1997
and 1996.
Prior to the roll-up transaction discussed in Note 1, the Partnership recorded
the compensation expense related to employee ownership interests in general and
administrative expenses. Included in general and administrative expenses in 1995
for the period prior to the roll-up transaction is $1,343,000 of compensation
expense from employee ownership interests. Subsequent to the roll-up
transaction, these amounts are included in corporate expenses. Corporate
expenses for the years ended December 31, 1997 and 1996 and for the three months
ended December 31, 1995 include compensation expense related to employee
ownership interests of $7,533,000, $2,620,000 and $1,113,000, respectively.
F-43
<PAGE> 84
8. COMMITMENTS AND CONTINGENCIES
401(k) Savings Plan
Effective January 1, 1995, a 401(k) savings plan was established by the
Partnership whereby eligible employees can contribute up to 15% of their salary.
RPG matches 50% of the employees' contributions up to a maximum of 6% of their
salary. Employees vest in the Partnership's matching contribution over six
years. Employees of the Partnership are eligible to participate in the plan on
the first day of the next calendar quarter following six months of service. The
Partnership's matching contributions were $333,000, $299,000 and $158,000 for
the years ended December 31, 1997, 1996 and 1995, respectively.
Litigation
The Partnership, during the normal course of operating its business, becomes
engaged in various litigation. In the opinion of the Partnership's management,
the ultimate disposition of such litigation will not have a material impact on
the Partnership's operations.
Construction Commitments
The Partnership has substantially completed the expansion of its casino and
hotel facilities. The total estimated cost of the project is $109,195,000, of
which $98,841,000 has been incurred and placed in service as of December 31,
1997.
F-44
<PAGE> 85
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Horseshoe Gaming, L.L.C.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Horseshoe Gaming, L.L.C. included in this
Form 10-K, and have issued our report thereon dated February 13, 1998. Our
audits were made for the purpose of forming an opinion on those statements taken
as a whole. The schedule listed under Item 14(a)2 is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements, and in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada,
February 13, 1998.
S-1
<PAGE> 86
SCHEDULE II
HORSESHOE GAMING, L.L.C.
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
(In thousands)
- -----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- -----------------------------------------------------------------------------------------------------------
Additions
Balance at Charged to Deductions Balance at
Beginning Costs and from Close
Description of Period Expenses Reserves of Period
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1997
Allowance for Doubtful
Accounts $ 3,452 $ 7,556 $ (2,043)(A) $ 8,965
======== ======== ======== ========
Year Ended December 31, 1996
Allowance for Doubtful
Accounts $ 2,663 $ 4,388 $ (3,599)(A) $ 3,452
======== ======== ======== ========
Year Ended December 31, 1995
Allowance for Doubtful
Accounts $ 477 $ 2,186 $ - $ 2,663
========= ======== ======== ========
</TABLE>
(A) Uncollectable accounts written off, net of amounts recovered.
S-2
<PAGE> 1
EXHIBIT 4.48
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
INTERCOMPANY SENIOR SECURED NOTE DUE JUNE 15, 2000
$50,000,000 New York, New York
Note Number: RPG-104 October 31, 1997
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, Robinson Property Group Limited Partnership
(the "Company"), a Mississippi limited partnership with its principal place of
business located at 1021 Casino Center Drive, Robinsonville, Mississippi 38664,
hereby promises to pay, jointly, severally and solidarily, to the order of
Horseshoe Gaming, L.L.C. (the "Payee"), a Delaware limited liability company
with its principal place of business located at 4024 Industrial Road, Las Vegas,
Nevada 89103, or its registered assigns, the principal amount of FIFTY MILLION
DOLLARS ($50,000,000), or such lesser amount as shall equal the aggregate unpaid
principal amount of this Note, and to pay interest thereon, as provided herein.
This Note is referred to herein individually as this "Note" and, collectively,
together with any other Notes which may be issued pursuant to Section 5 hereof,
as the "Notes." Certain capitalized terms used in this Note are defined in
Section 11 below.
- --------------------------------------------------------------------------------
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS.
THIS SECURITY MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER
FEDERAL OR STATE SECURITIES LAWS OR UNLESS THE PROPOSED TRANSACTION IS
REGISTERED OR QUALIFIED AS REQUIRED.
THIS SECURITY IS SUBJECT TO REPURCHASE IF THE OWNERSHIP OF THIS
SECURITY BY ANY PERSON OR ENTITY WILL PRECLUDE, INTERFERE WITH, THREATEN OR
DELAY THE ISSUANCE, MAINTENANCE, EXISTENCE OR REINSTATEMENT OF ANY GAMING OR
LIQUOR LICENSE, OR PERMIT OR APPROVAL OF ANY GAMING AUTHORITY OR RESULT IN THE
IMPOSITION OF BURDENSOME TERMS ON SUCH LICENSE, PERMIT OR APPROVAL.
THIS SECURITY IS SUBJECT TO REPURCHASE BY THE COMPANY, IN THE
EVENT THE MISSISSIPPI GAMING COMMISSION (OR ITS SUCCESSOR) FINDS THAT THE
BENEFICIAL OWNER OF SUCH SECURITY IS UNSUITABLE TO BE CONNECTED WITH A LICENSED
GAMING ENTERPRISE. REFERENCE IS MADE TO SECTION 75-76-233 OF THE MISSISSIPPI
GAMING CONTROL ACT AND REGULATION II(F)(2) OF THE REGULATIONS OF THE MISSISSIPPI
GAMING COMMISSION FOR A COMPLETE DESCRIPTION OF THE FOREGOING RESTRICTIONS.
- --------------------------------------------------------------------------------
<PAGE> 2
1. Payments of Interest. Interest (computed on the basis of a
360-day year of twelve 30 day months) on the unpaid principal amount shall be
payable at the rate of 9.39% per annum from the date hereof, payable
semi-annually in arrears on each June 15 and December 15 of each year,
commencing on December 15, 1997, until said principal amount shall have become
due and payable.
2. Payments of Principal.
2.1 Optional Redemption. The Notes may be redeemed, in whole or
in part, on a pro rata basis, at any time or from time to time, at the option of
the Company at 100% of the outstanding principal amount hereof, together with
interest accrued thereon to the date fixed for such optional redemption, without
premium or penalty. Upon receipt of any redemption payment, the holder of this
Note (the "Holder"; together with the holders of other Notes, the "Holders")
shall make a notation on this Note of such payment received and shall provide
the Company with evidence acceptable to the Company that the payment has been
received by the Holder and so noted.
2.2 Mandatory Redemptions.
a. The Company shall be required to apply 100% of Cash Flow
Available for Redemption to redeem the Notes, in inverse order of maturity, on a
pro rata basis; in each case at 100% of the principal amount of Notes so to be
redeemed, together with accrued interest thereon to the date of such redemption,
within 45 days of the end of each of the Company's first three fiscal quarters
and within 75 days after the end of each of the Company's fiscal years. The end
of year redemption payment shall take account of all payments made in the
preceding three quarters and appropriate adjustments shall be taken.
b. The remaining outstanding principal balance of the Notes plus
all interest accrued thereon is due in full on June 15, 2000.
c. The Company will give written notice of any redemption of the
Notes pursuant to paragraph (a) of this Section 2.2 to the Holders of Notes not
less than 30 days, nor more than 60 days, prior to the date fixed for such
redemption in such notice, which notice shall specify the principal amount of
the Notes so to be redeemed, together with the amount of interest accrued
thereon, and the date fixed for such redemption.
2.3 Redemption Pursuant to Gaming Laws.
a. Subject to the provisions of subsection (b) below with regard
to the Mississippi Gaming Commission and notwithstanding any other provision of
this Agreement, if the ownership of this Note by any person or entity will
preclude, interfere with, threaten or delay the issuance, maintenance, existence
or reinstatement of any gaming or liquor license, or permit or approval of any
Gaming Authority, or result in the imposition of burdensome terms or
2
<PAGE> 3
conditions on such license, permit or approval, as determined by any
Governmental Authority or the general partner of the Company (including, without
limitation, such Holder failing to qualify or to be found suitable under
applicable Gaming Laws), such Holder shall be obligated, at the request of the
Company, to dispose of this Note (subject to any restrictions on the transfer of
this Note set forth herein or otherwise provided by applicable law and subject
to any approvals by any Gaming Authority that may be required) within thirty
(30) days (or such other time period required by any Gaming Authority) after
receipt of notice of such determination by any Governmental Authority or the
general partner (in which event the Company shall have no obligation to pay any
interest to such Holder), and if this Note is not so disposed of within the
required period, the Company shall have the right to redeem such Holder's Note
at a redemption price equal to the principal amount of this Note, without
accrued interest, if any. Any Holder or beneficial owner of this Note that is
required to qualify or be found suitable under applicable Gaming Laws must pay
all investigative fees and costs of the Gaming Authorities in connection with
such application therefor.
b. Each Holder, by accepting this Note, shall be deemed to have
agreed (to the extent permitted by applicable law) that if the Mississippi
Gaming Commission requires that a person who is a Holder or beneficial owner of
this Note must be licensed or found suitable under applicable gaming laws, such
Holder or beneficial owner shall apply for a license or a finding of suitability
within the required time period. If such Holder fails to apply or become
licensed or is not found suitable, the Company may elect, at its option (i) to
require such Holder to dispose of this Note or beneficial interest therein
within 10 days of receipt of notice of the Company's election or such time as
may be ordered by the Mississippi Gaming Commission, or (ii) to redeem this Note
at a price equal to the principal amount of this Note, excluding accrued and
unpaid interest from the date the Mississippi Gaming Commission serves notice to
the Company of a determination of unsuitability to the redemption date, in
accordance with applicable law.
c. Any redemption notice given by the Company under this Section
2.3 shall state (i) that this Note is being called for redemption as a result of
the Holder's or beneficial owner's status under the relevant Gaming Laws, (ii)
the redemption date, (iii) the redemption price and (iv) the place or places
where this Note is to be surrendered for payment of the redemption price.
3. Repurchase of Notes at the Option of the Holder Upon a Change
of Control.
a. In the event that a Change of Control has occurred, each
Holder of Notes will have the right to require the Company to repurchase all or
any part of such Holder's Notes on the date that is no later than thirty (30)
Business Days after the occurrence of such Change of Control (the "Change of
Control Payment Date"), at a cash price equal to one hundred one percent (101%)
of the principal amount thereof (the "Change of Control Offer Price"), plus
accrued and unpaid interest, if any, to and including the Change of Control
Payment Date.
3
<PAGE> 4
b. In the event that, pursuant to this Section 3, the Company
shall be required to commence a Change of Control Offer, the Company shall
deliver a notice to each of the Holders, which shall govern the terms of any
Change of Control Offer and shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 3 and that all Notes or portions thereof tendered on or
prior to the Change of Control Payment Date will be accepted for payment;
(ii) the Change of Control Offer Price (including the
amount of accrued and unpaid interest) and the Change of Control Payment Date;
(iii) that any Note, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(iv) that the tender of any Note, or portion thereof,
shall be irrevocable; and
(v) a brief description of the events resulting in such
Change of Control.
c. On the Change of Control Payment Date, the Company shall
redeem all Notes, or parts thereof, tendered in response to the Change of
Control Offer.
4. Security Interest. The obligations of the Company under the
Notes to the Payee, as Payee of the Notes, and to the holders of the Senior
Secured Credit Facility Notes and the Senior Notes, as assignees of the Notes
are secured, inter alia, by (a) the Tunica County Deed of Trust granting a first
mortgage in all of the land in Tunica County, Mississippi on which the Horseshoe
Tunica Casino is located, all such other land owned by the Company which is
included on an exhibit to the Tunica County Deed of Trust and all personal
property used in connection with such real property, (b) the Tunica County
Second Deed of Trust, (c) the Tunica County Preferred Ship Mortgage, (d) the
Tunica County Second Ship Mortgage, (e) the Tunica County Security Agreement and
(f) the Tunica County Second Security Agreement.
5. Registration, Transfer and Exchange of Notes. The Company will
keep at its principal executive office a note register in which, subject to such
reasonable regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), it will provide for the registration and transfer of
this Note.
This Note may not be sold, transferred, pledged or hypothecated
unless the proposed transaction does not require registration or qualification
under the Securities Act or an applicable state securities or blue sky law or
unless an exemption from such registration is available. The transferor of this
Note shall be required to deliver an opinion as to the applicable exception in
connection with any such transfer. The transferee of this Note shall be required
to deliver an acknowledgment of Section 2.3.
4
<PAGE> 5
The Company shall not be required to register any transfer of
this Note if the Company reasonably believes such transferee would not be
approved as a transferee by the relevant Gaming Authority.
The Holder of this Note, at such Holder's option, may surrender
the same for transfer or exchange either at the principal executive office of
the Company or at the place of payment named herein, accompanied in the case of
a transfer or assignment by a written instrument of transfer or assignment in
form satisfactory to the Company duly executed by the registered Holder thereof
or by such Holder's attorney duly authorized in writing. In case any Holder
shall so request the transfer, assignment or exchange of this Note, the Company,
at its expense, will execute and deliver (in each case insured to your
reasonable satisfaction) in exchange therefor one or more new Notes, as may be
requested by such Holder, in the same aggregate unpaid principal amount as the
aggregate unpaid principal amount of the Note or Notes so surrendered. Any Note
issued in exchange for any other Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, and neither gain nor loss of interest shall result
from any such transfer or exchange. Notwithstanding the foregoing, Notes may not
be issued in denominations of less than $50,000 (except if the entire
outstanding principal balance of the Notes of such Holder is less than $50,000,
in which case one Note for the entire outstanding principal amount of the Notes
of such Holder may be issued).
The Company and any agent of the Company may treat the Holder in
whose name any Note is registered as the owner of such Note for the purpose of
receiving payment of the principal of and premium (if any) and interest on such
Note and for all other purposes whatsoever, whether or not such Note be overdue.
Notwithstanding anything contained herein to the contrary, the
provisions of this Section 5 shall not apply in connection with any of the
transactions contemplated by the HG Note Assignment.
6. Reserve Accounts. The Company may retain in a separate account
(the "Construction Reserve Account") an amount not in excess of $15 million, to
be utilized by the Company for the construction of additional hotel rooms and an
entertainment facility at the Horseshoe Tunica Casino (the "Construction
Project"). The amount which may be held in the Construction Reserve Account will
be reduced as the Company utilizes funds for the Construction Project. In
addition, the Company may retain in a separate account (the "Operating Reserve
Account") as an operating reserve, an amount not in excess of $5 million. If the
balance of the Operating Reserve Account shall at any time be reduced below $5
million, additional Available Cash Flow may be credited to the Operating Reserve
Account until the total in the Operating Reserve Account is equal to $5 million.
Amounts in the Operating Reserve Account may be used only for operating expenses
of the Horseshoe Tunica Casino or to redeem Notes. Without limiting the
generality of the foregoing, no amounts in the Operating Reserve Account may be
used for capital expenditures or to make Investments except as permitted in the
Senior Secured Credit Facility Note Purchase Agreement.
5
<PAGE> 6
7. Events of Default; Remedies.
7.1 Events of Default Defined; Acceleration of Maturity. If any
of the following events ("Events of Default") shall occur and be continuing (for
any reason whatsoever and whether it shall be voluntary or involuntary or by
operation of law or otherwise):
a. default shall be made in the payment of the principal of this
Note when and as the same shall become due and payable, whether at stated
maturity, by acceleration, by mandatory redemption or otherwise;
b. default shall be made in the payment of any interest on this
Note when and as such interest shall become due and payable, and such default
shall have continued for a period of thirty (30) days; or
c. An "Event of Default," as defined in either the Senior Secured
Credit Facility Note Purchase Agreement or the Indenture, shall have occurred
and be continuing;
then upon the occurrence of any Event of Default, the Majority Noteholders by
written notice to the Company, may declare the unpaid principal amount of all
Notes to be, and the same shall forthwith become, due and payable, together with
the interest accrued thereon and all other amounts payable by the Company
hereunder, provided, during the existence of an Event of Default under clause
(a) or (b) of this Section 7.1 with respect to any Note, the Holder of such
Note, by written notice to the Company, may declare such Note to be, and the
same shall forthwith become, due and payable, together with the interest accrued
thereon and all other amounts payable by the Company hereunder. If any Holder of
any Note shall exercise the option specified in the proviso to the preceding
sentence, the Company will forthwith give written notice thereof to the Holders
of all other outstanding Notes and each such Holder (whether or not such notice
is given or received), by written notice to the Company, may declare the
principal of all Notes held by it to be, and the same shall forthwith become,
due and payable, together with the interest accrued thereon and all other
amounts payable by the Company hereunder.
The provisions of this Section are subject, however, to the
condition that if, at any time after any Note shall have so become due and
payable, the Company shall pay all arrears of interest on such Note and all
payments on account of the principal on such Note and any other amounts owing
which shall have become due otherwise than by acceleration (with interest on
such principal, and, to the extent permitted by law, on overdue payments of
interest, at the rate specified in the Notes) and all Events of Default (other
than nonpayment of principal of and accrued interest on Notes, due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
Section 8, then, and in every such case, the Majority Noteholders, by written
notice to the Company, may rescind and annul any such acceleration and its
consequences; but no such action shall affect any subsequent Event of Default or
impair any right consequent thereon.
6
<PAGE> 7
8. Amendment and Waiver. a. Any term, covenant, agreement or
condition of the Notes, with the consent of the Company may be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), by one or more substantially
concurrent written instruments signed by the Majority Noteholders; provided,
however, that
(i) no such amendment or waiver shall
(x) reduce the principal of, or reduce the rate of or
change the time for payment of interest on or any premium payable
with respect to, any Note, or extend the maturity of any Note,
without the consent of the Holder of each Note so affected, or
(y) modify any of the provisions of the Notes with respect
to the payment or prepayment thereof, or reduce the percentage of
Holders of Notes required to approve any such amendment or
effectuate any such waiver, or amend this Section 8 without the
consent of the Holders of all of the Notes at the time
outstanding; and
(ii) no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon; and
provided, further, until the pledge of the Notes under the HG Note Assignment
has been released, no action may be taken by the Majority Noteholders or at
their direction or pursuant to their consent by the Company or the Majority
Noteholders under the Notes without the consent of the pledgees under the HG
Pledge Agreement.
b. Any amendment or waiver pursuant to subsection (a) of this
Section 8 shall apply equally to all the Holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company, in
each case whether or not a notation thereof shall have been placed on any Note.
c. So long as any outstanding Notes are owned by the Payee or any
other Holder, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of the
Notes unless each Holder of any Note (irrespective of the amount of Notes then
owned by it) shall be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
sufficient information to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any amendment or waiver effected
pursuant to the provisions of this Section 8 shall be delivered by the Company
to each Holder of outstanding Notes forthwith following the date on which the
same shall have been executed and delivered as set forth herein.
7
<PAGE> 8
9. Notices. All notices and other communications provided for in
this Note shall be in writing and delivered, telecopied or mailed, first class
postage prepaid, addressed:
(i) if to the Company:
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
1021 Casino Center Drive
Robinsonville, Mississippi 38664
Attention: Chief Financial Officer
(ii) if to the Payee, at the address set forth on the first
page of this Note or at such other address as the Payee may
hereafter designate by notice to the Company, and
(iii) if to any other Holder of the Notes, at the address of
such Holder as it appears on the note register.
Any such notice or communication shall be deemed to have been duly given
when delivered or telecopied and, if mailed, two days after deposit in the U.S.
mail.
10. Remedies Cumulative. No remedy herein conferred upon the
Holder of this Note is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
11. Definitions. Except as otherwise specified or as the context
may otherwise require, the following terms shall have the respective meanings
set forth below when used in this Note:
"Affiliate" means (i) any person directly or indirectly
controlling or controlled by or under direct or indirect common control with HG
or any of its Subsidiaries (other than Horseshoe Club Operating Company, a
Nevada corporation), including, without limitation, Jack Binion and Phyllis
Cope, (ii) any spouse, immediate family member or other relative as any person
described in clause (i) above, (iii) any trust in which any person described in
clause (i) or (ii) above has a beneficial interest, and (iv) any trust
established by any person described in clause (i) or (ii) above, whether or not
such person has a beneficial interest in such trust. For purposes of this
definition, the term "control" means (a) the power to direct the management and
policies of a person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract or otherwise, or (b) the
beneficial ownership of 10% or more of any class of voting Capital of an entity,
unless some other person beneficially owns a greater percentage of any class of
voting Capital of such entity.
8
<PAGE> 9
"Available Cash Flow" shall mean for any fiscal year the sum of
pre-tax net income of the Company and the aggregate of depreciation,
amortization and depletion of the Horseshoe Tunica Casino for such fiscal year,
less the aggregate Permitted Tax Distributions of the Company for such fiscal
year.
"beneficial owner" for purposes of the definition of Change of
Control has the meaning attributed to it in Rules 13d-3 and 13d-5 under the
Exchange Act, whether or not applicable, except that a "person" shall be deemed
to have "beneficial ownership" of all shares that any such person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time.
"Board of Managers" means, with respect to any person that is a
limited liability company, the Board of Managers of such person, acting as a
group, or any committee of the Board of Managers of such person authorized, with
respect to any particular matter, to exercise the power of the Board of
Managers.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capital" means (i) with respect to any corporation, any and all
shares of stock issued by that corporation and (ii) with respect to any other
person, any partnership interest, joint venture interest, limited liability
company member interest or other form of equity sharing or participation
interest, as applicable.
"Cash Flow Available for Redemption" shall mean for any fiscal
year the remainder of Available Cash Flow for such fiscal year, less amounts
credited to the Operating Reserve Account for such fiscal year.
"Change of Control" means (i) prior to the completion of a bona
fide underwritten initial public offering by HG, the failure at any time of
Excluded Persons as a group to own and control at least 40% of the issued and
outstanding Capital of HG; (ii) after the completion of a bona fide underwritten
initial public offering by HG, the acquisition, in one or more transactions, of
beneficial ownership by (A) any person or entity (other than an Excluded Person)
or (B) any group of persons or entities (excluding any group in which Excluded
Persons beneficially own in the aggregate at least 75% of the equity and voting
interests beneficially owned by the group) who constitute a group (within the
meaning of Section 13(d)(3) of the Exchange Act), in either case, of Capital of
HG such that, as a result of such acquisition, such person, entity or group
beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act),
directly or indirectly, 30% or more of the Capital of HG then outstanding;
provided, however, that no Change of Control shall be deemed to have occurred if
(A) Excluded Persons beneficially own, in the aggregate, at such time, a greater
percentage of Capital of HG than such other person, entity or group or (B) at
the time of such acquisition, Excluded Persons (or any of them) possess the
ability (by contract or otherwise) to elect, or cause the election, of a
majority of the members
9
<PAGE> 10
of HG's Board of Managers; (iii) any merger or consolidation of HG with or into
any person or any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the assets of HG, on a consolidated
basis, in one transaction or a series of related transactions, if immediately
after giving effect to such transaction or transactions, any person or group
(other than Excluded Persons or groups including Excluded Persons to the extent
contemplated by clause (i) or (ii) above, whichever is then applicable) is or
becomes the beneficial owner, directly or indirectly, of more than the
percentage of the Capital of HG contemplated by clause (i) or (ii) above,
whichever is then applicable; or (iv) during any period of 12 consecutive months
after October 10, 1995, individuals who at the beginning of any such 12-month
period constituted the Board of Managers of HG (together with any new managers
whose election by such Board or whose nomination for election by the members of
HG was approved by a vote of a majority of the managers then still in office who
were either managers at the beginning of such period or whose election or
nomination for election was previously so approved), cease for any reason to
constitute a majority of the managers of HG then in office.
"Collateral Agent" means United States Trust Company of New York,
as collateral agent for the holders of the Senior Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Securities and
Exchange Commission thereunder.
"Excluded Person" means (a) HG or any Subsidiary of HG, (b) any
employee benefit plan of HG or any trustee or similar fiduciary holding Capital
of HG for or pursuant to the terms of any such plan, (c) Jack Binion, (d)
Phyllis Cope and (e) members of the families and Affiliates (where the
determination of whether a person is an Affiliate is made without reference to
clause (b) of the definition of such term) of the foregoing persons.
"Gaming Authority" means any Governmental Authority with the
power to regulate gaming in any Gaming Jurisdiction, and the corresponding
Governmental Authorities with the responsibility to interpret and enforce the
laws and regulations applicable to gaming in any Gaming Jurisdiction.
"Gaming Jurisdiction" means any Federal, state or local
jurisdiction in which the Company or any entity in which the Company has a
direct or indirect beneficial, legal or voting interest conducts casino gaming,
now or in the future.
"Gaming Law" means any law, rule, regulation or ordinance
governing gaming activities (including, without limitation, the Mississippi
Gaming Control Act, in each case including all amendments or modifications
thereof), any administrative rules or regulations promulgated thereunder, and
any of the corresponding statutes, rules and regulations in each Gaming
Jurisdiction.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of the United States
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or a foreign government, any state, any province or any city or other political
subdivision or otherwise and whether now or hereafter in existence, or any
officer or official thereof, and any maritime authority.
"HG" means Horseshoe Gaming, L.L.C., a Delaware limited
liability company.
"HG Note Assignment" means the Note Assignment, executed as of
October 10, 1995, by HG in favor of the holders of the Senior Secured Credit
Facility Notes and the Collateral Agent, for the benefit of the holders of the
Senior Notes.
"Indenture" means the Indenture, dated as of October 10, 1995,
among HG, the Company, as guarantor, and U.S. Trust Company of California, N.A.,
as trustee.
"Investments" shall have the meaning set forth in the Senior
Secured Credit Facility Note Purchase Agreement.
"Majority Noteholders" means, at any time, the holders of a
majority of the aggregate principal amount of Notes then outstanding.
"Permitted Tax Distributions" shall have the meaning set forth
in the Senior Secured Credit Facility Note Purchase Agreement.
"Senior Notes" means the 12.75% Senior Notes due September 30,
2000, issued by HG, pursuant to Indenture.
"Senior Secured Credit Facility Note Purchase Agreement" means
the Senior Secured Credit Facility Note Purchase Agreement, dated as of October
10, 1995, among HG, the Company, as guarantor, and the purchasers named therein.
"Senior Secured Credit Facility Notes" means the notes issued by
HG pursuant to the Senior Secured Credit Facility Note Purchase Agreement.
"Subsidiary" with respect to any person, means (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of Capital entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such person or
one or more of the other Subsidiaries of that person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such person or a Subsidiary of such person or (b) the only
general partners of which are such person or one or more Subsidiaries of such
person (or any combination thereof). When used with respect to HG, "Subsidiary"
shall be deemed to include any direct Subsidiary of HG and each indirect
Subsidiary that is a direct Subsidiary of HG or one or more of its direct or
indirect Subsidiaries. Notwithstanding the foregoing, no Unrestricted Subsidiary
(as defined in the Senior Secured Credit Facility Note Purchase Agreement) shall
be a Subsidiary of HG or any of its Subsidiaries.
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"Tunica County Deed of Trust" means the Deed of Trust, Security
Agreement and Assignment of Leases and Rents, dated as of October 10, 1995,
executed by the Company in favor of HG and the holders of the Senior Secured
Credit Facility Notes, as the same may be amended from time to time in
accordance with its terms.
"Tunica County Preferred Ship Mortgage" means the preferred ship
mortgage, executed by the Company in favor of HG and the holders of the Senior
Secured Credit Facility Notes, as the same may be amended from time to time in
accordance with its terms.
"Tunica County Second Deed of Trust" means the Second Deed of
Trust, Security Agreement and Assignment of Leases and Rents, dated as of
October 10, 1995, executed by the Company in favor of HG and the Collateral
Agent, for the benefit of the holders of the Senior Notes as the same may be
amended from time to time in accordance with its terms.
"Tunica County Second Security Agreement" means the financing
statement and second security agreement, dated as of October 10, 1995, executed
by the Company in favor of HG and the Collateral Agent, for the benefit of the
holders of the Senior Notes , as the same may be amended from time to time in
accordance with its terms.
"Tunica County Second Ship Mortgage" means the Second Ship
Mortgage, executed by the Company in favor of HG and the Collateral Agent, for
the benefit of the holders of the Senior Notes, as the same may be amended from
time to time in accordance with its terms.
"Tunica County Security Agreement" means the financing statement
and security agreement, dated as of October 10, 1995, executed by the Company in
favor of HG and the holders of the Senior Secured Credit Facility Notes, as the
same may be amended from time to time in accordance with its terms.
"Vessel Trustee" means Chemical Trust Company of California, as
vessel trustee for the holders of the Senior Secured Credit Facility Notes with
respect to the Tunica County Preferred Ship Mortgage.
12. Governing Law. This Note shall be governed by and construed
in accordance with the internal laws of the State of New York.
13. Severability. If any provision of this Note shall be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any of the provisions hereof and this Note
shall be construed as if such invalid, illegal or unenforceable provisions had
never been contained herein.
14. Miscellaneous.
a. Payments of all amounts owing under this Note are to be made
at the address of the Payee stated on the first page of this Note or at such
other address as the Holder of
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this Note may designate from time to time in writing. Any payment date occurring
on any day other than a Business Day shall be deemed to be the next succeeding
Business Day.
b. The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred in the collection and enforcement of this
Note. The Company hereby consents to renewals and extensions of time at or after
the maturity hereof, without notice, and hereby waives diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
ROBINSON PROPERTY GROUP LIMITED
PARTNERSHIP,
a Mississippi Limited Partnership
By: Horseshoe GP, Inc., its General Partner
By: ____________________________________
Name: Walter J. Haybert
Title: Treasurer
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EXHIBIT 4.49
HORSESHOE ENTERTAINMENT,
A LOUISIANA LIMITED PARTNERSHIP
INTERCOMPANY SENIOR SECURED NOTE DUE JUNE 15, 2000
$100,000,000 New York, New York
Note Number: HE-104 October 31, 1997
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, Horseshoe Entertainment, a Louisiana Limited
Partnership (the "Company"), with its principal place of business located at 415
Traffic Street, Bossier City, Louisiana 71111, hereby promises to pay jointly,
severally and solidarily to the order of Horseshoe Gaming, L.L.C. (the "Payee"),
a Delaware limited liability company with its principal place of business
located at 4024 Industrial Road, Las Vegas, Nevada 89103, or its registered
assigns, the principal amount of ONE HUNDRED MILLION DOLLARS ($100,000,000), or
such lesser amount as shall equal the aggregate unpaid principal amount of this
Note, and to pay interest thereon, as provided herein. This Note is referred to
herein individually as this "Note" and, collectively, together with any other
Notes which may be issued pursuant to Section 5 hereof, as the "Notes." Certain
capitalized terms used in this Note are defined in Section 12 below.
- --------------------------------------------------------------------------------
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS.
THIS SECURITY MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER
FEDERAL OR STATE SECURITIES LAWS OR UNLESS THE PROPOSED TRANSACTION IS
REGISTERED OR QUALIFIED AS REQUIRED.
THIS SECURITY IS SUBJECT TO REPURCHASE IF THE OWNERSHIP OF THIS
SECURITY BY ANY PERSON OR ENTITY WILL PRECLUDE, INTERFERE WITH, THREATEN OR
DELAY THE ISSUANCE, MAINTENANCE, EXISTENCE OR REINSTATEMENT OF ANY GAMING OR
LIQUOR LICENSE, OR PERMIT OR APPROVAL OF ANY GAMING AUTHORITY OR RESULT IN THE
IMPOSITION OF BURDENSOME TERMS ON SUCH LICENSE, PERMIT OR APPROVAL.
- --------------------------------------------------------------------------------
<PAGE> 2
1. Payments of Interest. Interest (computed on the basis of a
360-day year of twelve 30 day months) on the unpaid principal amount shall be
payable at the rate of 9.39% per annum from the date hereof, payable
semi-annually in arrears on each June 15 and December 15 of each year,
commencing on December 15, 1997, until said principal amount shall have become
due and payable.
2. Payments of Principal.
2.1 Optional Redemption. The Notes may not be redeemed, in whole
or in part, at any time at the option of the Company.
2.2 Maturity.
b. The outstanding principal balance of the Notes plus all
interest accrued thereon is due in full on June 15, 2000.
c. The Company will give written notice of any redemption of the
Notes pursuant to paragraph (a) of this Section 2.2 to the Holders of Notes not
less than 30 days, nor more than 60 days, prior to the date fixed for such
redemption in such notice, which notice shall specify the principal amount of
the Notes so to be redeemed, together with the amount of interest accrued
thereon, and the date fixed for such redemption.
2.3 Redemption Pursuant to Gaming Laws.
a. If the ownership of this Note by any person or entity will
preclude, interfere with, threaten or delay the issuance, maintenance, existence
or reinstatement of any gaming or liquor license, or permit or approval of any
Gaming Authority, or result in the imposition of burdensome terms or conditions
on such license, permit or approval, as determined by any Governmental Authority
or the general partner of the Company (including, without limitation, such
Holder failing to qualify or to be found suitable under applicable Gaming Laws),
such Holder shall be obligated, at the request of the Company, to dispose of
this Note (subject to any restrictions on the transfer of this Note set forth
herein or otherwise provided by applicable law and subject to any approvals by
any Gaming Authority that may be required) within thirty (30) days (or such
other time period required by any Gaming Authority) after receipt of notice of
such determination by any Governmental Authority or the general partner (in
which event the Company shall have no obligation to pay any interest to such
Holder), and if this Note is not so disposed of within the required period, the
Company shall have the right to redeem such Holder's Note at a redemption price
equal to the principal amount of this Note, without accrued interest, if
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<PAGE> 3
any. Any Holder or beneficial owner of this Note that is required to qualify or
be found suitable under applicable Gaming Laws must pay all investigative fees
and costs of the Gaming Authorities in connection with such application
therefor.
b. Any redemption notice given by the Company under this Section
2.3 shall state (i) that this Note is being called for redemption as a result of
the Holder's or beneficial owner's status under the relevant Gaming Laws, (ii)
the redemption date, (iii) the redemption price and (iv) the place or places
where this Note is to be surrendered for payment of the redemption price.
3. Repurchase of Notes at the Option of the Holder Upon a Change
of Control.
a. In the event that a Change of Control has occurred, each
Holder of Notes will have the right to require the Company to repurchase all or
any part of such Holder's Notes on the date that is no later than thirty (30)
Business Days after the occurrence of such Change of Control (the "Change of
Control Payment Date"), at a cash price equal to one hundred one percent (101%)
of the principal amount thereof (the "Change of Control Offer Price"), plus
accrued and unpaid interest, if any, to and including the Change of Control
Payment Date.
b. In the event that, pursuant to this Section 3, the Company
shall be required to commence a Change of Control Offer, the Company shall
deliver a notice to each of the Holders, which shall govern the terms of any
Change of Control Offer and shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 3 and that all Notes or portions thereof tendered on or
prior to the Change of Control Payment Date will be accepted for payment;
(ii) the Change of Control Offer Price (including the
amount of accrued and unpaid interest) and the Change of Control Payment Date;
(iii) that any Note, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(iv) that the tender of any Note, or portion thereof,
shall be irrevocable; and
(v) a brief description of the events resulting in such
Change of Control.
c. On the Change of Control Payment Date, the Company shall
redeem all Notes, or parts thereof, tendered in response to the Change of
Control Offer.
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4. Security Interest. The obligations of the Company under the
Notes are secured by (a) the Bossier City Mortgage encumbering all of the land
in Bossier City, Louisiana on which the Horseshoe Bossier City Casino is
located, all such other land owned by the Company which is included on an
exhibit to the Bossier City Mortgage and all personal property used in
connection with the Horseshoe Bossier City Casino and (b) the Bossier City
Preferred Ship Mortgage, granting a first priority security interest in the
Bossier City riverboat casino owned by the Company, (c) the Bossier City Second
Ship Mortgage, (d) the Bossier City Security Agreement and (e) the Bossier City
Second Security Agreement. Such security interests are being assigned for the
benefit of the holders of the Senior Secured Credit Facility Notes and, on a
subordinated basis, for the benefit of the holders of the Senior Notes.
5. Registration, Transfer and Exchange of Notes. The Company will
keep at its principal executive office a note register in which, subject to such
reasonable regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), it will provide for the registration and transfer of
this Note.
This Note may not be sold, transferred, pledged or hypothecated
unless the proposed transaction does not require registration or qualification
under the Securities Act or an applicable state securities or blue sky law or
unless an exemption from such registration is available. The transferor of this
Note shall be required to deliver an opinion as to the applicable exception in
connection with any such transfer. The transferee of this Note shall be required
to deliver an acknowledgement of Section 2.3.
The Company shall not be required to register any transfer of
this Note if the Company reasonably believes such transferee would not be
approved as a transferee by the relevant Gaming Authority.
The Holder of this Note, at such Holder's option, may surrender
the same for transfer or exchange either at the principal executive office of
the Company or at the place of payment named herein, accompanied in the case of
a transfer or assignment by a written instrument of transfer or assignment in
form satisfactory to the Company duly executed by the registered Holder thereof
or by such Holder's attorney duly authorized in writing. In case any Holder
shall so request the transfer, assignment or exchange of this Note, the Company,
at its expense, will execute and deliver (in each case insured to your
reasonable satisfaction) in exchange therefor one or more new Notes, as may be
requested by such Holder, in the same aggregate unpaid principal amount as the
aggregate unpaid principal amount of the Note or Notes so surrendered. Any Note
issued in exchange for any other Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, and neither gain nor loss of interest shall result
from any such transfer or exchange. Notwithstanding the foregoing, Notes may not
be issued in denominations of less than $50,000 (except if the entire
outstanding principal balance of the Notes of such Holder is less than $50,000,
in which case one Note for the entire outstanding principal amount of the Notes
of such Holder may be issued).
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<PAGE> 5
The Company and any agent of the Company may treat the Holder in
whose name any Note is registered as the owner of such Note for the purpose of
receiving payment of the principal of and premium (if any) and interest on such
Note and for all other purposes whatsoever, whether or not such Note be overdue.
Notwithstanding anything contained herein to the contrary, the
provisions of this Section 5 shall not apply in connection with any of the
transactions contemplated by the HG Note Assignment.
6. Representations of the Company. The Company represents and
warrants to you as follows:
6.1 Organization and Authority. The Company is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Louisiana. The Company has the requisite power and authority to
own or hold under lease the property it purports to own or hold under lease and
to transact the business it transacts and proposes to transact. The Company has
the requisite power and authority to execute and deliver this Note and the other
documents and agreements contemplated hereby to be executed and delivered by the
Company, and to perform the provisions hereof and thereof to be performed by the
Company. The Company is duly qualified and is in good standing in each
jurisdiction in which the character of the properties owned or held under lease
by it or the nature of the business transacted by it requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect.
The execution, delivery and performance of this Note and the
other Operative Documents and any other documents or agreements contemplated
hereby and thereby, and the consummation of the transactions contemplated hereby
and thereby, have been duly authorized and approved by the Company and each is
the valid and binding obligation of the Company, enforceable in accordance with
its terms, except as may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by legal or equitable principles
relating to or limiting creditors' rights generally or as rights to
indemnification may be limited by applicable securities laws.
6.2 Ownership of the Company. Except as set forth on Schedule
6.2, on the date hereof, NGCP will be the only general partner of the Company
and the persons named on Schedule 6.2 will be the only limited partners of the
Company. The partnership interests of NGCP and the limited partners in the
Company have been duly authorized and validly issued and all required
contributions in respect of all such partnership interests have been made.
Except as set forth on Schedule 6.2, the Company has no
outstanding securities convertible into or exchangeable for any interests in the
Company or any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements (contingent or otherwise) providing for the
issuance of, or any calls, commitments or claims of any character relating to,
any interest in the Company or any securities convertible into or exchangeable
for any interest in
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<PAGE> 6
the Company. Except as set forth on Schedule 6.2, the Company is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any interest in the Company or obligation evidencing the right of the
Holder thereof to purchase any interest in the Company.
6.3 Subsidiaries. Except as set forth on Schedule 6.3, the
Company does not have any Subsidiaries and does not have any equity interest in
any other entity.
6.4 Litigation; Observance of Statutes, Regulations and Orders.
Except as disclosed on Schedule 6.4, there are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened, against or affecting
the Company or any property of the Company or any of the partners of the Company
in any court or before any arbitrator of any kind or before or by any
Governmental Body (except actions, suits or proceedings arising in the ordinary
course of business which individually or in the aggregate, if adversely
determined, would not cause a Material Adverse Effect).
Except as set forth on Schedule 6.4, the Company is not in
default under any Order of any court, arbitrator or Governmental Body, and is
not subject to or a party to any Order of any court or Governmental Body arising
out of any action, suit or proceeding under any statute or other law. The
Company is not in violation of any statute or other rule or regulation of any
Governmental Body, the violation of which could cause a Material Adverse Effect.
6.5 Title to Property; Leases. On the date hereof, the Company
will have good, marketable and insurable title to the real properties owned by
the Company including, without limitation, good, marketable and insurable title
to the real properties which are the subject of the Bossier City Mortgage,
except for Permitted Liens which do not interfere with the intended use of the
property. All real property owned by the Company is reflected on Schedule 6.5.
On the date hereof, the Company enjoys full and undisturbed
possession under all leases necessary in any material respect for the operation
of the business of the Company, each of which is listed on Schedule 6.5 (the
"Leases"). None of the Leases contain any unusual or burdensome provisions
which, individually or in the aggregate, could materially impair the operation
of the business of the Company. Schedule 6.5 sets forth a correct and complete
list of all Leases of the Company existing on the Closing Date. The Leases are
valid and subsisting and are in full force and effect and the Company is not in
default on any of the terms and obligations of any Lease, and no event over the
passage of time shall constitute such default.
6.6 Taxes. Except as set forth on Schedule 6.6, the Company has
filed all tax returns which are required to have been filed in any jurisdiction,
and has paid all material taxes including, but not limited to, real estate taxes
shown to be due and payable on such returns and all other taxes and assessments
payable by the Company, to the extent the same have become due and payable and
before they have become delinquent, except for any taxes and assessments the
amount, applicability or validity of which is currently being contested in good
faith by
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appropriate proceedings and with respect to which the Company has set aside on
its books reserves (to the extent required by GAAP) deemed by it to be adequate.
Except as set forth in Schedule 6.6, the Company does not know of any proposed
tax assessment against the Company. The tax returns filed by the Company are
true, complete and accurate in all material respects and all tax liabilities are
adequately provided for on the books of the Company. Except as set forth on
Schedule 6.6, there are no tax certiorari proceedings pending in connection with
the real properties which are the subject of the Bossier City Mortgage.
6.7 Compliance with Laws and Other Instruments.
a. Except as disclosed on Schedule 6.7, the consummation of the
transactions contemplated by this Note and the execution, delivery and
performance of the terms and provisions of this Note and the Bossier City
Mortgage, will not (i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of the Company under (x) any indenture, mortgage, deed of trust, bank loan or
credit agreement, License or other material agreement or instrument to which the
Company is a party or by which the Company or any of its properties may be bound
or affected or (y) the organizational documents of the Company or (ii) conflict
with or result in a breach of any of the terms, conditions or provisions of any
Order of any court, arbitrator or Governmental Body applicable to the Company or
(iii) violate any provision of any statute or other rule or regulation of any
Governmental Body applicable to the Company, the violation of which would have a
Material Adverse Effect.
b. The Company is not in violation of any law, rule, regulation,
Order, indenture, mortgage, deed of trust, bank loan, credit agreement, License
or other agreement or instrument to which the Company is a party or by which the
Company or any of its properties may be bound or affected, which violation would
have a Material Adverse Effect.
c. The Company has all licenses required under any Gaming Law in
connection with the operation of the Horseshoe Bossier City Casino, including,
without limitation, the Louisiana License. Except as set forth on Schedule 6.7,
all such licenses are in full force and effect and no action has been taken by
any party to appeal, review, amend or revoke any such license.
6.8 Consents. Except as disclosed on Schedule 6.8, no consent,
approval or authorization of, or registration, filing or declaration with or
delivery of notice to, any Governmental Body or any third party (including, but
not limited to, the Leases) is required for the validity, execution and delivery
or for the performance by the Company of this Note and the other Operative
Documents, except for filings required by Federal or state securities laws and
the filings and recordings required to perfect the Bossier City Mortgage.
6.9 Intellectual Property; Licenses. Schedule 6.9 lists each
trademark, service mark, trade name, brand, copyright, patent, patent
application and right with respect to any of the foregoing (collectively, the
"Intellectual Property") owned, licensed or used by the Company in
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<PAGE> 8
the conduct of its business. The Company owns or possesses the right to use each
item of its Intellectual Property. Except as set forth in Schedule 6.9, the
Company does not know of any conflict with any right of any other Person with
respect to any of the Intellectual Property. The Company has not received any
notice of (and no executive officer of the Company or its Affiliates is
otherwise aware of) any conflict with respect to any of the Intellectual
Property. The Company is not a party to or bound by any license or other
agreement with respect to any of the Intellectual Property, except as set forth
in Schedule 6.9. Schedule 6.9 also lists each license, franchise, permit or
other authorization (collectively, the "Licenses" and individually, a "License")
which is necessary for the conduct of the business of the Company and briefly
describes each License, including the licensor, royalty payments, fees or other
payment obligations, the terms of the License and the expiration date thereof.
Except as set forth in Schedule 6.9, the Company has obtained and complied in
all material respects with all of the provisions of each License held by such
Person. Except as set forth in Schedule 6.9, each License is valid and in full
force and effect. The continuation, validity and effectiveness of each item of
Intellectual Property and each License will in no way be affected by the
execution and delivery of this Note or the other Operative Documents or the
consummation of the transactions contemplated hereby or thereby. The Company has
not breached any material provision of, and is not in default in any material
respect under the terms of, and has not engaged in any activity that would cause
the revocation, termination or suspension of, any License, and no action or
proceeding seeking the revocation or suspension of any License is pending or, to
the knowledge of the Company, threatened. There is no material default or
claimed or purported or alleged material default or state of facts that with
giving of notice or the lapse of time or both would constitute a default on the
part of any party under any contract or arrangement with respect to any of the
Intellectual Property or Licenses.
6.10 Compliance with ERISA. Schedule 6.10 identifies each
"employee benefit plan", as defined in Section 3(3) of ERISA, currently
maintained for the benefit of, or related to any or all of the employees or
former employees of the Company or any ERISA Affiliate (the "Employee Plans").
Each of the Employee Plans is in compliance, in form and operation, with the
requirements of ERISA and the Code, and all other applicable Federal, state and
local statutes, orders, rules or regulations. No Employee Plan constitutes a
Multiemployer Plan. No "prohibited transaction", as defined in Section 406 of
ERISA or 4975 of the Code, has occurred with respect to any Employee Plan which
has or will make the Company or any employee of the Company liable for any tax
or penalty pursuant to Section 502 of ERISA or Section 4975 of the Code. All
applicable contributions to all Employee Plans have been made or will be made
when due. Neither the Company, nor any ERISA Affiliate of the Company has
incurred (i) any "accumulated funding deficiency", within the meaning of Section
412 of the Code or Section 302 of ERISA, or (ii) any liability to the PBGC or
any Multiemployer Plan under Title IV of ERISA.
6.11 Environmental Laws. Except as set forth on Schedule 6.11, to
the knowledge of the Company, the Company (i) has no liability under any
applicable environmental or health and safety-related law, regulation, rule,
ordinance, or legally enforceable requirement at the Federal, state, or local
level (each an "Environmental Law") or common law cause of action
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relating to or arising from environmental conditions which is reasonably likely
to have a Material Adverse Effect and any facilities and operations of the
Company comply with and will continue to comply with all applicable
Environmental Laws to the extent that failure to comply is reasonably likely to
have a Material Adverse Effect; (ii) is not subject to any outstanding judgment,
consent decree, compliance order, or administrative order with respect to any
environmental or health and safety matter or received any written request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law which if adversely
determined, is reasonably likely to have a Material Adverse Effect; and (iii)
has no reason to believe that any of the items enumerated in clause (ii) of this
paragraph will be forthcoming. Except as set forth on Schedule 6.l1, to the
knowledge of the Company: (i) the Company has never and will never generate,
transport, use, store, treat, dispose of, or manage any hazardous waste as
defined or regulated under any Environmental Law ("Hazardous Waste"), except in
accordance with applicable Environmental Laws and except to the extent that
failure to comply with applicable Environmental Laws is not reasonably likely to
have a Material Adverse Effect; (ii) the Company is not aware of and has not
caused any release or threat of release of a hazardous waste, hazardous
material, hazardous substance, petroleum product, oil, toxic substance,
pollutant, contaminant, or other human health or safety, as defined or regulated
under any Environmental Law ("Hazardous Material") at any site presently or
formerly owned, operated, or leased by the Company except in accordance with
applicable Environmental Laws, and except to the extent that failure to comply
with applicable Environmental Laws is not reasonably likely to have a Material
Adverse Effect; (iii) the Company has never had Hazardous Material transported
from any site presently or formerly owned, operated or leased by the Company for
treatment, storage, or disposal at any other place, except in accordance with
applicable Environmental Laws and except to the extent that failure to comply
with applicable Environmental Laws is not reasonably likely to have a Material
Adverse Effect; (iv) the Company does not presently own, operate, lease or use
any site on which underground storage tanks are or were located except where the
presence and/or removal of such underground storage tanks is not reasonably
likely to have a Material Adverse Effect; (v) the Company has never placed
underground tanks on any site owned, operated, leased or used by the Company
except where the presence and/or removal of such underground storage tanks is
not reasonably likely to have a Material Adverse Effect; (vi) the Company has
never removed underground tanks from any site presently or formerly owned,
operated, leased or used by the Company except where the presence and/or removal
of such underground storage tanks is not reasonably likely to have a Material
Adverse Effect; and (vii) the Company has never had a Lien imposed by any
Governmental Body on any property, facility, machinery, or equipment currently
owned, operated or leased by the Company in connection with the presence of any
Hazardous Material.
6.12 Solvency. As of the date hereof, after giving effect to the
transactions contemplated by this Note and the other Operative Documents and the
other transactions related hereto and thereto, and the payment of fees and
expenses in connection therewith, the Company in good faith after due inquiry
believes that:
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<PAGE> 10
a. The fair market going concern value of all of the assets
(including goodwill), of the Company (that is, the amount which could be
realized for the Company within a reasonable time, either through collection or
sale of such assets as a going concern at the regular market value) will be
greater than the total amount of liabilities, including contingent,
subordinated, absolute, fixed, matured or unmatured and liquidated or
unliquidated liabilities, of the Company.
b. The fair market going concern value of all of the assets
(including goodwill), of the Company (that is, the amount which could be
realized for the Company within a reasonable time, either through collection or
sale of such assets as a going concern at the regular market value) is
sufficient to pay the probable liability of the Company on its existing debts as
such debts become absolute and matured. The Company currently pays and expects
it will be able to pay its debts and other liabilities, contingent obligations
and other commitments as they mature or come due in the normal course of
business.
c. The Company is not engaged in, or is about to engage in,
business or transactions for which it has unreasonably small capital.
No transfer of property is being made and no obligation is being
incurred in connection with the transactions contemplated by this Note, the
other Operative Documents or any other document contemplated herein or therein
with the intent to hinder, delay or defraud either present or future creditors
the Company.
7. Covenants. The Company covenants and agrees that on and after
the date hereof, so long as any Note shall be outstanding or any amount shall be
due and unpaid thereunder:
7.1 Maintenance of Existence. Except to the extent that failing
to do so is not prohibited by the Senior Secured Credit Facility Note Purchase
Agreement and the Indenture, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect its existence in
accordance with, respectively, the rights (charter and statutory), Licenses and
franchises of the Company; provided, however, that the Company shall not be
required to preserve any such right, License or franchise if the Company shall
determine that the preservation thereof is no longer desirable in the operation
of the business of the Company and that the loss thereof is not adverse in any
respect to the Holders of the Notes.
7.2 Payment of Taxes and Other Claims. The Company shall, and
shall cause each of its Subsidiaries to, pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all taxes, assessments
and governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon the Company or any of
its Subsidiaries or properties and assets of the Company or any of its
Subsidiaries and (ii) all lawful claims, whether for labor, materials, supplies,
services or anything else, that have become due and payable and that by law have
or may become a Lien upon the property and assets of the Company or any of its
Subsidiaries; provided, however, that the
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Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which disputed amounts adequate reserves have been established in accordance
with GAAP.
7.3 Maintenance of Insurance. From and at all times after the
date hereof, the Company and its Subsidiaries shall have in effect customary
property and comprehensive general liability insurance, in each case in
compliance with the terms and conditions of the Bossier City Mortgage, the
Bossier City Preferred Ship Mortgage and the Bossier City Second Ship Mortgage
and, in any event, on terms and in an amount reasonably sufficient (taking into
account, among other factors, the creditworthiness of the insurer) to avoid a
Material Adverse Effect.
7.4 Maintenance of Properties. Except to the extent that failure
to do so is not prohibited by the Senior Secured Credit Facility Note Purchase
Agreement and the Indenture, the Company shall, and shall cause each of its
Subsidiaries to, maintain, preserve, protect and keep the properties material to
the operation of the business of the Company and each of its Subsidiaries in
good repair, working order and condition (ordinary wear and tear excepted), and
make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times consistent with past practices of the Company and such Subsidiaries.
7.5 Compliance with ERISA. The Company shall not, nor shall the
Company permit any ERISA Affiliate to (a) engage in any transaction in
connection with which the Company could be subject to either a material penalty
or excise tax imposed by ERISA or the Code, (b) terminate or withdraw from any
Employee Plan (other than a Multiemployer Plan) in a manner which could result
in any material liability to the Company to the PBGC, (c) fail to make full
payment when due of all material amounts which, under the provisions of any
Employee Plan, the Company is required to make as contributions thereto, or (d)
permit to exist any material accumulated funding deficiency with respect to any
Employee Plan.
7.6 Compliance with Environmental Laws. The Company shall, and
shall cause each of its Subsidiaries to, at all times maintain in full force and
effect all material licenses and permits which are required under applicable
Environmental Laws in connection with the conduct of the business or operations
of the Company and its Subsidiaries. Each of the Company and its Subsidiaries
shall at all times remain in compliance with the terms and conditions of all
such licenses and permits and with all Environmental Laws, except where the
failure to comply is not reasonably likely to have a Material Adverse Effect.
7.7 Limitation on Liens. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly create, receive,
assume or permit to exist or otherwise cause or permit to become in effect any
Lien, other than those which are permitted under the Senior Secured Credit
Facility Note Purchase Agreement, the Indenture and the Bossier City Mortgage.
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7.8 Compliance with Laws. The Company shall at all times maintain
in full force and effect the Louisiana License and all other licenses and
permits which are required under gaming laws in Louisiana and the United States
and comply, and cause each of its Subsidiaries to comply, with all other
applicable laws, rules, regulations (provided this covenant shall not be deemed
to have been breached in respect of the non-compliance with any such other law,
rule or regulation if such non-compliance in the aggregate would not cause a
Material Adverse Effect) and Orders; such compliance to include, without
limitation, compliance with ERISA and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970.
8. Events of Default; Remedies.
8.1 Events of Default Defined; Acceleration of Maturity. If any
of the following events ("Events of Default") shall occur and be continuing (for
any reason whatsoever and whether it shall be voluntary or involuntary or by
operation of law or otherwise):
a. default shall be made in the payment of the principal of this
Note when and as the same shall become due and payable, whether at stated
maturity, by acceleration, by mandatory redemption or otherwise;
b. default shall be made in the payment of any interest on this
Note when and as such interest shall become due and payable, and such default
shall have continued for a period of thirty (30) days; or
c. default shall be made in the performance or observance of any
covenant, agreement or condition contained in this Note and such default shall
have continued unremedied for a period of thirty (30) days or such longer period
(but in no event longer than a total of sixty (60) unremedied days) during which
the Company is diligently pursuing a remedy to such default; or
d. a default in the payment of principal, premium or interest
when due that extends beyond any stated period of grace applicable thereto or an
acceleration for any other reason of the maturity of any Indebtedness of the
Company or any of its Subsidiaries (other than Indebtedness of the Company to
any Subsidiary of HG or of a Subsidiary of the Company to the Company or another
Subsidiary of HG) with an aggregate principal amount in excess of ten million
dollars ($10,000,000); or
e. an order for relief shall be entered in a proceeding under the
Bankruptcy Code in respect of the Company; a decree, judgment or order by a
court of competent jurisdiction shall have been entered adjudging the Company or
any of its Subsidiaries that individually or as a group constitute a Significant
Subsidiary, as bankrupt or insolvent; or such decree, judgment or order shall
have been entered approving as properly filed a petition seeking reorganization
of the Company or such Significant Subsidiary under any bankruptcy or similar
law, and such decree or order shall have continued undischarged and unstayed for
a period of sixty (60) days; or a decree
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or order of a court of competent jurisdiction over the appointment of a
receiver, liquidator, trustee or assignee in bankruptcy or insolvency of the
Company or such Significant Subsidiary, or of the property of any such person,
or for the winding up or liquidation of the affairs of any such person, shall
have been entered, and such decree, judgment or order shall have remained in
force undischarged and unstayed for a period of sixty (60) days; or
f. the Company or any of its Subsidiaries that individually or as
a group constitute a Significant Subsidiary, shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent seeking
reorganization under, any bankruptcy or similar law or similar statute, or shall
consent to the filing of any such petition, or shall consent to the appointment
of a custodian, receiver, liquidator, trustee or assignee in bankruptcy or
insolvency of it or any of its assets or property, or shall make a general
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due, or shall, within the meaning of
any Bankruptcy Law, become insolvent or fail generally to pay its debts as they
become due; or
g. final, non-appealable, unsatisfied judgments not covered by
insurance aggregating in excess of one million dollars ($1,000,000), at any one
time being rendered against the Company or any of its Subsidiaries and not
stayed, bonded or discharged within sixty (60) days; or
h. for any reason, the Holders shall cease to hold, pursuant to
the Bossier City Mortgage, a valid enforceable mortgage and security interest in
and to the Mortgaged Property (as defined in the Bossier City Mortgage) subject
to no prior lien, mortgage or security interest in favor of any third party,
except as permitted in Bossier City Mortgage; provided, however, if the
potential detrimental effect on the Holders in the case of a lien, mortgage or
security interest in favor of a third party is covered by title insurance, then
such lien, mortgage or security interest shall only constitute an Event of
Default hereunder if such lien, mortgage or security interest shall have
continued unremoved for a period of thirty (30) days or such longer period (but
in no event longer than a total of sixty (60) unremedied days) during which the
Company is diligently pursuing a remedy to such default; or
i. the legal right of the Company to operate the gaming
establishment within any Horseshoe Bossier City Casino is suspended or lost and
such loss or suspension shall continue for more than thirty (30) consecutive
days.
then upon the occurrence of any Event of Default, the Majority Noteholders by
written notice to the Company, may declare the unpaid principal amount of all
Notes to be, and the same shall forthwith become, due and payable, together with
the interest accrued thereon and all other amounts payable by the Company
hereunder, provided, during the existence of an Event of Default under clause
(a) or (b) of this Section 8.1 with respect to any Note, the Holder of such
Note, by written notice to the Company, may declare such Note to be, and the
same shall forthwith become, due and payable, together with the interest accrued
thereon and all other
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<PAGE> 14
amounts payable by the Company hereunder. If any Holder of any Note shall
exercise the option specified in the proviso to the preceding sentence, the
Company will forthwith give written notice thereof to the Holders of all other
outstanding Notes and each such Holder (whether or not such notice is given or
received), by written notice to the Company, may declare the principal of all
Notes held by it to be, and the same shall forthwith become, due and payable,
together with the interest accrued thereon and all other amounts payable by the
Company hereunder. Notwithstanding the foregoing, the unpaid principal amount of
the Notes may not be accelerated pursuant to an Event of Default described in
subsection d if prior to such acceleration, all amounts due under such other
indebtedness as described in such subsection shall have been repaid.
The provisions of this Section are subject, however, to the
condition that if, at any time after any Note shall have so become due and
payable, the Company shall pay all arrears of interest on such Note and all
payments on account of the principal on such Note and any other amounts owing
which shall have become due otherwise than by acceleration (with interest on
such principal, and, to the extent permitted by law, on overdue payments of
interest, at the rate specified in the Notes) and all Events of Default (other
than nonpayment of principal of and accrued interest on Notes, due and payable
solely by virtue of acceleration) shall be remedied or waived pursuant to
Section 9, then, and in every such case, the Majority Noteholders, by written
notice to the Company, may rescind and annul any such acceleration and its
consequences; but no such action shall affect any subsequent Event of Default or
impair any right consequent thereon.
9. Amendment and Waiver. a. Any term, covenant, agreement or
condition of the Notes, with the consent of the Company may be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), by one or more substantially
concurrent written instruments signed by the Majority Noteholders; provided,
however, that
(i) no such amendment or waiver shall
(x) reduce the principal of, or reduce the rate of or
change the time for payment of interest on or any premium payable
with respect to, any Note, or extend the maturity of any Note,
without the consent of the Holder of each Note so affected, or
(y) modify any of the provisions of the Notes with respect
to the payment or prepayment thereof, or reduce the percentage of
Holders of Notes required to approve any such amendment or
effectuate any such waiver, or amend this Section 9 without the
consent of the Holders of all of the Notes at the time
outstanding; and
(ii) no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon; and
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provided, further, until the pledge of the Notes under the HG Note Assignment
has been released, no action may be taken by the Majority Noteholders or at
their direction or pursuant to their consent by the Company or the Majority
Noteholders under the Notes without the consent of the pledgees under the HG
Note Assignment.
b. Any amendment or waiver pursuant to subsection (a) of this
Section 9 shall apply equally to all the Holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company, in
each case whether or not a notation thereof shall have been placed on any Note.
c. So long as any outstanding Notes are owned by the Payee or any
other Holder, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of the
Notes unless each Holder of any Note (irrespective of the amount of Notes then
owned by it) shall be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
sufficient information to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any amendment or waiver effected
pursuant to the provisions of this Section 9 shall be delivered by the Company
to each Holder of outstanding Notes forthwith following the date on which the
same shall have been executed and delivered as set forth herein.
10. Notices. All notices and other communications provided for in
this Note shall be in writing and delivered, telecopied or mailed, first class
postage prepaid, addressed:
(i) if to the Company:
HORSESHOE ENTERTAINMENT,
A LOUISIANA LIMITED PARTNERSHIP
415 Traffic Street
Bossier City, Louisiana 71111
Attention: Chief Financial Officer
(ii) if to the Payee, at the address set forth on the first
page of this Note or at such other address as the Payee may
hereafter designate by notice to the Company, and
(iii) if to any other Holder of the Notes, at the address of
such Holder as it appears on the note register.
Any such notice or communication shall be deemed to have been duly given
when delivered or telecopied and, if mailed, two days after deposit in the U.S.
mail.
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11. Remedies Cumulative. No remedy herein conferred upon the
Holder of this Note is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
12. Definitions. Except as otherwise specified or as the context
may otherwise require, the following terms shall have the respective meanings
set forth below when used in this Note:
"Affiliate" means (i) any person directly or indirectly
controlling or controlled by or under direct or indirect common control with HG
or any of its Subsidiaries, including, without limitation, Jack Binion and
Phyllis Cope, (ii) any spouse, immediate family member or other relative as any
person described in clause (i) above, (iii) any trust in which any person
described in clause (i) or (ii) above has a beneficial interest, and (iv) any
trust established by any person described in clause (i) or (ii) above, whether
or not such person has a beneficial interest in such trust. For purposes of this
definition, the term "control" means (a) the power to direct the management and
policies of a person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract or otherwise, or (b) the
beneficial ownership of 10% or more of any class of voting Capital of an entity,
unless some other person beneficially owns a greater percentage of any class of
voting Capital of such entity.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"beneficial owner" for purposes of the definition of Change of
Control has the meaning attributed to it in Rules 13d-3 and 13d-5 under the
Exchange Act, whether or not applicable, except that a "person" shall be deemed
to have "beneficial ownership" of all shares that any such person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time.
"Board of Managers" means, with respect to any person that is a
limited liability company, the Board of Managers of such person, acting as a
group, or any committee of the Board of Managers of such person authorized, with
respect to any particular matter, to exercise the power of the Board of
Managers.
"Bossier City Mortgage" shall mean a first mortgage encumbering
all of the land in Bossier City, Louisiana on which the Horseshoe Bossier City
Casino is located, and all other land owned by the Company, as the same may be
amended or modified from time to time in accordance with its terms.
"Bossier City Preferred Ship Mortgage" shall mean the preferred
ship mortgage on the Bossier City riverboat casino owned by the Company, as the
same may be amended or modified from time to time in accordance with its terms.
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"Bossier City Second Security Agreement" means the financing
statement and second security agreement, dated as of October 10, 1995, executed
by the Company in favor of HG, as the same may be amended from time to time in
accordance with its terms.
"Bossier City Second Ship Mortgage" means the Second Ship
Mortgage, executed by the Company in favor of HG, as the same may be amended
from time to time in accordance with its terms.
"Bossier City Security Agreement" means the financing statement
and security agreement, dated as of October 10, 1995, executed by the Company in
favor of HG, as the same may be amended from time to time in accordance with its
terms.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capital" means (i) with respect to any corporation, any and all
shares of stock issued by that corporation and (ii) with respect to any other
person, any partnership interest, joint venture interest, limited liability
company member interest or other form of equity sharing or participation
interest, as applicable.
"Capitalized Lease Obligation" shall mean any obligation payable
under a lease of real or personal property to the extent such obligation, in
accordance with GAAP, should be capitalized on the lessee's balance sheet or for
which the amount of the asset and liability thereunder as if so capitalized
should be disclosed in a note to such balance sheet.
"Change of Control" means (i) prior to the completion of a bona
fide underwritten initial public offering by HG, the failure at any time of
Excluded Persons as a group to own and control at least 40% of the issued and
outstanding issued and outstanding Capital of HG; (ii) after the completion of a
bona fide underwritten initial public offering by HG, the acquisition, in one or
more transactions, of beneficial ownership by (A) any person or entity (other
than an Excluded Person) or (B) any group of persons or entities (excluding any
group in which Excluded Persons beneficially own in the aggregate at least 75%
of the equity and voting interests beneficially owned by the group) who
constitute a group (within the meaning of Section 13(d)(3) of the Exchange Act),
in either case, of Capital of HG such that, as a result of such acquisition,
such person, entity or group beneficially owns (within the meaning of Rule 13d-3
under the Exchange Act), directly or indirectly, 30% or more of the voting
Capital of HG entitled to vote in the election of directors, managers, general
partners or other similar governing bodies of HG then outstanding; provided,
however, that no Change of Control shall be deemed to have occurred if (A)
Excluded Persons beneficially own, in the aggregate, at such time, a greater
percentage of voting Capital of HG entitled to vote in the election of
directors, managers, general partners or other similar governing bodies of HG
than such other person, entity or group or (B) at the time of such acquisition,
Excluded Persons (or any of them) possess the ability (by contract or otherwise)
to elect, or cause the election, of a majority of the members of HG's Board of
Managers; (iii) any
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merger or consolidation of HG with or into any person or any sale, transfer or
other conveyance, whether direct or indirect, of all or substantially all of the
assets of HG, on a consolidated basis, in one transaction or a series of related
transactions, if immediately after giving effect to such transaction or
transactions, any person or group (other than Excluded Persons or groups
including Excluded Persons to the extent contemplated by clause (i) or (ii)
above, whichever is then applicable) is or becomes the beneficial owner,
directly or indirectly, of more than the percentage of the Capital of HG
contemplated by clause (i) or (ii) above, whichever is then applicable; or (iv)
during any period of 12 consecutive months after October 10, 1995, individuals
who at the beginning of any such 12-month period constituted the Board of
Managers of HG (together with any new managers whose election by such Board or
whose nomination for election by the members of HG was approved by a vote of a
majority of the managers then still in office who were either managers at the
beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a majority of the
managers of HG then in office.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any corporation that is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Code) as the Company or any corporation or trade or business that is
under common control (within the meaning of Section 414 (c) of the Code) with
the Company or, solely for purposes of liability under Section 412 of the Code
or Section 302 of ERISA, any entity treated as a single employer with the
Company under Section 414(m) or (o) of the Code.
"Employee Plans" shall have the meaning ascribed thereto in
Section 6.10.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Securities and
Exchange Commission thereunder.
"Excluded Person" means (a) HG or any Subsidiary of HG, (b) any
employee benefit plan of HG or any trustee or similar fiduciary holding Capital
of HG for or pursuant to the terms of any such plan, (c) Jack Binion, (d)
Phyllis Cope and (e) members of the families and Affiliates (where the
determination of whether a person is an Affiliate is made without reference to
clause (b) of the definition of such term) of the foregoing persons.
"GAAP" shall mean generally accepted accounting principles as in
effect on the date hereof.
"Gaming Authority" means any Governmental Authority with the
power to regulate gaming in any Gaming Jurisdiction, and the corresponding
Governmental Authorities
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with the responsibility to interpret and enforce the laws and regulations
applicable to gaming in any Gaming Jurisdiction.
"Gaming Jurisdiction" means any Federal, state or local
jurisdiction in which the Company or any entity in which the Company has a
direct or indirect beneficial, legal or voting interest conducts casino gaming,
now or in the future.
"Gaming Law" means any law, rule, regulation or ordinance
governing gaming activities (including, without limitation, the Louisiana
Riverboat Economic Development and Gaming Control Act, in each case including
all amendments or modifications thereof), any administrative rules or
regulations promulgated thereunder, and any of the corresponding statutes, rules
and regulations in each Gaming Jurisdiction.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of the United States or a foreign government, any state, any province
or any city or other political subdivision or otherwise and whether now or
hereafter in existence, or any officer or official thereof, and any maritime
authority.
"Governmental Body" shall mean any Federal, State, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, foreign or domestic.
"HG" means Horseshoe Gaming, L.L.C., a Delaware limited
liability company.
"HG Note Assignment" means the Note Assignment, executed as of
October 10, 1995, by HG in favor of the holders of the Senior Secured Credit
Facility Notes and United States Trust Company of New York, as Collateral Agent
for the benefit of the holders of the Senior Notes.
"Holder" or "Holders" shall mean the holder or holders of this
Note.
"Horseshoe Bossier City Casino" shall mean the dockside casino
owned by the Company in Bossier City/Shreveport, Louisiana.
"Indebtedness" of any person means, without, duplication, (a) all
liabilities and obligations, contingent or otherwise, of such person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors that
have remained unpaid for greater than ninety (90) days past their original due
date or that are being contested in good faith and for which adequate reserves
have been made) those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors, (iv) evidenced by
bankers'
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acceptances or similar instruments issued or adapted by banks, (v) for the
payment of money relating to a Capitalized Lease Obligation, or (vi) evidenced
by a letter of credit or a reimbursement obligation of such person with respect
to any letter of credit; (b) all obligations of such person under Interest Swap
and Hedging Obligations; (c) all liabilities of others of the kind described in
the preceding clauses (a) or (b) that such person has guaranteed or that is
otherwise its legal liability (but only to the extent of the amount actually
guaranteed) and all obligations to purchase, redeem or acquire any Capital; (d)
all obligations secured by a Lien to which the property or assets (including,
without limitation, leasehold interests and any other tangible or intangible
property rights) of such person are subject, whether or not the obligations
secured thereby shall have been assumed by or shall otherwise be such person's
legal liability; provided, however, that the amount of such obligations shall be
limited to the lesser of the fair market value of the assets or property to
which such Lien attaches and the amount of the obligation so secured; and (e)
any and all deferrals, renewals, extensions, refinancings and refundings
(whether direct or indirect) of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a), (b),
(c) or (d), or this clause (e), whether or not between or among the same
parties.
"Indenture" means the Indenture, dated as of October 10, 1995,
among HG, RPG, as guarantor, and U.S. Trust Company of California, N.A., as
trustee.
"Intellectual Property" shall have the meaning ascribed thereto
in Section 6.9.
"Interest Swap and Hedging Obligation" means any obligation of
any person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investments" shall have the meaning set forth in the Senior
Secured Credit Facility Note Purchase Agreement.
"Leases" shall have the meaning ascribed thereto in Section 6.5.
"License" shall have the meaning ascribed thereto in Section 6.9.
"Lien" shall mean, as to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance in or on, or any interest or
title of any vendor, lessor, lender or other secured party to or of the Person
under any Indebtedness, conditional sale or other title retention agreement or
Capitalized Lease Obligation with respect to, any property or asset of the
Person, or the signing or filing of a financing statement which names the Person
as debtor, or the
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signing of any security agreement authorizing any other party as the secured
party thereunder to file any financing statement.
"Louisiana License" shall mean all gaming licenses required to
operate the Horseshoe Bossier City Casino.
"Majority Noteholders" means, at any time, the holders of a
majority of the aggregate principal amount of Notes then outstanding.
"Material Adverse Effect" shall mean a material adverse effect on
the business, condition (financial or otherwise), operations, earnings,
performance, properties or prospects of the Company and its Subsidiaries taken
as a whole or the ability of the Company to perform its obligations under this
Note.
"Multiemployer Plan" shall mean any employee benefit plan
described in Section 3(37) of ERISA.
"NGCP" shall mean New Gaming Capital Partnership, a Nevada
limited partnership.
"Operative Documents" means this Note, the Bossier City
Mortgage, the Bossier City Preferred Ship Mortgage, the Bossier City Second Ship
Mortgage, the Bossier City Security Agreement and the Bossier City Second
Security Agreement.
"Order" shall mean any order, writ, injunction, decree, judgment,
award, determination, direction or demand.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Liens" shall mean all Liens which may be incurred by
the Company under the Senior Secured Credit Facility Note Purchase Agreement and
the Indenture.
"Permitted Tax Distributions" shall have the meaning set forth
in the Senior Secured Credit Facility Note Purchase Agreement.
"Person" shall mean an individual, partnership, trust,
corporation, a government or agency or political subdivision or any agency,
department or instrumentality thereof or other person or entity.
"RPG" shall mean Robinson Property Group Limited Partnership, a
Mississippi limited partnership.
21
<PAGE> 22
"Senior Secured Credit Facility Note Purchase Agreement" means
the Senior Secured Credit Facility Note Purchase Agreement, dated as of October
10, 1995, among HG, the Company, as guarantor, and the purchasers named therein.
"Senior Secured Credit Facility Notes" means the notes issued by
HG pursuant to the Senior Secured Credit Facility Note Purchase Agreement.
"Senior Notes" means the 12.75% Senior Notes due September 30,
2000 of HG, issued pursuant to the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act of 1933, as amended, as such
regulation is in effect on the date hereof.
"Subsidiary" with respect to any person, means (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of Capital entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such person or
one or more Subsidiaries of such person or by such person and one or more
Subsidiaries of such person and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such person or a Subsidiary
of such person or (b) the only general partners of which are such person or one
or more Subsidiaries of such person (or any combination thereof). When used with
respect to HG, "Subsidiary" shall be deemed to include any direct Subsidiary of
HG and each indirect Subsidiary that is a direct Subsidiary of HG or one or more
of its direct or indirect Subsidiaries. Notwithstanding the foregoing, no
Unrestricted Subsidiary (as defined in the Senior Secured Credit Facility Note
Purchase Agreement) shall be a Subsidiary of HG or any of its Subsidiaries.
13. Governing Law. This Note shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. Severability. If any provision of this Note shall be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any of the provisions hereof and this Note
shall be construed as if such invalid, illegal or unenforceable provisions had
never been contained herein.
15. Miscellaneous.
a. Payments of all amounts owing under this Note are to be made
at the address of the Payee stated on the first page of this Note or at such
other address as the Holder of this Note may designate from time to time in
writing. Any payment date occurring on any day other than a Business Day shall
be deemed to be the next succeeding Business Day.
22
<PAGE> 23
b. The Company promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred in the collection and enforcement of this
Note. The Company hereby consents to renewals and extensions of time at or after
the maturity hereof, without notice, and hereby waives diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.
HORSESHOE ENTERTAINMENT,
A LOUISIANA LIMITED PARTNERSHIP
By: New Gaming Capital Partnership, a Nevada
limited partnership, its General Partner
By: Horseshoe GP, Inc., its General Partner
By: _______________________________________
Name: Walter J. Haybert
Title: Treasurer
23
<PAGE> 1
EXHIBIT 4.50
AMENDED AND RESTATED CREDIT FACILITY AGREEMENT,
dated as of November 12, 1997,
among
HORSESHOE GAMING, L.L.C.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as the Agent for the Lenders,
and
CIBC OPPENHEIMER CORP.,
as the Arranger.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
I DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms...........................................................2
1.2. Use of Defined Terms...................................................28
1.3. Cross-References.......................................................28
1.4. Accounting and Financial Determinations................................28
II COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Commitments............................................................28
2.1.1. Revolving Loan Commitment of Each Lender...............................28
2.1.2. Swing Loan Commitment..................................................29
2.1.3. Lenders Not Permitted or Required To Make Loans........................29
2.2. Reduction of Commitment Amounts........................................29
2.2.1. Optional...............................................................29
2.2.2. Mandatory..............................................................30
2.2.3. Special Letter of Credit Provisions....................................30
2.3. Borrowing Procedure....................................................31
2.3.1. Revolving Loans........................................................31
2.3.2. Swing Loans............................................................31
2.4. Continuation and Conversion Elections..................................32
2.5. Funding................................................................32
2.6. Notes..................................................................33
2.7. Letter of Credit Procedure.............................................33
2.8. Increase in the Revolving Loan Commitment Amount.......................34
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments.............................................35
3.1.1. Payment Terms..........................................................35
3.1.2. Special Swing Loan Provisions..........................................37
3.1.3. Post Default Application of Payments...................................38
3.2. Interest Provisions....................................................38
3.2.1. Rates..................................................................38
3.2.2. Post-Maturity Rates....................................................39
3.2.3. Payment Dates..........................................................39
3.3. Fees...................................................................40
3.3.1. Commitment Fee.........................................................40
3.3.2. Upfront Fees...........................................................40
3.3.3. Agent's Fee............................................................40
3.3.4. Letter of Credit Fees..................................................40
3.4. Agreement to Repay Letter of Credit Drawings with Revolving
Loans..................................................................40
3.5. Letter of Credit Participations........................................41
3.6. Repurchase of Notes at the Option of the Lender Upon a Change of
Control................................................................43
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
IV CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
4.1. Eurodollar Rate Lending Unlawful.......................................45
4.2. Deposits Unavailable...................................................45
4.3. Increased Costs, etc...................................................46
4.4. Funding Losses.........................................................46
4.5. Increased Capital Costs................................................47
4.6. Taxes..................................................................47
4.7. Payments, Computations, etc............................................48
4.8. Sharing of Payments....................................................49
4.9. Setoff.................................................................50
4.10. Use of Proceeds........................................................50
4.11. Discretion of Lenders as to Manner of Funding..........................50
4.12. Substitution...........................................................51
V CONDITIONS TO BORROWING
5.1. Initial Borrowing......................................................51
5.1.1. Resolutions, etc.......................................................51
5.1.2. Delivery of Notes......................................................53
5.1.3. Guarantees.............................................................53
5.1.4. Payment of Outstanding Indebtedness, etc...............................54
5.1.5. Borrower Pledge Agreement..............................................54
5.1.6. JBB Pledge Agreement...................................................54
5.1.7. Security Agreement.....................................................54
5.1.8. Deed of Trust..........................................................55
5.1.9. Surveys................................................................55
5.1.10. Appraisals.............................................................55
5.1.11. Environmental Audit....................................................56
5.1.12. RPG First Preferred Ship Mortgage......................................56
5.1.13. Amended and Restated Note Assignment...................................56
5.1.14. Consents, etc..........................................................57
5.1.15. Insurance Coverages....................................................58
5.1.16. Solvency...............................................................58
5.1.17. Opinions of Counsel....................................................58
5.1.18. Other Debt Documentation...............................................58
5.1.19. Intercreditor Agreement................................................58
5.1.20. Closing Fees, Expenses, etc............................................58
5.2. All Borrowings.........................................................58
5.2.1. Compliance with Warranties, No Default, etc ...........................59
5.2.2. Borrowing Request......................................................59
5.2.3. Satisfactory Legal Form................................................60
VI REPRESENTATIONS AND WARRANTIES
6.1. Organization, etc......................................................60
6.2. Due Authorization, Non-Contravention, etc..............................61
6.3. Government Approval, Regulation, etc...................................61
6.4. Validity, etc..........................................................61
6.5. Financial Information..................................................61
6.6. No Material Adverse Change.............................................62
6.7. Litigation, Labor Controversies, etc...................................62
6.8. Subsidiaries...........................................................62
6.9. Ownership of Properties................................................62
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.10. Compliance.............................................................63
6.11. Taxes..................................................................63
6.12. Pension and Welfare Plans..............................................63
6.13. Environmental Warranties...............................................63
6.14. HE Notes...............................................................65
6.15. Senior Debt............................................................65
6.16. Regulations G, U and X.................................................65
6.17. Accuracy of Information................................................65
VII COVENANTS
7.1. Affirmative Covenants..................................................66
7.1.1. Financial Information, Reports, Notices, etc...........................66
7.1.2. Compliance with Laws, etc..............................................69
7.1.3. Maintenance of Properties..............................................69
7.1.4. Insurance..............................................................70
7.1.5. Books and Records......................................................70
7.1.6. Environmental Covenant.................................................70
7.1.7. Maintenance of Existence...............................................71
7.1.8. Gaming and Liquor Licenses.............................................71
7.1.9. Accuracy of Information................................................71
7.1.10. Additional Guarantees and Collateral Documentation.....................71
7.1.11. Additional HE Pledges..................................................72
7.1.12. Additional HE or RPG Notes.............................................72
7.1.13. Outstandings Under This Agreement......................................72
7.2. Negative Covenants.....................................................72
7.2.1. Business Activities....................................................72
7.2.2. Indebtedness...........................................................72
7.2.3. Liens..................................................................74
7.2.4. Financial Condition....................................................76
7.2.5. Investments ...........................................................76
7.2.6. Restricted Payments, etc...............................................77
7.2.7. Capital Expenditures...................................................79
7.2.8. Rental Obligations.....................................................80
7.2.9. Consolidation, Merger, etc.............................................80
7.2.10. Asset Dispositions, etc................................................80
7.2.11. Modification of Certain Agreements.....................................81
7.2.12. Transactions with Affiliates...........................................81
7.2.13. Negative Pledges, Restrictive Agreements, etc..........................81
VIII EVENTS OF DEFAULT
8.1. Listing of Events of Default...........................................82
8.1.1. Non-Payment of Obligations.............................................82
8.1.2. Breach of Warranty.....................................................82
8.1.3. Non-Performance of Certain Covenants and Obligations ..................82
8.1.4. Non-Performance of Other Covenants and Obligations.....................82
8.1.5. Default on Other Indebtedness..........................................82
8.1.6. Judgments..............................................................83
8.1.7. Pension Plans..........................................................83
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
8.1.8. Bankruptcy, Insolvency, etc............................................83
8.1.9. Impairment of Security, etc............................................84
8.1.10. Gaming License. ......................................................84
8.1.11. Government Approvals. ................................................84
8.1.12. Liens on Shares of Significant Subsidiaries. .........................85
8.2. Action if Bankruptcy...................................................85
8.3. Action if Other Event of Default.......................................85
IX THE AGENT
9.1. Actions................................................................86
9.2. Funding Reliance, etc..................................................86
9.3. Exculpation............................................................87
9.4. Successor..............................................................87
9.5. Credit Decisions.......................................................88
9.6. Copies, etc............................................................88
9.7. Co-Agents..............................................................88
X MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc...............................................89
10.2. Notices................................................................90
10.3. Payment of Costs and Expenses..........................................90
10.4. Indemnification........................................................91
10.5. Survival...............................................................93
10.6. Severability...........................................................93
10.7. Headings ..............................................................93
10.8. Execution in Counterparts, Effectiveness, etc. .......................93
10.9. Governing Law; Entire Agreement........................................93
10.10. Successors and Assigns.................................................94
10.11. Sale and Transfer of Loans and Notes; Participations in Loans and
Notes..................................................................94
10.11.1. Assignments............................................................94
10.11.2. Participations.........................................................96
10.12. Other Transactions.....................................................97
10.13. Removal of a Lender....................................................97
10.14. Nonrecourse............................................................98
10.15. Waiver of Jury Trial...................................................98
10.16. Amendment and Restatement..............................................99
</TABLE>
SCHEDULE I - Revolving Percentages
SCHEDULE II - Disclosure Schedule
SCHEDULE III - Insurance Coverage
EXHIBIT A - Form of Note
EXHIBIT B - Form of Swingline Note
EXHIBIT C - Form of Borrowing Request
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Lender Assignment Agreement
EXHIBIT F - Form of Opinions of Counsel to the Borrower
EXHIBIT G - Form of Guarantee and Security Agreement
EXHIBIT H - Form of Intercreditor Agreement
<PAGE> 6
EXHIBIT I - Form of Compliance Certificate
EXHIBIT J - Form of Borrower Pledge Agreement
EXHIBIT K - Form of Certificate of Solvency
<PAGE> 7
AMENDED AND RESTATED CREDIT FACILITY AGREEMENT
This AMENDED AND RESTATED CREDIT FACILITY AGREEMENT (this "Agreement")
is dated as of November 12, 1997, among HORSESHOE GAMING, L.L.C., a Delaware
limited liability company (the "Borrower"), the various financial institutions
as are or may become parties hereto (collectively, the "Lenders"), CIBC INC.
("CIBC Inc."), as Swingline Lender, CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"),
as agent for the Lenders (herein, in such capacity, called the "Agent") and CIBC
OPPENHEIMER CORP., as arranger (herein, in such capacity called the "Arranger").
W I T N E S S E T H:
WHEREAS, pursuant to a Senior Secured Credit Facility Note Purchase
Agreement dated as of October 10, 1995, as amended prior to the date hereof (as
so amended, the "Note Purchase Agreement") among, inter alia, the Borrower,
Robinson Property Group Limited Partnership, a Mississippi limited partnership
("RPG") and debis Financial Services, Inc. and other financial institutions
(collectively, the "Note Purchasers" and each, individually, a "Note
Purchaser"), each of the Note Purchasers has purchased one or more of the Senior
Secured Credit Facility Notes due September 30, 1999 (each an "Existing Note")
issued by the Borrower;
WHEREAS, pursuant to a Guaranty and Security Agreement dated as of
October 10, 1995 (the "RPG Guaranty and Security Agreement"), RPG has
unconditionally guaranteed the obligations of the Borrower in respect of the
Existing Notes;
WHEREAS, the obligations of the Borrower and RPG under the Note Purchase
Agreement and the RPG Guaranty and Security Agreement were secured by various
mortgages, deeds of trust, first preferred ship mortgages and other collateral
more particularly described therein (collectively, the "Security Documents");
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the Note Purchasers and CIBC, the Note Purchasers assigned to CIBC
all of the rights, duties and obligations of the remaining Note Purchasers in
connection with the Note Purchase Agreement, the Security Documents and the
documents executed in connection therewith;
WHEREAS, the parties hereto wish to amend and restate their respective
obligations under the Note Purchase Agreement on the
<PAGE> 8
terms, and subject to the conditions set forth herein, and the parties expressly
disclaim any intent to effect a novation or extinguishment or discharge of the
Note Purchase Agreement or discharge of any obligations under the Existing Notes
and the Security Documents as a result of entering into this Agreement and the
other documents contemplated herein;
WHEREAS, the Borrower desires to obtain Commitments from the Lenders
pursuant to which Loans and Letters of Credit, in a maximum aggregate principal
amount at any one time outstanding not to exceed $130,000,000 (subject to
increase pursuant to Section 2.8), will be made to, or issued for the account
of, the Borrower from time to time prior to the Commitment Termination Date; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments and make such Loans to the Borrower and to issue Letters of Credit
for the account of the Borrower or for the account of the Borrower and one or
more of its subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management
-2-
<PAGE> 9
and policies of such Person whether by contract or otherwise.
"Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 9.4.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently announced by the Agent at
its Domestic Office as its reference rate; and
(b) the Federal Funds Rate most recently determined by the Agent
(calculated on a 365-day basis) plus 50 basis points.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Agent or any other Lender in connection with
extensions of credit. Changes in the rate of interest on that portion of any
Loans maintained as Base Rate Loans will take effect simultaneously with each
change in the Alternate Base Rate. The Agent will give notice promptly to the
Borrower and the Lenders of changes in the Alternate Base Rate.
"Amended and Restated Note Assignment" means that certain Amended and
Restated Note Agreement of even date herewith executed by the Borrower in favor
of Agent, as the same may be amended, supplemented, restated or otherwise
modified from time to time, pursuant to which the HE Notes and the RPG Notes
have been pledged to the Agent.
"Applicable Base Rate Margin" is the rate per annum determined by
reference to the definition of the term "Applicable Margin."
"Applicable Eurodollar Rate Margin" is the rate per annum determined by
reference to the definition of the term "Applicable
-3-
<PAGE> 10
Margin."
"Applicable Margin" means, in the case of any Base Rate Loan or
Eurodollar Rate Loan, a rate per annum determined by reference to the Borrower's
Leverage Ratio as follows (expressed in basis points):
<TABLE>
<CAPTION>
Applicable Base Applicable Eurodollar Commitment
Leverage Ratio Rate Margin Rate Margin Fee
- -------------- --------------- --------------------- ----------
<S> <C> <C> <C>
Less than 1.75 0.00 100.00 37.50
Greater than or 25.00 125.00 37.50
equal to 1.75,
but less than 2.25
Greater than or 50.00 150.00 37.50
equal to 2.25,
but less than 2.75
Greater than or 75.00 175.00 43.75
equal to 2.75,
but less than 3.25
3.25 or greater 100.00 200.00 50.00
</TABLE>
The "Applicable Base Rate Margin" and the "Applicable Eurodollar Rate Margin"
shall be adjusted on the first day of each March, June, September and December
(or, if such day is not a Business Day, on the next succeeding Business Day),
based on the Leverage Ratio as of the last day of the preceding Fiscal Quarter.
If the Borrower should fail to deliver in a timely manner a certificate required
under Section 7.1.1(e) hereof, then, until the Borrower shall have provided such
certificate, it shall be presumed that the Leverage Ratio as of the end of the
preceding Fiscal Quarter was greater than 3.25 (and, from the date of the
delivery of such certificate, the Applicable Margin for all Base Rate Loans and
Eurodollar Rate Loans shall be determined by reference to such certificate).
"Arranger" is defined in the preamble.
"Assignee Lender" is defined in Section 10.11.1.
"Assignment of Deed of Trust" means that certain
-4-
<PAGE> 11
Assignment of Deed of Trust, Security Agreement and Assignment of Leases and
Rents dated as of the date hereof from remaining Note Purchaser to the Agent.
"Assignment of HE Security Agreement" means that certain Assignment, of
even date herewith, from the remaining Note Purchaser in favor of the Agent and
covering all right, title and interest of the Note Purchasers under the HE
Security Agreement.
"Assignments of HE Mortgages" means those certain Assignments of
Mortgage, Security Agreement and Assignment of Leases and Rents dated as of the
date hereof from the remaining Note Purchaser to the Agent.
"Assignment of Tunica County Security Agreement" means that certain
assignment, of even date herewith, from the remaining Note Purchaser in favor of
the Agent and covering all
right, title and interest of the Note Purchasers under the Tunica County
Security Agreement.
"Authorized Officer" means, relative to the Borrower, until the Borrower
notifies the Agent to the contrary, those of its officers whose signatures and
incumbency shall have been certified to the Agent and the Lenders pursuant to
Section 5.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Board of Managers" means, with respect to any Person that is a limited
liability company, either the sole Manager of such Person or, if there is more
than one Manager, the Managers of such Person, acting as a group, or any
committee of the Managers of such Person authorized, with respect to any
particular matter, to exercise the power of the Managers.
"Borrower" is defined in the preamble.
"Borrower Pledge Agreement" means that certain Pledge Agreement executed
and delivered by the Borrower pursuant to Section 5.1.5, in substantially the
form of Exhibit J hereto and otherwise in form and substance satisfactory to the
Agent, as amended, supplemented, restated or otherwise modified from time to
time.
"Borrowing" means the Loans of the same Type made by all
-5-
<PAGE> 12
Lenders on the same Business Day and pursuant to the same Borrowing Request in
accordance with Section 2.3.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit C
hereto.
"Bossier Casino" means the Horseshoe casino, hotel and dockside
facilities owned by HE and located in Bossier City, Louisiana.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying of
any Eurodollar Rate Loans, any day on which dealings in Dollars are
arranged in the London Eurodollar interbank market.
"Capital" means, (i) with respect to any corporation, any and all shares
of stock issued by that corporation and (ii) with respect to any other Person,
any partnership interest, joint venture interest, limited liability company
member interest or other form of equity sharing or participation interest, as
applicable and (iii) warrants, options, participations or other equivalents of
or interests (however designated) in any of the items described in clause (i) or
(ii) above.
"Capital Expenditures" means, for any period, without duplication, the
sum of
(a) the aggregate amount of all expenditures of the Borrower and
its Subsidiaries for fixed or capital assets (including, without
limitation, capital stock) made during such period which, in accordance
with GAAP, would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP,
-6-
<PAGE> 13
would be classified as capitalized leases, and, for purposes of this Agreement
and each other Loan Document, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit having a maturity not greater than one year of any
domestic commercial bank, or U.S. branch of a foreign bank, of recognized
standing having capital and surplus in excess of five hundred million dollars
($500,000,000), and time deposits and certificates of deposit having a maturity
not greater than one year of other banks located in jurisdictions where the
Borrower and its Subsidiaries do business; provided, however, the aggregate
amount of all time deposits and certificates of deposit of such other banks may
not exceed five million dollars ($5,000,000), (iii) commercial paper rated at
the time of purchase at least A-2 or the equivalent thereof by Standard & Poor's
Corporation or at least P-2 or the equivalent thereof by Moody's Investors
Service, Inc. and maturing within one year after the date of acquisition, (iv)
repurchase obligations with a term of not more than ten (10) days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (ii) above, (v) marketable
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing, or
payable at the demand of the holder thereof, within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the three
highest ratings obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc., and (vi) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (v) above.
"Casino" means any gaming establishment and other property or assets
directly ancillary thereto or used in connection therewith including any
building, restaurant, hotel, theater, parking facilities, retail shops, land,
golf courses and other recreation and entertainment facilities, marina vessel,
barge,
-7-
<PAGE> 14
ship and equipment.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change of Control" means
(a) the failure of Jack B. Binion, Phyllis Cope and their family
members and Affiliates to own, free and clear of all Liens or other
encumbrances, 60% of the outstanding shares of HGI on a fully diluted
basis or the failure of such Persons to control HGI; or
(b) the failure of Jack B. Binion, Phyllis Cope and their family
members and Affiliates to own directly or through HGI, free and clear of
all Liens or other encumbrances, at least 51% of the outstanding shares
of voting stock of the Borrower on a fully diluted basis; or
(c) HGI shall cease to serve as the manager of the Borrower.
"Change of Control Offer" is defined in Section 3.6.
"Change of Control Offer Period" is defined in Section 3.6.
"Change of Control Offer Price" is defined in Section 3.6.
"Change of Control Payment Date" is defined in Section 3.6.
"Change of Control Put Date" is defined in Section 3.6.
"CIBC" is defined in the preamble.
"CIBC Inc." is defined in the preamble.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means, collectively, the Pledged Casinos, the vessel
subject to the RPG First Preferred Ship Mortgage, the
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collateral described in the HE Collateral Documents, the Security Agreement, the
Guarantees, the JBB Pledge Agreement, the Amended and Restated Note Assignment
and the Borrower Pledge Agreement, all property pledged pursuant to Section
7.1.10 and all other property and interests pledged from time to time as
collateral security for the Obligations.
"Commitment" means, as the context may require, a Lender's Revolving
Loan Commitment or the Swingline Lender's Swingline Commitment.
"Commitment Amount" means, as the context may require, the Revolving
Loan Commitment Amount or the Swing Loan Commitment Amount.
"Commitment Fee" is defined in Section 3.3.1.
"Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Commitment Amount is terminated in full
or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Commitments
shall terminate automatically and without further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a)
through (d) of Section 8.1.8 with respect to the Borrower or any
Significant Subsidiary; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loans to be due and payable
pursuant to Section 8.3, or
(ii) in the absence of such declaration, the giving of
notice by the Agent, acting at the direction
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of the Required Lenders, to the Borrower that the Commitments have
been terminated.
"Consolidated Earnings After Permitted Tax Distributions" means the
Borrower's net income for any Fiscal Quarter minus, so long as the Borrower
shall be a limited liability company, the Permitted Tax Distributions for such
Fiscal Quarter.
"Consolidated Net Worth" means the consolidated net worth of the
Borrower and its Subsidiaries.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person,
including, without limitation, any "keep well" obligation or completion guaranty
other than the Borrower's completion guaranty given in connection with the
Vicksburg Joint Venture. The amount of any Person's obligation under any
Contingent Liability shall (subject to any limitation set forth therein) be
deemed to be the outstanding principal amount (or maximum principal amount, if
larger) of the debt, obligation or other liability guaranteed thereby; provided,
however, that to the extent that such Person's obligation consists only of a
Lien to which the property or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of such Person
are subject, the amount of such obligation shall be deemed to be the lesser of
the fair market value of the assets or property to which such Lien attaches and
the amount of the obligation so secured.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit D hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single
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employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
"Deed of Trust" means the Deed of Trust, Security Agreement and
Assignment of Leases and Rents dated as of October 2, 1995 covering the fee
simple real properties comprising the Tunica Casino, as assigned to the Agent
pursuant to the Assignment of Deed of Trust to be executed and delivered
pursuant to Section 5.1.8 and as amended, supplemented, restated or otherwise
modified from time to time.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule II, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto.
"EBITDA" means, for any period, the net income of the Borrower and its
consolidated Subsidiaries plus the Borrower and its consolidated Subsidiaries'
interest expense (such expense not to be net of interest income), income taxes
(if incurred), depreciation, amortization and other non-cash (including any SEC
Valuation Adjustment) or non-recurring expenses and, without duplication, cash
dividends received from any Unrestricted Subsidiary, minus any non-cash or
non-recurring gains of the Borrower and its consolidated Subsidiaries,
calculated on a rolling four-quarter basis at the end of each Fiscal Quarter.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 10.8.
"Eligible Assignee" means (I) (a) a financial institution organized
under the laws of the United States, or any state
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<PAGE> 18
thereof, and having a combined capital and surplus of at least $100,000,000; (b)
a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development (the
"OECD"), or a political subdivision of any such country, and having a combined
capital and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States of America; or (c) a
Person that is engaged in the business of commercial finance and that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a
Subsidiary, or (iii) a Person of which a Lender is a Subsidiary; and (II) a
Person that is, to the extent required under applicable Gaming Laws, registered
with, approved by, or not disapproved by (whichever may be required under
applicable Gaming Laws), all applicable Gaming Boards.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and published guidelines
(including consent decrees and administrative orders) relating to public health
and safety and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Eurodollar Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender as designated from time to
time by notice from such Lender to the Borrower and the Agent, whether or not
outside the United States, which shall be making or maintaining Eurodollar Rate
Loans of such Lender hereunder.
"Eurodollar Rate" means, relative to the Interest Period for each
Eurodollar Rate Loan comprising all or any part of the same Borrowing, the rate
of interest equal to (a) the interest rate per annum for deposits in U.S.
dollars for a period approximately equal to such Interest Period which appears
on page 3750 of the Dow Jones Telerate Screen as of 11:00 a.m. London time two
Business Days prior to the beginning of such Interest Period for delivery on the
first day of such Interest Period, or (b) if such a rate does not appear on page
3750 of the Dow Jones Telerate Screen, the average (rounded upwards, if
necessary, to the
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nearest 1/100 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Agent in the interbank market as
at or about 11:00 a.m. New York time two Business Days prior to the beginning of
such Interest Period for delivery on the first day of such Interest Period, and
in an amount approximately equal to the total amount of such Eurodollar Rate
Loan comprising part of such Borrowing and for a period equal to such Interest
Period.
"Eurodollar Rate Loan" means a Loan bearing interest, at all times
during an Interest Period applicable to such Loan, at a fixed rate of interest
determined by reference to the Eurodollar Rate (Reserve Adjusted).
"Eurodollar Rate (Reserve Adjusted)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a Eurodollar Rate Loan for
any Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
------------------ ------------------------------------
(Reserve Adjusted) 1.00 - Eurodollar Reserve Percentage
The Eurodollar Rate (Reserve Adjusted) for the Interest Period for each
Eurodollar Rate Loan comprising part of the same Borrowing will be determined by
the Agent two Business Days before the first day of such Interest Period.
"Eurodollar Reserve Percentage" means, relative to each Interest Period,
a percentage (expressed as a decimal) equal to the daily average during such
Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the F.R.S. Board, for determining the maximum aggregate
reserve requirements (including any emergency, supplemental or other marginal
reserve requirement) applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other applicable regulation issued from time to time by the
F.R.S. Board which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as currently defined in Regulation D having a term approximately
equal or comparable to such Interest Period.
"Event of Default" is defined in Section 8.1.
"Existing Notes" is defined in the first recital.
"Existing Senior Notes" means the $137,000,000 of 12.75%
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Senior Notes due 2000 of the Borrower outstanding under the Senior Note
Indenture.
"Existing Subordinated Debt" means the $160,000,000 of 9.375% Senior
Subordinated Notes due 2007 of the Borrower outstanding under the Subordinated
Debt Indenture.
"Expansion Capital Expenditures" means any Capital Expenditure of the
Borrower or any of its Subsidiaries made with respect to any Related Business
that is, or after giving effect to such expenditures will be, (a) owned by the
Borrower, HE or a Guarantor or (b) which further expands or enhances the Pledgor
Casinos and which is not properly characterized as a Maintenance Capital
Expenditure.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"First Preferred Ship Mortgages" means the HE First Preferred Ship
Mortgage and the RPG First Preferred Ship Mortgage.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "1996 Fiscal Year") refer to the Fiscal Year
ending on December 31, 1996.
"Fixed Charge Coverage Ratio" means the ratio of (a) twelve-month
trailing EBITDA minus Maintenance Capital Expenditures during such period to (b)
the sum of (i) the Borrower's and its Subsidiaries' consolidated interest
expense and capitalized
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interest expense (exclusive of interest income) (each as defined under GAAP) for
such twelve-month period, plus (ii) all mandatory principal payments required to
be made by the Borrower or any of its Subsidiaries (whether or not such payments
are actually made) for such twelve-month period plus (iii) provision for taxes
and, without duplication, so long as the Borrower shall be a limited liability
company, Permitted Tax Distributions for such twelve-month period plus (iv) all
dividends and distributions paid on any membership interest (or, if the Borrower
shall cease to be a limited liability company, shares of capital stock) of the
Borrower and all redemptions and repurchases of any membership interest (or, if
the Borrower shall cease to be a limited liability company, shares of capital
stock) of the Borrower during such twelve month period (exclusive of (A) the
amount of dividends and distributions by the Borrower pursuant to clause (a) of
the definition of Permitted Distribution Amount and (B) up to $10,000,000 to
redeem or repurchase the minority limited partnership interests in HE) plus (v)
all Investments during such twelve month period (exclusive of any Investments
pursuant to clause (a) of the definition of "Permitted Distribution Amount").
"Fronting Fee" is defined in Section 3.3.4.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Funded Debt" means the consolidated Indebtedness of the Borrower and
its Subsidiaries of the nature referred to in clauses (a), (b), (c), (f) and (g)
of the definition of "Indebtedness".
"GAAP" is defined in Section 1.4.
"Gaming Board" means any governmental agency that holds regulatory,
licensing or permit authority over gambling, gaming or Casino activities
conducted by the Borrower or any of its Subsidiaries within its jurisdiction.
"Gaming Laws" means all Laws pursuant to which any Gaming Board
possesses regulatory, licensing or permit authority over gambling, gaming or
Casino activities conducted by the Borrower or any of its Subsidiaries within
its jurisdiction.
"Guarantees" means the guarantee and security agreements dated the date
hereof executed and delivered by the Guarantors
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pursuant to Section 5.1.3, and any guarantee and security agreement executed and
delivered by a Significant Subsidiary pursuant to Section 7.1.10 hereof, each of
which shall be substantially in the form of Exhibit G hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Guarantors" means, collectively, HGI, HGP, RPG, NGCP and Horseshoe
Ventures, any other Significant Subsidiary of the Borrower (except HE) and any
other Person that executes a Guarantee pursuant to the provisions of Section
7.1.10.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
published guideline (including consent decrees and administrative
orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or
material, all as amended or hereafter amended.
"HE" means Horseshoe Entertainment, L.P., a Louisiana limited
partnership.
"HE Collateral Documents" means the HE Mortgages, the HE First Preferred
Ship Mortgage, the HE Security Agreement and any other document or instrument
executed by HE as collateral security for HE's obligations under the HE Notes,
as the same may be amended, supplemented, restated or otherwise modified from
time to time.
"HE First Preferred Ship Mortgage" means that certain First Preferred
Ship Mortgage dated as of September 29, 1995 on the whole of the Queen of the
Red, which was assigned to the Agent pursuant to the terms of the HE First
Preferred Ship Mortgage Assignment, as the same may be further amended,
supplemented, restated or otherwise modified from time to time, and any first
preferred ship mortgage taken in substitution or
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replacement of the foregoing (including, without limitation, any first preferred
ship mortgage on the King of the Red at such time as the Queen of the Red is
contributed to the Vicksburg Joint Venture or another similar transaction).
"HE First Preferred Ship Mortgage Assignment" means that certain
Assignment of First Preferred Ship Mortgage executed by the remaining Note
Purchaser in favor of the Agent.
"HE Mortgages" means those certain Mortgages, Security Agreements and
Assignments of Leases and Rents dated as of October 2, 1995, May 10, 1996 and
December 20, 1996 from HE in favor of the Borrower, as the same may be amended,
supplemented, restated or otherwise modified from time to time, which mortgages
(i) secure the obligations of HE under the HE Notes, (ii) have been assigned to
the Noteholders and (iii) will be assigned to the Agent pursuant to the
Assignment of the HE Mortgages.
"HE Notes" means those certain HE Intercompany Senior Notes dated
October 10, 1995, and due September 30, 2000 and dated June 15, 1997 and due
June 15, 2007, in the aggregate commitment amount of $300,000,000 from HE
payable to the Borrower and all other promissory notes, whether now existing or
hereinafter arising, from HE payable to the Borrower, as the same may be
amended, supplemented, restated or otherwise modified from time to time.
"HE Security Agreement" means that certain Security Agreement and
Exhibit A to UCC- 1 financing statement executed by HE in favor of the Borrower
and the Noteholders and filed with the Louisiana Secretary of State and in the
office of the Clerk and Record of the Parish of Bossier, Louisiana, as assigned
to the Note Purchasers, and as assigned to the Agent pursuant to the Assignment
of HE Security Agreement.
"Hedging Obligations" means, with respect to any Person, all obligations
of such Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by
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applying a fixed or floating rate of interest on the same notional amount.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"HGI" means Horseshoe Gaming, Inc., a Delaware corporation.
"HGP" means Horseshoe GP, Inc., a Nevada corporation.
"Horseshoe Ventures" means Horseshoe Ventures, L.L.C., a Delaware
limited liability company.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item
in such financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which would be to
cause the Borrower to be in default of any of its obligations under
Section 7.2.4.
"including" means including without limiting the generality of any
description preceding such term.
"Increasing Lenders" is defined in Section 2.8.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative
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to the face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as Capitalized
Lease Liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging Obligations;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price
of property or services, and
indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such Person
or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any
of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable
therefor.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Interest Period" means, relative to any Eurodollar Rate Loans, the
period beginning on (and including) the date on which such Eurodollar Rate Loan
is made or continued as, or converted into, a Eurodollar Rate Loan pursuant to
Section 2.3 or 2.5 and shall end on (but exclude) the day which numerically
corresponds to such date one, two, three or six months thereafter (or, if such
month has no numerically corresponding day, on the last Business Day of such
month) or for such other time period for
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which the Agent shall determine that Dollar deposits are generally available in
the interbank market, in either case as the Borrower may select in its relevant
notice pursuant to Section 2.3 or 2.5; provided, however, that
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than five different dates;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period
shall end on the Business Day immediately preceding such numerically
corresponding day); and
(d) no Interest Period may end later than the date set forth in
clause (a) of the definition of "Commitment Termination Date".
"Investment" means any investment in any Person, whether by means of
share purchase, capital, equity, asset or similar contribution, loan, advance,
time deposit, Contingent Liability or otherwise (excluding (a) commission,
travel and similar advances to officers and employees made in the ordinary
course of business and consistent with past practice, (b) in the case of the
Borrower, loans and advances to officers and employees in an aggregate amount
not to exceed $7,500,000 and (c), in the case of HE, loans and advances to the
limited partners of HE in an aggregate amount not to exceed $7,500,000; provided
that the aggregate amount of loans and advances excluded pursuant to clauses (b)
and (c) shall in no event exceed $12,500,000). The amount of any Investment
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.
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"JBB Gaming Investments, L.L.C." means JBB Gaming Investments, L.L.C., a
Delaware limited liability company.
"JBB Pledge Agreement" means that certain Pledge Agreement, executed and
delivered by JBB pursuant to Section 5.1.6, in form and substance satisfactory
to the Agent, as amended, supplemented, restated or otherwise modified from time
to time.
"L/C Fees" is defined in Section 3.3.4.
"L/C Issuer" shall mean CIBC, and its successors and assigns.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit E hereto.
"Lender Disqualification" means, with respect to any Lender:
(a) the failure of that Lender timely to file pursuant to
applicable Gaming Laws (i) any application requested of that Lender by
any Gaming Board in connection with any licensing required of that
Lender as a lender to the Borrower or (ii) any required application or
other papers in connection with the determination of the suitability of
that Lender as a lender to the Borrower;
(b) the withdrawal by that Lender (except where requested or
permitted by the Gaming Board) of any such application or other required
papers; or
(c) any final determination by a Gaming Board pursuant to
applicable Gaming Laws (i) that such Lender is "unsuitable" as a lender
to the Borrower, (ii) that such Lender shall be "disqualified" as a
lender to the Borrower or (iii) denying the issuance to such Lender of
any license required under applicable Gaming Laws to be held by all
lenders to the Borrower.
"Lenders" is defined in the preamble.
"Letter of Credit" means a standby letter of credit issued at the
request and for the account of the Borrower or for the account of the Borrower
and one or more of its Subsidiaries pursuant to Section 2.7.
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"Leverage Ratio" means the ratio of (a) Funded Debt as of the last day
of any Fiscal Quarter to (b) twelve-month trailing EBITDA as of the last day of
such Fiscal Quarter.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" means, as the context may require, a Revolving Loan or a Swing
Loan of any Type made hereunder.
"Loan Document" means this Agreement, the Notes, the Guarantees, the
Deed of Trust, the Assignment of Deed of Trust, the JBB Pledge Agreement, the
Assignments of HE Mortgages, the RPG First Preferred Ship Mortgage, the RPG
First Preferred Ship Mortgage Assignment, the Borrower Pledge Agreement, the
Amended and Restated Note Assignment, the HE Collateral Documents, the HE Notes,
the Security Agreement and each other relevant agreement, document or instrument
delivered in connection with this Agreement and the Notes.
"Maintenance Capital Expenditures" means any Capital Expenditures by the
Borrower or its Subsidiaries which are made to maintain, restore or refurbish
the condition or usefulness of property of the Borrower or its Subsidiaries, or
otherwise to support the continuation of such Person's day-to-day operations as
then conducted, but which are not properly chargeable to repairs and maintenance
in accordance with GAAP; provided, however, that such term shall not include any
Capital Expenditures to restore the condition or usefulness of property to the
extent funded from insurance proceeds delivered to the Borrower or its
Subsidiaries in accordance with the terms of the Loan Documents.
"Majority Lenders" means, at any time, Lenders holding at least 51% of
the then aggregate outstanding principal amount of the Notes then held by the
Lenders, or, if no such principal amount is then outstanding, Lenders having at
least 51% of the Commitments.
"Material Adverse Effect" means any circumstances or event which could
reasonably likely (i) have any material adverse effect upon the validity or
enforceability of this Agreement, the
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Notes or any other Loan Document, (ii) be material and adverse to the condition
(financial or otherwise), business, operations or property of the Borrower and
the Guarantors taken as a whole, or (iii) materially impair the ability of the
Borrower to fulfill its obligations under this Agreement, the Notes or any other
Loan Document.
"Maturity Date" means, for any Commitment hereunder, the earliest of
(a) the date on which such Commitment is terminated in full
pursuant to the terms of this Agreement or is reduced to zero pursuant
to Section 2.2;
(b) the date on which any Commitment Termination Event occurs;
and
(c) the Stated Maturity Date.
"Monthly Payment Date" means the last day of each calendar month or, if
any such day is not a Business Day, the next succeeding Business Day.
"NGCP" means New Gaming Capital Limited Partnership, a Nevada limited
partnership.
"New Lender" is defined in Section 2.8.
"Nonrecourse Parties" is defined in Section 10.14.
"Non-Tax Distribution Event" shall mean the occurrence of any one of the
following events: (i) a Default described in Sections 8.1.1, 8.1.5, 8.1.6 or
8.1.10 shall have occurred or (ii) the Notes shall have become or been declared
immediately due and payable or (iii) a Change of Control shall have occurred and
the Borrower shall not have repurchased all Notes tendered in accordance with
Section 3.6.
"Note" means, as the context may require, either a Revolving Note or the
Swingline Note.
"Note Purchase Agreement" is defined in the first recital.
"Note Purchasers" is defined in the first recital.
"Notes" means the Revolving Notes and the Swingline Note.
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"Obligations" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document (including any interest or
other amount accruing after the filing of a petition with respect to, or the
commencement of, any bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, whether or not a claim for
post-petition interest or such other amount is allowed in such case or
proceeding).
"Obligor" means the Borrower or any other Person (other than the Agent
or any Lender) obligated under any Loan Document.
"Organic Document" means, relative to any Person, its certificate of
incorporation, its limited liability company agreement, its partnership
agreement, its by-laws and all shareholder agreements, voting trusts and similar
arrangements applicable to any of its authorized shares of capital stock.
"Participant" is defined in Section 10.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.
"Permitted Dispositions" means (a) the contribution of cash sufficient
to pay for the riverboat known as Queen of the Red to the Vicksburg Joint
Venture (or another similar transaction), provided, however, that on or before
such contribution the Agent shall have received a first preferred ship mortgage
on the riverboat known as the King of the Red, (b) the sale by HE of the Le
Bossier Hotel, (c) sales or dispositions by the Borrower or any Subsidiary of
damaged, worn out or other obsolete property so long as such property is no
longer necessary for the proper conduct of such Person's business, (d) the grant
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by the Borrower or any Subsidiary of easements or rights of way provided that
they do not in the aggregate materially detract from the value of said property
or materially interfere with its use in the ordinary conduct of such Person's
business or (e) sales or dispositions by the Borrower or any Guarantor of any
Collateral so long as (i) such assets are not material to the business,
operations or property of the Casino in which such assets are used and (ii) the
aggregate book value of all such assets sold or disposed does not exceed
$5,000,000 in the aggregate over the term of this Agreement.
"Permitted Distribution Amount" means the sum of (a) $30,000,000 plus
(b) commencing with the Fiscal Year beginning January 1, 1997, 50% of
Consolidated Earnings After Permitted Tax Distributions, provided that no more
than $20,000,000 of the amount described in clause (a) (and none of the amount
described in clause (b)) may be used for dividends and distributions before June
30, 1998, and on such date the unused portion of the amount described in clause
(a) shall permanently reduce to not more than $20,000,000 and such reduced
amount shall be available for Investments only, plus (c) up to $11,000,000 of
the noncash expenses for the 1997 Fiscal Year only recorded by the Borrower for
such year for the expenses described in clause (i) of the definition of the term
"SEC Valuation Adjustment."
"Permitted Liens" means the Liens permitted under Section 7.2.3.
"Permitted Tax Distributions" means, so long as the Borrower shall be a
limited liability company, for any Fiscal Quarter or Fiscal Year, an amount
equal to 40% of the Borrower's net income for such period.
"Person" means any natural person, limited liability company,
corporation, partnership, firm, association, trust, government, governmental
agency or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Personal Property Collateral" is defined in Section 5.1.3.
"Plan" means any Pension Plan or Welfare Plan.
"Pledged Casinos" shall mean all real property interests underlying the
Bossier Casino, the Tunica Casino and any real property interests pledged
pursuant to Section 7.1.10, all
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property subject to the Liens of the First Preferred Ship Mortgages and all
fixtures, personal property and other improvements now existing or to be
constructed on any of such properties.
"Quarterly Payment Date" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"Related Business" means the gaming (including pari-mutuel betting)
business and any and all reasonably related businesses necessary for, in support
or anticipation of and ancillary to or in preparation for, the gaming business
including, without limitation, the development, expansion or operation of any
Casino (including any land-based, dockside, riverboat or other type of Casino)
owned, or to be owned, by the Borrower or one of its Subsidiaries.
"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, Lenders holding at least 66 2/3%
of the then aggregate outstanding principal amount of the Notes then held by the
Lenders, or, if no such principal amount is then outstanding, Lenders having at
least 66 2/3% of the Commitments.
"Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect from time to
time.
"Revolving Loan" means each Loan made by the Lenders pursuant to the
Revolving Loan Commitment.
"Revolving Loan Commitment" is defined in Section 2.1.1.
"Revolving Loan Commitment Amount" means, on any date, $130,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2 or
increased pursuant to Section 2.8, minus the aggregate principal amount of
indebtedness of the Borrower to the Swingline Lender resulting from outstanding
Swing Loans, minus the aggregate undrawn face amount of outstanding Letters of
Credit.
"Revolving Note" means a promissory note of the Borrower payable to any
Lender in the form of Exhibit A hereto (as such
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promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrower to such Lender
resulting from outstanding Revolving Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.
"Revolving Percentage" means, relative to any Lender for all Revolving
Loans made or Letters of Credit issued, the percentage set forth opposite its
name on Schedule I or as set forth in its Lender Assignment Agreement, as such
percentage may be adjusted from time to time pursuant to Section 2.8 or pursuant
to Lender Assignment Agreements executed by such Lender and its Assignee Lenders
and delivered pursuant to Section 10.11.
"RPG" is defined in the first recital.
"RPG First Preferred Ship Mortgage" means that certain First Preferred
Ship Mortgage dated as of October 29, 1995, which was assigned to the Agent
pursuant to the terms of the RPG First Preferred Ship Mortgage Assignment, as
the same may be amended, supplemented, restated or otherwise modified from time
to time, and any first preferred ship mortgage taken in substitution or
replacement of the foregoing.
"RPG First Preferred Ship Mortgage Assignment" means that certain
Assignment of First Preferred Ship Mortgage executed by the remaining Note
Purchaser in favor of the Agent.
"RPG Notes" means those certain RPG Intercompany Senior Notes dated
October 10, 1995 and June 15, 1997 in the aggregate principal amount of
$71,400,000 from RPG payable to the Borrower, and all other promissory notes,
whether now existing or hereafter arising from RPG payable to the Borrower, as
the same may be amended, supplemented, restated or otherwise modified from time
to time.
"RPG Guaranty and Security Agreement" is defined in the second recital.
"SEC Valuation Adjustment" means, for any Fiscal Year of the Borrower
and so long as such adjustments shall be required by the rules of the Securities
and Exchange Commission, (i) the noncash income or expense recorded by the
Borrower for such year as a result of the decrease or increase in the fair
market value of the ownership interests of the Borrower issued pursuant to
certain employment agreements between the Borrower and its officers and
employees plus (ii) the noncash income or expense
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recorded by the Borrower in respect of the undistributed earnings attributable
to such ownership interests.
"Secured Hedging Obligations" means Hedging Obligations of the Borrower
with any Lender, which pursuant to Section 7.2.2(k), may be ratably secured by
the Collateral.
"Security Agreement" means the Security Agreement executed and delivered
by the Borrower pursuant to Section 5.1.7, as amended, supplemented, restated or
otherwise modified from time to time.
"Security Documents" is defined in the third recital.
"Senior Note Indenture" means that certain Indenture dated as of October
10, 1995 between the Borrower, as issuer, and U.S. Trust Company of California,
N.A.
"Significant Subsidiary" means each Subsidiary of the Borrower that
(a) is designated with an asterisk in Item 2 ("Subsidiaries") of
the Disclosure Schedule;
(b) accounted for at least 5% of consolidated revenues of the
Borrower and its Subsidiaries or 5% of consolidated earnings of the
Borrower and its Subsidiaries before interest and taxes, in each case
for the four Fiscal Quarters of the Borrower for which financial
statements are available ending on the last day of the last Fiscal
Quarter of the Borrower immediately preceding the date as of which any
such determination is made; or
(c) has assets which represent at least 5% of the consolidated
assets of the Borrower and its Subsidiaries as of the last day of the
last Fiscal Quarter of the Borrower immediately preceding the date as of
which any such determination is made,
all of which, with respect to clauses (b) and (c), shall be as reflected on the
financial statements of the Borrower for the period, or as of the date, in
question.
"Specified Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both, would
constitute an Event of Default under any
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subsection of Section 8.1 other than (i) Section 8.1.4 and (ii) Section 8.1.2 to
the extent the Default under Section 8.1.2 has resulted solely from a Default
under Section 8.1.4.
"Stated Maturity Date" means June 15, 2000.
"Subordinated Debt" means the Existing Subordinated Debt and all other
unsecured Indebtedness of the Borrower for money borrowed which is subordinated,
upon terms satisfactory to the Agent, in right of payment to the payment in full
in cash of all Obligations.
"Subordinated Debt Indenture" means that certain Indenture dated as of
June 15, 1997 between the Borrower, as issuer, and U.S. Trust Company of Texas,
N.A.
"Subsidiary," with respect to any Person, means (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of Capital entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof as at the
time owned or controlled, directly or indirectly, by such Person, by one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person and (ii) any partnership (a) the sole general partner or the
managing general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof); provided, however, that the term
"Subsidiary" shall not include any Unrestricted Subsidiary.
"Swingline Commitment" is defined in Section 2.1.2.
"Swingline Lender" means CIBC, in its capacity as lender pursuant to
Section 2.1.2. "Swingline Note" means a promissory note of the Borrower payable
to the Swingline Lender in the form of Exhibit B hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to the Swingline Lender resulting
from outstanding Swing Loans, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"Swing Loan" means each Loan made by the Swingline Lender pursuant to
the Swingline Commitment.
"Swing Loan Commitment Amount" means, on any date,
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$5,000,000, as such amount may be reduced from time to time pursuant to Section
2.2.
"Taxes" is defined in Section 4.6.
"Title Company" means Chicago Title Insurance Company or such other
title insurance company as may be reasonably acceptable to the Agent.
"Tunica Casino" means the Horseshoe casino and hotel, owned by RPG and
located in Tunica, Mississippi.
"Tunica County Security Agreement" means that certain Security Agreement
and Exhibit A to UCC-1 financing statement executed by RPG in favor of the
Borrower and the Noteholders and filed with the Mississippi Secretary of State
and in the office of the Chancery Clerk of Tunica County, Mississippi on October
3, 1995, as assigned on the same date to the Note Purchasers, and as assigned to
the Agent pursuant to the Assignment of Tunica County Security Agreement.
"Type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a Eurodollar Rate Loan.
"Unrestricted Subsidiary" means the Vicksburg Joint Venture and any
Person created after the date hereof in which the Borrower or any of its
Subsidiaries owns all or a portion of the outstanding capital stock or other
ownership interests and which the Borrower has designated in a written notice to
the Agent as an "Unrestricted Subsidiary" (unless otherwise designated by the
Borrower pursuant to Section 7.1.10).
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Vicksburg Joint Venture" means that certain limited liability company
created in accordance with that certain Contribution Agreement between the
Borrower or its Subsidiary and Lady Luck Vicksburg, Inc. to develop a riverboat
casino and related land-based facilities in Vicksburg, Mississippi.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
SECTION I.2. Use of Defined Terms. Unless otherwise
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defined or the context otherwise requires, terms for which meanings are provided
in this Agreement shall have such meanings when used in the Disclosure Schedule
and in each Note, Borrowing Request, Continuation/Conversion Notice, Loan
Document, notice and other communication delivered from time to time in
connection with this Agreement or any other Loan Document.
SECTION I.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION I.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in Section 6.5.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION II.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article V), each Lender severally agrees to make Loans
pursuant to the Commitments described in this Section 2.1.
SECTION II.1.1. Revolving Loan Commitment of Each Lender. From time to
time on any Business Day occurring prior to the Commitment Termination Date,
each Lender will make loans (relative to such Lender, and of any Type, its
"Revolving Loans") to the Borrower equal to such Lender's Revolving Percentage
of the aggregate amount of the Borrowing of Revolving Loans requested by the
Borrower to be made on such day. The commitment of each Lender described in this
Section 2.1.1 is herein referred to as its "Revolving Loan Commitment". On the
terms and subject to the conditions hereof, the Borrower may from time to time
borrow, repay and reborrow under the Revolving Loan Commitment
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without premium or penalty.
SECTION II.1.2. Swing Loan Commitment. From time to time on any Business
Day occurring before the Commitment Termination Date, the Swingline Lender will
make Swing Loans to the Borrower equal to the amount of Swing Loans requested by
the Borrower to be made on such day. The commitment of the Swingline Lender
described in this Section 2.1.2 is herein referred to as its "Swingline
Commitment". On the terms and subject to the conditions hereof, the Borrower may
from time to time borrow, repay and reborrow under the Swingline Commitment
without premium or penalty.
SECTION II.1.3. Lenders Not Permitted or Required To Make Loans.
(a) No Lender shall be permitted or required to make any Revolving Loan
if, after giving effect thereto and the repayment of any Swing Loan with the
proceeds therefrom, the aggregate outstanding principal amount of all Revolving
Loans
(i) of all Lenders would exceed the Revolving Loan Commitment
Amount, or
(ii) of such Lender would exceed such Lender's Revolving
Percentage of the Revolving Loan Commitment Amount.
(b) The Swingline Lender shall not be permitted or required to make any
Swing Loan if, after giving effect thereto,
(i) the aggregate outstanding principal amount of all Swing
Loans would exceed the Swingline Loan Commitment Amount; or
(ii) the amount of such Swing Loan would exceed the Revolving
Loan Commitment Amount minus the aggregate principal amount of
outstanding Revolving Loans.
SECTION II.2. Reduction of Commitment Amounts. The Commitment Amounts
are subject to reduction from time to time pursuant to this Section 2.2.
SECTION II.2.1. Optional. The Borrower may, from time to time on any
Business Day, voluntarily reduce the amount of any Commitment Amount; provided,
however, that all such reductions
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shall require at least three Business Days' prior notice to the Agent and be
permanent, and any partial reduction of any Commitment Amount shall be in a
minimum amount of $1,000,000 or an integral multiple thereof. Prior to the
occurrence and continuance of an Event of Default, all voluntary reductions of
the Commitments by the Borrower shall be made to reduce the Revolving Loan
Commitment and, in the case of the last $5,000,000 of the Revolving Loan
Commitment, the Swingline Commitment. After the occurrence and during the
continuance of an Event of Default, all optional reductions of Commitment
Amounts shall be applied to reduce the Revolving Loan Commitment and Swingline
Commitment pro rata.
SECTION II.2.2. Mandatory. There shall be a mandatory reduction of the
Commitment Amount in an amount equal to all payments or prepayments received by
the Borrower in respect of the HE Notes to the extent that such prepayment
reduces the outstanding principal balance thereof below (i) 115% of the
aggregate Revolving Loan Commitments from the Closing Date through October 31,
1998, (ii) 110% of the aggregate Revolving Loan Commitments from November 1,
1998 through October 31, 1999 or (iii) 105% of the aggregate Revolving Loan
Commitments thereafter. Such reduction shall be effective immediately upon the
Borrower's receipt of such proceeds and shall be applied in the following
manner:
first, to any unused portion of the Revolving Loan
Commitment and, in the case of the last $5,000,000 of the
Revolving Loan Commitment, the Swingline Commitment, in
which event such unused portion of the Revolving Loan
Commitment (or the Revolving Loan Commitment and the
Swingline Commitment) shall, to the extent of such
proceeds, be canceled and the Borrower may retain proceeds
in an amount equal to the amount of the Revolving Loan
Commitment so cancelled; and
second, to the prepayment of the outstanding Revolving
Loans in excess of such unused portion of the Revolving
Loan Commitment and the corresponding cancellation of the
Revolving Loan Commitment by the amount of such
prepayment; provided that at such time, if any, as the
Revolving Loan Commitment is equal to or less than
$5,000,000, the proceeds shall be applied pro rata to the
outstanding Revolving Loans and Swing
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Loans, with a cancellation of the Revolving Loan
Commitment and Swing Loan Commitment Amount by the
amount of the respective prepayment.
SECTION II.2.3. Special Letter of Credit Provisions. Notwithstanding
anything to the contrary herein, the Borrower may not reduce the Revolving Loan
Commitment Amount to an amount less than the aggregate undrawn face amount of
outstanding Letters of Credit then in effect unless the Borrower shall have
deposited with the Agent all amounts required pursuant to the second paragraph
of Section 2.7 hereof.
SECTION II.3. Borrowing Procedure.
SECTION II.3.1. Revolving Loans. The Borrower may from time to
time irrevocably request that a Borrowing of Revolving Loans be made by
delivering a Borrowing Request to the Agent (i) for a Eurodollar Rate Loan, on
or before 11:30 a.m., New York time, on a Business Day, at least three Business
Days prior to the date of such proposed Borrowing, in a minimum amount of
$1,000,000 or an integral multiple of $1,000,000 in excess thereof, or in the
unused amount of the Revolving Loan Commitment Amount and (ii) for a Base Rate
Loan, on or before 11:30 a.m., New York time, on a Business Day, at least one
Business Day prior to the date of such proposed Borrowing, in a minimum amount
of $1,000,000 or an integral multiple of $1,000,000 in excess thereof, or in the
unused amount of the Revolving Loan Commitment Amount. The Agent shall promptly
notify each other Lender in writing of the terms of such Borrowing Request. On
the terms and subject to the conditions of this Agreement, each Borrowing shall
be comprised of the Type of Revolving Loans, and shall be made on the Business
Day, specified in such Borrowing Request. On or before 1:00 p.m., New York time,
on the Business Day such Revolving Loans are to be made, each Lender shall
deposit with the Agent same day funds in an amount equal to such Lender's
Revolving Percentage of the requested Borrowing. Such deposit will be made to an
account which the Agent shall specify from time to time by notice to the
Lenders. No Lender's obligation to make any Loan shall be affected by any other
Lender's failure to make any Revolving Loan, and no Lender shall have any
obligation to assume all or any portion of a non-performing Lender's obligation
to make a Revolving Loan. To the extent funds are received from the Lenders, on
the proposed date for such Borrowing the Agent shall make such funds available
to the Borrower at the office of the Agent.
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SECTION II.3.2. Swing Loans. The Borrower may from time to time
irrevocably request, by delivering a telephonic notice to the Swingline Lender
(which notice shall promptly be confirmed by telecopy to the Swingline Lender
and to the Agent) that a Borrowing of Swing Loans be made, by 1:00 p.m., New
York time, on or before the date such Borrowing is requested, in a minimum
amount of $100,000 or an integral multiple thereof, or in the unused amount of
the Swingline Loan Commitment Amount. On the terms and subject to the conditions
of this Agreement, each such Borrowing shall be comprised of Base Rate Loans,
and shall be made on the Business Day specified in such Borrowing Request. The
Swingline Lender shall make funds in an amount equal to the requested Borrowing
available to the Borrower to the accounts the Borrower shall have specified in
such Borrowing Request. Each request by the Borrower for a Borrowing of Swing
Loans shall be deemed to reaffirm the representations set forth in subsections
(a), (b) and (c) of Section 5.2.1. The Swingline Lender shall not fund a
Borrowing of Swing Loans if prior to the date of such Borrowing the Swingline
Lender shall have received written notice from the Agent or any Lender of the
existence and continuance of an Event of Default.
SECTION II.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 11:30 a.m., New York
time, on a Business Day, the Borrower may from time to time irrevocably elect,
on not less than three or more than five Business Days' notice that all, or any
portion in an aggregate minimum amount of $1,000,000 and an integral multiple of
$1,000,000 in excess thereof, of any Loan be, in the case of Base Rate Loans,
converted into Eurodollar Rate Loans or, in the case of Eurodollar Rate Loans,
continued as a Eurodollar Rate Loan or that all, or any portion in an aggregate
minimum amount of $1,000,000 and an integral multiple of $1,000,000 in excess
thereof of any Loan be, in the case of Eurodollar Rate Loans, converted into
Base Rate Loans (in the absence of delivery of a Continuation/Conversion Notice
with respect to any Eurodollar Rate Loan at least three Business Days before the
last day of the then current Interest Period with respect thereto, such
Eurodollar Rate Loan shall, on such last day, automatically convert to a Base
Rate Loan); provided, however, that no portion of the outstanding principal
amount of any Loans may be continued after the end of the applicable Interest
Period therefor as, or be converted into, Eurodollar Rate Loans when any
Specified Default has occurred and is continuing. The Agent shall promptly
notify each other Lender in writing of the terms of such Continuation/Conversion
Notice.
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SECTION II.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurodollar Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by such Lender) to make or maintain such Eurodollar Rate Loan;
provided, however, that such Eurodollar Rate Loan shall nonetheless be deemed to
have been made and to be held by such Lender, and the obligation of the Borrower
to repay such Eurodollar Rate Loan shall nevertheless be to such Lender for the
account of such foreign branch, Affiliate or international banking facility. In
addition, the Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall
be conclusively assumed that each Lender elected to fund all Eurodollar Rate
Loans by purchasing Dollar deposits in its Eurodollar Office's interbank
eurodollar market.
SECTION II.6. Notes. Each Lender's Revolving Loans under its Revolving
Loan Commitment shall be evidenced by a Note payable to the order of such Lender
in a maximum principal amount equal to such Lender's Revolving Percentage of the
original Revolving Loan Commitment Amount. The Swingline Lender's Swing Loans
shall be evidenced by a Swingline Note payable to the order of the Swingline
Lender in a maximum principal amount equal to the Swing Loan Commitment Amount.
The Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on the grid attached to such Lender's Note (or on
any continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loans evidenced thereby. Such notations shall
be conclusive and binding on the Borrower absent manifest error; provided,
however, that the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower or any other Obligor.
SECTION II.7. Letter of Credit Procedure. The Borrower may from time to
time request that a Letter of Credit be issued by delivering to the L/C Issuer
(with a telecopy to the Agent) on a Business Day, at least five Business Days
prior to the date of such proposed issuance, a Letter of Credit application in
the L/C Issuer's then standard form, completed to the satisfaction of the L/C
Issuer, and such other certificates as the L/C Issuer may reasonably request;
provided, however, that no Letter of Credit shall be issued if after giving
effect to the issuance thereof, the aggregate undrawn face amount of outstanding
Letters of
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Credit would exceed the lesser of (a) the Revolving Loan Commitment Amount minus
the aggregate unpaid principal amount of Revolving Loans and Swing Loans then
outstanding or (b) $10,000,000. On the terms and subject to the conditions of
this Agreement, each Letter of Credit shall be issued by the L/C Issuer on the
Business Day specified in the Borrower' application therefor. The Agent shall
promptly notify each Lender in writing of the material terms of each Letter of
Credit issued by the L/C Issuer. Each request for a Letter of Credit and each
Letter of Credit shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication Number 500. Each Letter of Credit will be issued for a term of not
more than one year, and in no event shall any Letter of Credit have an
expiration date later than the Stated Maturity Date.
Upon any termination of the Revolving Loan Commitment prior to the
Stated Maturity Date, the Borrower shall deposit with the Agent an amount equal
to 105% of the aggregate amount available to be drawn under outstanding Letters
of Credit, such amount to be placed in a segregated, interest-bearing cash
collateral account pledged to the Lenders as Collateral hereunder over which
Borrower shall have no control but which shall be applied solely to repay the
Borrower's obligations in connection with such Letters of Credit unless an Event
of Default has occurred and is continuing. In the event the expiration date (or
earlier termination) of any Letter of Credit should occur with no draw having
been made thereunder for which the Borrower has not made reimbursement and so
long as no Event of Default has occurred and is continuing, the amount of the
cash collateral account shall be reduced by 105% of the undrawn amount of such
expired Letter of Credit, together with the interest accrued on such amount to
such date, and the amount of such reduction shall be paid to the Borrower (and,
in the case of the final Letter of Credit to expire or otherwise be terminated,
the remaining balance of the cash collateral account shall be paid to the
Borrower).
SECTION II.8. Increase in the Revolving Loan Commitment Amount.
(a) Provided that no Default or Event of Default then exists, the
Borrower may at any time request in writing that the then effective
Revolving Loan Commitment Amount be increased to an amount which is not
greater than $180,000,000 in accordance with the provisions of this
Section. Any request under this Section shall be submitted
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by the Borrower to the Agent (which shall forward copies to the
Lenders), specify the proposed effective date and amount of such
increase and be accompanied by a certificate from an Authorized Officer
of the Borrower, stating that no Default or Event of Default exists as
of the date of the request or will result from the requested increase.
The Borrower may also specify any fees offered to those Lenders (the
"Increasing Lenders") which agree to increase their Revolving Loan
Commitments (which fees may be variable based upon the amount by which
any such Lender is willing to increase its Revolving Loan Commitment).
No Lender shall have any obligation, express or implied, to offer to
increase its Revolving Loan Commitment. Only the consent of each
Increasing Lender shall be required for an increase in the Revolving
Loan Commitment Amount pursuant to this Section. No Lender which elects
not to increase its Revolving Loan Commitment may be replaced in respect
of its existing Revolving Loan Commitment as a result thereof without
such Lender's consent.
(b) Each Increasing Lender shall as soon as practicable specify
the amount of the proposed increase which it is willing to assume. The
Borrower may accept some or all of the offered amounts or designate new
lenders who qualify as Eligible Assignees and which are reasonably
acceptable to the Agent as additional Lenders hereunder in accordance
with clause (c) of this Section (each, a "New Lender"), which New Lender
may assume all or a portion of the increase in the Revolving Loan
Commitment Amount. The Borrower and the Agent shall have discretion
jointly to adjust the allocation of the increased Revolving Loan
Commitment Amount among Increasing Lenders and New Lenders.
(c) Each New Lender designated by the Borrower and reasonably
acceptable to the Agent shall become an additional party hereto as a New
Lender concurrently with the effectiveness of the proposed increase in
the Revolving Loan Commitment Amount upon its execution of an instrument
of joinder to this Agreement which is in form and substance reasonably
acceptable to the Agent and which, in any event, contains the
representations, warranties, indemnities and other protections afforded
to the Agent and the other Lenders.
(d) Subject to the foregoing, any increase requested by the
Borrower shall be effective as of the date proposed
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by the Borrower and shall be in the principal amount equal to (i) the
amount which Increasing Lenders are willing to assume as increases to
the amount of their Revolving Loan Commitments plus (ii) the amount
offered by any New Lender, in either case as adjusted by the Borrower
and the Agent pursuant to Section 2.8(b). Upon the effectiveness of any
such increase, the Borrower shall issue replacement Notes to each
affected Lender and new Notes to each New Lender, and the Revolving
Percentages of each Lender will be adjusted to give effect to the
increase in the Revolving Loan Commitment Amount as set forth in a new
Schedule I issued by the Agent. To the extent that the adjustment of
Revolving Loan Percentages results in loss or expenses to any Lender as
a result of the prepayment of any Eurodollar Rate Loan on a date other
than the scheduled last day of the Interest Period applicable thereto,
the Borrower shall be responsible for such loss or expenses pursuant to
Section 4.4.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION III.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
SECTION III.1.1. Payment Terms. Prior to the Stated Maturity
Date, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
any Loans, such prepayment to be applied to Loans in the manner
designated by the Borrower; provided, however, that
(i) any such prepayment shall be made pro rata among all Lenders
having Loans of the designated Type and, if applicable, having the
designated Interest Period;
(ii) no such prepayment of any Eurodollar Rate Loan may be made
on any day other than the last day of the Interest Period for such
Loan;
(iii) all such voluntary prepayments of any Eurodollar Rate Loan
shall require at least three
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Business Days' prior written notice to the Agent and all such
voluntary partial prepayments shall be in an aggregate minimum
amount of $1,000,000 and integral multiples of $1,000,000 in excess
thereof or such lesser amount as will prepay such Loan in full;
(iv) all such voluntary prepayments of any Base Rate Loan
outstanding under the Revolving Loan Commitment shall require at
least one Business Day's notice, and all such voluntary partial
prepayments shall be in an aggregate minimum amount of $1,000,000
and integral multiples of $1,000,000 in excess thereof or such
lesser amount as will prepay such Loan in full; and
(v) all such voluntary prepayments of any Swing Loan shall
require at least one Business Day's notice to the Swingline Lender
(unless notice shall have been given by 12:00 noon, New York time
and payment shall be received by 1:00 p.m. New York time, in which
event one Business Day's notice shall not be required), and all such
voluntary partial prepayments shall be in an aggregate minimum
amount of $100,000 or integral multiples of $100,000 or such lesser
amount as will prepay such Loan in full.
(b) shall, immediately upon any acceleration of the Stated
Maturity Date of any Loans pursuant to Section 8.2 or Section 8.3, repay
all Loans, unless, pursuant to Section 8.3, only a portion of all Loans
is so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Revolving
Loan Commitment Amount.
SECTION III.1.2. Special Swing Loan Provisions. All Swing Loans
shall be payable with accrued interest thereon solely to the Swingline Lender
for its own account, and shall otherwise be subject to all the terms and
conditions applicable to the Revolving Loans (unless otherwise specifically set
forth herein). Upon the earlier to occur of (x) thirty days after the making of
any Swing Loan or (y) one Business Day after the occurrence of an Event of
Default, the Borrower shall repay all of such Swing Loans in cash by 1:00 p.m.,
New York time, on the date due or make a Borrowing of Revolving Loans in an
amount at least equal
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to the aggregate outstanding principal amount of all Swing Loans together with
all accrued interest thereon, and shall apply the proceeds of such Borrowing to
repay in its entirety the aggregate outstanding principal amount of all Swing
Loans together with accrued interest thereof to the date of such repayment.
In the event that any portion of any Swing Loan is not repaid when due,
the Swingline Lender shall promptly notify the Agent and the Agent shall
promptly, and in no event later than 5:00 p.m., New York time, two Business Days
after its receipt of such notice, notify each Lender in writing of the
unreimbursed amount of such Swing Loan and of such Lender's Revolving Percentage
of such unreimbursed amount. Each of the Lenders shall make a Revolving Loan in
an amount equal to such Lender's Revolving Percentage of the unreimbursed amount
of such Swing Loan, together with accrued unpaid interest thereon (to the extent
that there is availability under the Revolving Loan Commitment), and pay the
proceeds thereof, in immediately available funds, directly to the Agent for the
account of the Swingline Lender, not later than 1:00 p.m., New York time, on the
next Business Day after the date such Lender is notified by the Agent. Revolving
Loans made by the Lenders to repay unreimbursed Swing Loans pursuant to this
Section shall constitute Revolving Loans hereunder, initially shall be Base Rate
Loans and shall be subject to all of the provisions of this Agreement concerning
Revolving Loans, except that such Revolving Loans shall be made upon demand by
the Agent as set forth above rather than upon notice by the Borrower, and shall
be made, notwithstanding anything in this Agreement to the contrary, without
regard to satisfaction of conditions precedent to the making of Revolving Loans
set forth in Article V of this Agreement; provided, however that no Lender shall
be obligated to make such Revolving Loans if, prior to the date of the Borrowing
of the Swing Loan to be refunded, the Swingline Lender had received written
notice from the Agent or any Lender of the existence and continuance of an Event
of Default.
Each Lender's obligation to make Revolving Loans in the amount of its
Revolving Percentage of any unreimbursed Swing Loan pursuant hereto is several,
and not joint or joint and several. The failure of any Lender to perform its
obligation to make a Revolving Loan in the amount of such Lender's Revolving
Percentage of any unreimbursed Swing Loan will not relieve any other Lender of
its obligation hereunder to make a Revolving Loan in the amount of such other
Lender's Revolving Percentage of such unreimbursed Swing Loan. Any Lender may,
but shall have no
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obligation to any Person to, assume all or any portion of any non-performing
Lender's obligation to make a Revolving Loan in the amount of such Lender's
Revolving Percentage of such unreimbursed Swing Loan. The Borrower agree to
accept the Revolving Loans hereinabove provided, whether or not such Loans could
have been made pursuant to the terms of Section 5.2 hereof or any other Section
of this Agreement.
In the event, for whatever reason, the Agent determines that the Lenders
are not able to, or that it could be disadvantageous for the Lenders to, advance
their respective Revolving Percentage of Revolving Loans for the purpose of
refunding Swing Loans as required hereunder, then each of the Lenders absolutely
and unconditionally agrees to purchase and take from the Swingline Lender on
demand an undivided participation interest in Swing Loans outstanding in an
amount equal to their respective Revolving Percentage of such Swing Loans.
SECTION III.1.3. Post Default Application of Payments.
Notwithstanding any provision of Section 3.1.1 to the contrary, after the
occurrence and during the continuance of an Event of Default, all optional and
mandatory payments under Section 3.1.1 shall be applied first to pay any fees
and expenses then due and owing, second to the pro rata payment of accrued and
unpaid interest on all Loans and third to the pro rata reduction of amounts
outstanding under the Revolving Loan Commitment and the Swingline Commitment.
SECTION III.2. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance with this
Section 3.2.
SECTION III.2.1. Rates. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Borrower may elect that
Loans comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate
Loan, equal to the sum of the Alternate Base Rate from time to time in
effect plus the Applicable Base Rate Margin in effect from time to time;
(b) on that portion maintained as a Eurodollar Rate Loan, during
each Interest Period applicable thereto, equal to the sum of the
Eurodollar Rate (Reserve Adjusted) for such Interest Period plus the
Applicable Eurodollar Rate
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Margin in effect from time to time.
All Eurodollar Rate Loans shall bear interest from and including the
first day of the applicable Interest Period to (but not including) the last day
of such Interest Period at the interest rate determined as applicable to such
Eurodollar Rate Loan.
SECTION III.2.2. Post-Maturity Rates. After the date any
principal amount of any Loan is due and payable (whether on the Stated Maturity
Date, upon acceleration or otherwise), or after any other monetary Obligation of
the Borrower shall have become due and payable, the Borrower shall pay, but only
to the extent permitted by law, interest (after as well as before judgment) on
such amounts at a rate per annum equal to the Alternate Base Rate plus the Base
Rate Margin in effect from time to time plus 1% until such amount is paid in
full.
SECTION III.2.3. Payment Dates. Interest accrued on each Loan
shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Loan;
(c) with respect to Base Rate Loans, on each Monthly Payment Date
occurring after the Effective Date;
(d) with respect to Eurodollar Rate Loans, the last day of each
applicable Interest Period (and, if such Interest Period shall be six
months, on the 90th day of such Interest Period);
(e) with respect to any Base Rate Loans converted into Eurodollar
Rate Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 8.2 or Section 8.3, immediately
upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity
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Date, upon acceleration or otherwise) shall be payable upon demand.
SECTION III.3. Fees. The Borrower agrees to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION III.3.1. Commitment Fee. The Borrower agrees to pay to the Agent
for the account of each Lender, for the period (including any portion thereof
when its Revolving Loan Commitment is suspended by reason of the Borrower's
inability to satisfy any condition of Article V) commencing on the Effective
Date and continuing through the final Commitment Termination Date, a per annum
fee (the "Commitment Fee") on the average daily unused portion of the Revolving
Loan Commitment Amount (without giving effect to any reduction thereof as a
result of any outstanding Swing Loans), calculated on a 360-day basis using the
basis points per annum rate as set forth under the column labeled "Commitment
Fee" in the definition of "Applicable Margin" opposite the Borrower's Leverage
Ratio. The Commitment Fee shall be payable by the Borrower quarterly in arrears
on each Quarterly Payment Date (or, if such day is not a Business Day, on the
next succeeding Business Day), commencing with the first such date to occur
after the Effective Date, and on any expiration or termination of the Revolving
Loan Commitment.
SECTION III.3.2. Upfront Fees. The Agent agrees to pay to each Lender
upfront fees in such amounts as have been agreed upon previously by the Agent
and each such Lender.
SECTION III.3.3. Agent's Fee. The Borrower hereby agrees to pay to the
Agent for its own account additional fees in such amounts and at such times as
more particularly set forth in the commitment letter and term sheet dated
September 26, 1997.
SECTION III.3.4. Letter of Credit Fees. The Borrower agrees to pay to
the Agent, for the account of the Lenders, letter of credit fees (the "L/C
Fees") on the average daily face amount of outstanding Letters of Credit during
each Fiscal Quarter, calculated at a per annum rate equal to the Applicable
Eurodollar Rate Margin in effect on the last day of such Fiscal Quarter. The
Borrower further agree to pay to the L/C Issuer, for its own account, a fronting
fee (the "Fronting Fee") equal to 0.125% per annum of the average daily face
amount of outstanding Letters of Credit during each Fiscal Quarter, calculated
on the last day of such Fiscal Quarter. The L/C Fees and the Fronting
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Fee shall be computed on the basis of a year comprised of 360 days and shall be
payable quarterly in arrears, on each Quarterly Payment Date.
SECTION III.4. Agreement to Repay Letter of Credit Drawings with
Revolving Loans. The Borrower agrees to reimburse the L/C Issuer for each draft
that is paid under any Letter of Credit for the amount of (a) such draft and (b)
any reasonable taxes, fees, charges or other costs and expenses incurred by the
L/C Issuer in connection with such payment, whether such draft is paid before,
on or after termination of the Revolving Loan Commitment. Upon notice by the L/C
Issuer to the Borrower and the Agent (and notice by the Agent to the Lenders
pursuant to Section 3.5) on any day that payment has been made under any Letter
of Credit, the Borrower shall reimburse the L/C Issuer with the proceeds of a
Revolving Loan made pursuant to Section 3.5 not later than the following
Business Day. Interest shall be payable on any and all unreimbursed amounts
advanced by the L/C Issuer under this Section from the date such amounts have
been advanced by the L/C Issuer until reimbursed at the rate of interest payable
on Base Rate Loans.
The payment obligations of the Borrower under this Section shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including without limitation,
the following circumstances:
(a) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against any beneficiary, or any
transferee, of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any
other Person, whether in connection with this Agreement, the
transactions contemplated herein, or any unrelated transaction;
(b) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
unenforceable in any respect or any statement therein being untrue or
inaccurate in any respect; provided that any such statement or other
document appears, on examination, to be regular on its face; or
(c) payment by the L/C Issuer under any Letter of Credit against
presentation of drafts, certificates, claims,
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documents or required statements that do not strictly comply with the
terms of the Letter of Credit; provided that, upon examination, any such
drafts, certificates, claims, documents or statements appear on their
face to be in accordance with the Letter of Credit.
SECTION III.5. Letter of Credit Participations. The L/C Issuer
irrevocably agrees to grant and hereby grants to each Lender, and, to induce the
L/C Issuer to issue Letters of Credit hereunder, each Lender irrevocably agrees
to accept and purchase and hereby accepts and purchases from the L/C Issuer for
such Lender's own account and risk an undivided interest equal to such Lender's
Revolving Percentage in the L/C Issuer's obligations and rights under each
Letter of Credit issued hereunder and each draft paid by the L/C Issuer
hereunder.
Upon presentation of a draft drawn under any Letter of Credit, the L/C
Issuer shall promptly notify the Agent and the Agent shall promptly notify each
Lender of the amount under such draft and of such Lender's Revolving Percentage
of such amount. Except to the extent that (i) the Borrower shall have previously
reimbursed the L/C Issuer for such draft or (ii) there is a sufficient amount in
any cash collateral account established to cover payments to be made under such
Letter of Credit, each of the Lenders shall thereafter make a Revolving Loan in
an amount equal to such Lender's Revolving Percentage of the amount of such
payment made by the L/C Issuer, together with any accrued and unpaid interest
thereon. Each Lender shall pay the proceeds of its Loan, in immediately
available funds, directly to the Agent for the account of the L/C Issuer, (i)
not later than 1:00 p.m. New York time, on the following Business Day if the
Agent shall have provided notice prior to 11:30 a.m. New York time, and (ii) if
the Agent shall have provided notice after 11:30 a.m. New York time, not later
than 1:00 p.m. New York time, on the second following Business Day. Revolving
Loans made by the Lenders to repay amounts under Letters of Credit pursuant to
this Section shall constitute Revolving Loans hereunder, initially shall be Base
Rate Loans and shall be subject to all of the provisions of this Agreement
concerning Revolving Loans, except that such Revolving Loans shall be made upon
demand by the Agent as set forth above rather than upon notice by the Borrower,
and shall be made, notwithstanding anything in this Agreement to the contrary,
without regard to satisfaction of conditions precedent to the making of
Revolving Loans set forth in Article V of this Agreement and, notwithstanding
any termination of the Revolving Loan Commitment prior to the Stated Maturity
Date, Revolving
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Loans shall be made to reimburse the L/C Issuer for any drafts paid under any
Letter of Credit outstanding on the date of such termination.
Each Lender's obligation to make Revolving Loans in the amount of its
Revolving Percentage of any unreimbursed amounts outstanding under a Letter of
Credit pursuant hereto is several, and not joint or joint and several. The
failure of any Lender to perform its obligation to make a Revolving Loan in the
amount of such Lender's Revolving Percentage of any unreimbursed amounts
outstanding under a Letter of Credit will not relieve any other Lender of its
obligation hereunder to make a Revolving Loan in the amount of such other
Lender's Revolving Percentage of such amounts. Any Lender may, but shall have no
obligation to any Person to, assume all or any portion of any non-performing
Lender's obligation to make a Revolving Loan in the amount of such Lender's
Revolving Percentage of such amount outstanding under a Letter of Credit. The
Borrower agrees to accept the Revolving Loans hereinabove provided, whether or
not such loans could have been made pursuant to the terms of Section 5.2 hereof,
or any other Section of this Agreement.
SECTION III.6. Repurchase of Notes at the Option of the Lender Upon a
Change of Control.
(a) In the event that a Change of Control has occurred, each
Lender will have the right, at such Lender's option, pursuant to an
irrevocable and unconditional offer by the Borrower (the "Change of
Control Offer") to require the Borrower to repurchase all or any part of
such Lender's Notes on the date that is no later than thirty (30)
Business Days after the occurrence of such Change of Control (the
"Change of Control Payment Date"), at a cash price equal to one hundred
one percent (101%) of the principal amount thereof (the "Change of
Control Offer Price"), plus accrued and unpaid interest, fees and
expenses, if any, to but excluding the Change of Control Payment Date.
Upon expiration of the Change of Control Offer Period (as defined
below), the Borrower shall purchase all Notes tendered in response to
the Change of Control Offer.
(b) In the event that, pursuant to this Section 3.6, the Borrower
shall be required to commence a Change of Control Offer, the Borrower
shall follow the procedures set forth in this Section 3.6 as follows:
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(1) the Change of Control Offer shall commence within ten
(10) Business Days following the Change of Control;
(2) the Change of Control Offer shall remain open for
twenty (20) Business Days following its commencement and no
longer, except to the extent that a longer period is required by
applicable law (the "Change of Control Offer Period");
(3) within five (5) Business Days following the expiration
of a Change of Control Offer, the Borrower shall purchase all of
the tendered Notes at the Change of Control Offer Price, plus
accrued and unpaid interest; and
(4) on or before the commencement of any Change of Control
Offer, the Borrower shall send, by first-class mail, a notice to
each of the Lenders, which shall govern the terms of any Change
of Control Offer and shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 3.6 and that all Notes or
portions thereof tendered will be accepted for payment;
(ii) the Change of Control Offer Price (including
the amount of accrued and unpaid interest), the Change of
Control Payment Date and the Change of Control Put Date
(as defined below);
(iii) that any Note, or portion thereof, not
tendered or accepted for payment will continue to accrue
interest;
(iv) that, unless the Borrower defaults in making
payment therefor in accordance with the last paragraph of
this clause (b), or such payment is prevented for any
reason, any Note, or portion thereof, accepted for payment
pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date;
(v) that Lenders electing to have a Note, or
portion thereof, purchased pursuant to a Change
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of Control Offer will be required to surrender the Note
to the Borrower at the address specified in the notice,
prior to the close of business on the earlier of (a) the
fifth (5th) Business Day prior to the Change of Control
Payment Date and (b) the fifth (5th) Business Day
following the expiration of the Change of Control Offer
(such earlier date being the "Change of Control Put
Date");
(vi) that Lenders will be entitled to withdraw
their election, in whole or in part, if the Borrower
receives, prior to the close of business on the Change of
Control Put Date, a facsimile transmission or letter
setting forth the name of the Lender, the principal amount
of the Notes the Lender is withdrawing and a statement
containing a facsimile signature and stating that such
Lender is withdrawing its election to have such principal
amount of Notes purchased; and
(vii) a brief description of the events resulting
in such Change of Control.
Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state laws and any provisions of this Agreement that
conflict with such laws shall be deemed to be superseded by the provisions of
such laws.
On or before the Change of Control Payment Date, the Borrower shall (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer prior to the close of business on the Change of Control
Put Date and (ii) pay to each Lender that has tendered a Note the Change of
Control Offer Price (together with accrued and unpaid interest, fees and
expenses) of such Note whereupon, such Lender's Revolving Loan Commitment shall
be reduced by the principal amount received by such Lender. The Borrower shall
promptly execute and mail or deliver to such Lender a new Note equal in
principal amount to any unpurchased portion of the Note surrendered. Any Notes
not so accepted shall be promptly mailed or delivered by the Borrower to the
applicable Lender.
ARTICLE IV
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CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION IV.1. Eurodollar Rate Lending Unlawful. If any Lender shall
determine (which determination shall, upon notice thereof to the Borrower and
the Lenders, be conclusive and binding on the Borrower) that the introduction of
or any change in or in the interpretation of any law makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for
such Lender to make, continue or maintain any Loan as, or to convert any Loan
into, a Eurodollar Rate Loan, the obligations of all Lenders to make, continue,
maintain or convert any such Loans shall, upon such determination, forthwith be
suspended until such Lender shall notify the Agent that the circumstances
causing such suspension no longer exist, and all Eurodollar Rate Loans shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION IV.2. Deposits Unavailable. If the Agent shall have determined
that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to CIBC; or
(b) by reason of circumstances affecting the interbank market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurodollar Rate Loans,
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
any Loans as, or to convert any Loans into, Eurodollar Rate Loans shall
forthwith be suspended until the Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.
SECTION IV.3. Increased Costs, etc. The Borrower agrees to reimburse
each Lender for any increase in the cost to such Lender of, or any reduction in
the amount of any sum receivable by such Lender in respect of, (i) making,
continuing or maintaining (or of its obligation to make, continue or maintain)
any Loans as, or of converting (or of its obligation to convert) any Loans into,
Eurodollar Rate Loans or (ii) any Letter of Credit (or any Lender's
participation therein) issued hereunder as a result of any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in adopted after the Effective Date of, any law or regulation, directive,
guideline,
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decision or request (whether or not having force of law) of any court, central
bank, regulator or other governmental authority (whether or not having the force
of law and whether or not the failure to comply with such guideline or
requirement would be unlawful). Such Lender shall promptly notify the Agent and
the Borrower in writing of the occurrence of any such event, such notice to
state, in reasonable detail, the reasons therefor and the additional amount
required fully to compensate such Lender for such increased cost or reduced
amount. Such additional amounts shall be payable by the Borrower directly to
such Lender within five days of its receipt of such notice.
SECTION IV.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurodollar Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any Eurodollar Rate Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as Eurodollar Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into,
Eurodollar Rate Loans in accordance with the Continuation/ Conversion
Notice therefor,
(except where such loss or expense results from a breach by such Lender of its
obligations under this Agreement) then, upon the written notice of such Lender
to the Borrower (with a copy to the Agent), the Borrower shall, within five days
of its receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice shall include calculations in reasonable detail of
such loss or expense.
SECTION IV.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having
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the force of law) of any court, central bank, regulator or other governmental
authority affects or would affect the amount of capital required or expected to
be maintained by any Lender or any Person controlling such Lender, and such
Lender determines (in its reasonable discretion) that the rate of return on its
or such controlling Person's capital as a consequence of its Revolving Loan
Commitment or the Loans made by such Lender or any Letter of Credit issued by
such Lender or in which such Lender is a risk participant is reduced to a level
below that which such Lender or such controlling Person could have achieved but
for the occurrence of any such circumstance, then, in any such case upon notice
from time to time by such Lender to the Borrower, the Borrower shall immediately
pay directly to such Lender additional amounts sufficient to compensate such
Lender or such controlling Person for such reduction in rate of return. The
Borrower shall be liable for all such additional amounts only if such Lender
shall have notified the Borrower within 90 days after such Lender shall have
received notice of the change in circumstances giving rise to the request for
compensation hereunder; otherwise, the Borrower shall be liable only for such
additional amounts arising after delivery to the Borrower of notice of such
change in circumstances. A statement of such Lender as to any such additional
amount or amounts (including calculations thereof in reasonable detail) shall be
delivered to the Borrower. In determining such amount, such Lender shall use any
reasonable method of averaging and attribution.
SECTION IV.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts (such non-excluded items being called "Taxes"). In the event
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
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(c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties (other than penalties attributable
to the misconduct or negligence of the Agent or such Lender), interest or
expenses) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such person would have received had not such Taxes been
asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 4.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
Upon the request of the Borrower or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the due date of any payments under the Notes, execute and deliver to
the Borrower and the Agent, on or about the first scheduled payment date in each
Fiscal Year, one or more (as the Borrower or the Agent may reasonably request)
United States Internal Revenue Service Forms 4224 or Forms 1001 or such other
forms or documents (or successor forms or documents), appropriately completed,
as may be applicable to establish the extent, if any, to which a payment to such
Lender is exempt from withholding or deduction of Taxes.
SECTION IV.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes
(other than the Swingline Note) or any other Loan Document shall be made by the
Borrower to the Agent for the pro rata account of the Lenders entitled to
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receive such payment. All such payments required to be made to the Agent shall
be made, without setoff, deduction, recoupment or counterclaim, not later than
1:00 p.m., New York time, on the date due, in same day or immediately available
funds, to such account as the Agent shall specify from time to time by notice to
the Borrower. Funds received after that time shall be deemed to have been
received by the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds to each Lender its share, if any, of such
payments received by the Agent for the account of such Lender. All interest,
Commitment Fees, L/C Fees, Fronting Fees shall be computed on the basis of the
actual number of days (including the first day but excluding the last day)
occurring during the period for which such interest or fee is payable over a
year comprised of 360 days (or, in the case of interest on a Base Rate Loan, 365
days or, if appropriate, 366 days). Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by clause (c) of the definition of the term
"Interest Period" with respect to Eurodollar Rate Loans) be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION IV.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms of
Sections 4.3, 4.4 and 4.5) in excess of its pro rata share of payments then or
therewith obtained by all Lenders, such Lender shall purchase from the other
Lenders such participations in Loans made by them as shall be necessary to cause
such purchasing Lender to share the excess payment or other recovery ratably
with each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of (a) the amount of
such selling Lender's required repayment to the purchasing Lender to (b) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights
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of payment (including pursuant to Section 4.9) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim. For the purposes of
determining a Lender's applicable pro rata share, all issued and outstanding
Letters of Credit shall be considered Revolving Loans, and any payments in
respect thereof shall be deposited in the cash collateral account established
pursuant to Section 2.7 hereof. If any Letter of Credit shall thereafter expire
or terminate without being drawn, the amount previously deposited into the cash
collateral account in respect thereof shall be released from the cash collateral
account and distributed to the Lenders on a pro rata basis or, if no Specified
Default shall be continuing, delivered to the Borrower.
SECTION IV.9. Setoff. Each Lender shall, with the consent of the
Required Lenders, upon the occurrence of any Event of Default, have the right to
appropriate and apply to the payment of the Obligations owing to it (whether or
not then due), and (as security for such Obligations) the Borrower hereby grants
to each Lender a continuing security interest in, any and all balances, credits,
deposits, accounts or moneys of the Borrower then or thereafter maintained with
such Lender; provided, however, that any such appropriation and application
shall be subject to the provisions of Section 4.8. Each Lender agrees promptly
to notify the Borrower and the Agent after any such setoff and application made
by such Lender; provided, however, that the failure to give such notice shall
not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such
Lender may have.
SECTION IV.10. Use of Proceeds. The Borrower shall apply the proceeds of
each Borrowing for general business purposes of the Borrower and its
Subsidiaries, including working capital, Capital Expenditures, refinancing
existing Indebtedness, acquisitions and Investments. Without limiting the
foregoing, no proceeds of any Loan will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the
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Securities Exchange Act of 1934 or any "margin stock", as defined in F.R.S.
Board Regulation U.
SECTION IV.11. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Lender had actually funded and maintained each Eurodollar Loan during the
Interest Period for such Loan through the purchase of deposits having a maturity
corresponding to the last day of such Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period. Each Lender shall
use reasonable efforts (consistent with its internal policies and legal and
regulatory restrictions) to take appropriate action, including the selection of
a jurisdiction of its Domestic Office or Eurodollar Office or the changing of
the jurisdiction of its Domestic Office or Eurodollar Office, as the case may
be, so as to avoid any suspension of such Lender's obligations under Section 4.1
or the imposition of any increased costs or taxes or to reduce the amount of any
such increased costs or taxes which may thereafter accrue; provided that no such
selection or change of the jurisdiction for its Domestic Office or Eurodollar
Office shall be made if, in the reasonable judgment of such Lender, such
selection or change would be disadvantageous to such Lender.
SECTION IV.12. Substitution. In the event that (w) any Lender shall have
defaulted in its obligation to fund a Revolving Loan in accordance with the
terms of this Agreement, (x) any Lender's circumstances shall have caused the
Lenders' obligations to make, or to continue or convert outstanding Loans as or
to, Eurodollar Rate Loans to be suspended pursuant to Section 4.1 or (y) any
Lender has demanded compensation under Section 4.3 or 4.5, or becomes entitled
to receive additional amounts under Section 4.6 and so long as there does not
exist a Specified Default, the Borrower shall have the right, with the consent
of the Agent (which consent shall not be unreasonably withheld), to designate an
Eligible Assignee (which may be one or more of the Lenders) as a substitute for
such Lender to purchase the Revolving Note (for a price equal to all principal,
interest, fees and costs owed to such Lender) and assume the Commitments of such
Lender.
ARTICLE V
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CONDITIONS TO BORROWING
SECTION V.1. Initial Borrowing. The obligations of the Lenders to fund
the initial Borrowing or the L/C Issuer to issue the initial Letter of Credit
shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 5.1.
SECTION V.1.1. Resolutions, etc. The Agent shall have received:
(a) Copies of the resolutions of the Board of Managers of the
Borrower (on its own behalf and as manager of Horseshoe Ventures) and
copies of resolutions of the Board of Directors of HGP (on its own
behalf and as general partner of NGCP, which is the general Partner of
HE, and as general partner of RPG) approving this Agreement, the Notes,
each other Loan Document to which it (or HE or RPG) is or is to be a
party, and of all documents evidencing other necessary action and
governmental approvals, if any, with respect to this Agreement, the
Notes and each other Loan Document to which the Borrower, HE and RPG is
a party, in each case certified (on the date of the initial Borrowing)
by the Secretary of the Borrower or HGP;
(b) A copy of the certificate of incorporation, certificate of
limited partnership or certificate of formation, as applicable, of each
of the Borrower, HE, RPG, NGCP, HGP, JBB and Horseshoe Ventures and each
amendment thereto, certified (as of a date reasonably near the initial
Borrowing Date) by the Secretary of State of its state of organization
as being a true and correct copy thereof;
(c) A certificate of the Secretary of the Borrower or HGP, dated
the initial Borrowing Date, certifying the names and true signatures of
the officers authorized to sign this Agreement, the Notes, each other
Loan Document and any document(s) relating to this Agreement to which
the Borrower, HE, NGCP, RPG, HGP, JBB and Horseshoe Ventures is a party
and the other documents to be delivered hereunder and thereunder;
(d) A certificate of the Secretary of State of Delaware (as of a
date reasonably near the initial Borrowing Date) that the Borrower is
duly organized as a limited
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liability company, validly existing and in good standing under the laws
of the State of Delaware;
(e) A copy of a certificate of the Secretary of State of the
State of (i) Nevada, as to NGCP and HGP, (ii) Louisiana, as to HE, (iii)
Mississippi, as to RPG, and (iv) Delaware, as to Horseshoe Ventures and
JBB certifying (as of a date reasonably near the initial Borrowing Date)
the certificate of incorporation, certificate of limited partnership,
articles of organization or certificate of formation, as applicable, of
each of such entities and that each such entity is duly organized,
validly existing and in good standing under the laws of its state of
organization; and
(f) A certificate of the Secretary of the Borrower or HGP, dated
the initial Borrowing Date, certifying as to (i) the absence of any
amendments to the organization documents of the Borrower, HE, RPG, NGCP,
HGP, JBB and Horseshoe Ventures since the date of the Secretary of
State's certificate referred to in clause (e) above, (ii) a true and
correct copy of the operating agreement, limited partnership agreement
or by-laws, as applicable of the Borrower, HE, RPG, NGCP, HGP, JBB and
Horseshoe Ventures as in effect on the initial Borrowing Date and (iv)
the absence of any proceeding for the dissolution or liquidation of the
Borrower, HE, RPG, NGCP, HGP, JBB and Horseshoe Ventures.
SECTION V.1.2. Delivery of Notes. The Agent shall have received, for the
account of each Lender, the Notes duly executed and delivered by the Borrower.
SECTION V.1.3. Guarantees. The Agent shall have received the Guarantees,
dated the date hereof, duly executed by each of the Guarantors, covering all of
each such Person's equipment, gaming devices and associated equipment, fixtures,
furnishings, inventory, accounts, intangibles and other personal property of
every kind and description, including, to the extent permitted by the terms of
the financing or leasing agreements applicable thereto, all furniture, fixtures
and equipment that are financed or leased (all of the foregoing is collectively
referred to as the "Personal Property Collateral"), together with
(a) acknowledgment copies of properly filed Uniform Commercial
Code financing statements, assignments or amendments, or such other
evidence of filing as may
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be acceptable to the Agent, naming each of the Guarantors as the debtor
and the Agent as the secured party, or other similar instruments or
documents, filed under the Uniform Commercial Code of all jurisdictions
as may be necessary or, in the opinion of the Agent, desirable to
perfect the security interest of the Agent pursuant to the Guarantees;
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens (other
than Permitted Liens) in any collateral described in the Guarantees
together with such other Uniform Commercial Code Form UCC-3 termination
statements as the Agent may reasonably request); and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agent, dated a date reasonably
near to the date of the initial Borrowing, listing all effective
financing statements which name the Guarantors (under their present
names and any previous names) as the debtor and which are filed in the
jurisdictions in which filings were made pursuant to clause (a) above,
together with copies of such financing statements (none of which, other
than Permitted Liens, shall cover any collateral described in the
Guarantees).
SECTION V.1.4. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the initial Borrowing).
SECTION V.1.5. Borrower Pledge Agreement. The Agent shall have received
executed counterparts of the Borrower Pledge Agreement, dated as of the date
hereof, duly executed by the Borrower, together with the certificates or other
documentation evidencing all of the ownership interests pledged pursuant to the
Borrower Pledge Agreement, which certificates or other documentation shall in
each case be accompanied by undated stock powers duly executed in blank.
SECTION V.1.6. JBB Pledge Agreement. The Agent shall have received
executed counterparts of the JBB Pledge Agreement, dated as of the date hereof,
duly executed by JBB, together with the
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certificates or other documentation, evidencing all of the ownership interests
pledged pursuant to the JBB Pledge Agreement, which certificates or other
documentation shall in each case be accompanied by undated stock powers duly
executed in blank.
SECTION V.1.7. Security Agreement. The Agent shall have received
executed counterparts of the Security Agreement, dated as of the date hereof,
duly executed by the Borrower, covering all of the Borrower's Personal Property
Collateral, together with
(a) acknowledgment copies of properly filed Uniform Commercial
Code financing statements, assignments or amendments, or such other
evidence of filing as may be acceptable to the Agent, naming the
Borrower as the debtor and the Agent as the secured party, or other
similar instruments or documents, filed under the Uniform Commercial
Code of all jurisdictions as may be necessary or, in the opinion of the
Agent, desirable to perfect the security interest of the Agent pursuant
to the Security Agreement;
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens (other
than Permitted Liens) in any collateral described in the Security
Agreement together with such other Uniform Commercial Code Form UCC-3
termination statements as the Agent may reasonably request); and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agent, dated a date reasonably
near to the date of the initial Borrowing, listing all effective
financing statements which name the Borrower (under its present name and
any previous names) as the debtor and which are filed in the
jurisdictions in which filings were made pursuant to clause (a) above,
together with copies of such financing statements (none of which, other
than Permitted Liens, shall cover any collateral described in the
Security Agreement).
SECTION V.1.8. Deed of Trust. The Agent shall have received executed
counterparts of the Assignment of Deed of Trust with respect to the Tunica
Casino, dated as of the date hereof, duly executed by the remaining Noteholder,
together with
(i) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and
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filings of the Assignment of Deed of Trust as may be necessary or, in
the reasonable opinion of the Agent, desirable effectively to assign the
Deed of Trust to the Agent as a valid, perfected Lien against the Tunica
Casino, which Lien is subject to no outstanding Liens securing monetary
obligations recorded against RPG's interest in the Tunica Casino other
than junior Liens securing the notes outstanding under the Senior Note
Indenture;
(ii) title policies (collectively, the "Title Policies") in favor
of the Agent on behalf of the Lenders in amounts and in form and
substance reasonably satisfactory to the Agent and issued by the Title
Company, with respect to the Deed of Trust; and
(iii) such other approvals, opinions, or documents in connection
with the foregoing as the Agent may reasonably request.
SECTION V.1.9. Surveys. The Agent shall have received, in
triplicate, a surveyor's current plat of survey (dated not earlier than October
1, 1997) of each of the Pledged Casinos prepared (and so certified) in
compliance with the provisions of any applicable state survey standards by a
registered land surveyor of the state in which such Pledged Casino is located,
and certified to the Agent and the Title Company.
SECTION V.1.10. Appraisals. The Agent shall have received copies
of MAI appraisals prepared in accordance with the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, addressed to the Agent, with respect to
each Pledged Casino, prepared by Hospitality Valuation Services, Inc. and in
form, scope and substance reasonably satisfactory to the Agent in all material
respects, which appraisals shall not have been withdrawn or modified.
SECTION V.1.11. Environmental Audit. The Agent shall have
received copies of a so-called "phase one" environmental audit covering each
Pledged Casino in each case prepared by an environmental consulting firm
selected by the Borrower and reasonably acceptable to the Agent, and in form,
substance and results, reasonably satisfactory to the Agent.
SECTION V.1.12. RPG First Preferred Ship Mortgage.
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(a) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of the RPG First Preferred
Ship Mortgage Assignment as may be necessary or, in the reasonable
opinion of the Agent, desirable effectively to assign the RPG First
Preferred Ship Mortgage to the Agent as a valid, perfected Lien against
the vessel described therein, which Lien is subject to no outstanding
Liens securing monetary obligations recorded against such vessel other
than junior Liens securing the notes outstanding under the Senior Note
Indenture; and
(b) such other approvals, opinions or documents in connection
with the foregoing as the Agent may reasonably request.
SECTION V.1.13. Amended and Restated Note Assignment. The Agent
shall have received an executed original of the Amended and Restated Note
Assignment, dated as of the date hereof, together with the original HE Notes and
the RPG Notes, endorsed in blank and executed originals of each of the HE
Collateral Documents, and the following:
(a) acknowledgment copies of properly filed Uniform Commercial
Code financing statements (Form UCC-1), or such other evidence of filing
as may be acceptable to the Agent, naming HE as the debtor and the
Borrower as the secured party, together with properly filed assignments
to the Agent of the Borrower's interests thereunder, or other similar
instruments or documents, filed under the Uniform Commercial Code of all
jurisdictions as may be necessary or, in the opinion of the Agent,
desirable to perfect the security interest of the Agent (as assignee)
pursuant to the HE Collateral Documents;
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens other
than Permitted Liens in any collateral described in the HE Collateral
Documents, together with such other Uniform Commercial Code Form UCC-3
termination statements as the Agent may reasonably request;
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report
certified by a party acceptable to the Agent, dated a date reasonably
near to the date of the
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initial Borrowing, listing all effective financing statements which name
HE (under its present name and any previous names) as the debtor and
which are filed in the jurisdictions in which filings were made pursuant
to clause (a) above, together with copies of such financing statements;
(d) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of the Assignment of HE
Mortgages as may be necessary or, in the reasonable opinion of the
Agent, desirable effectively to assign the HE Mortgages as valid,
perfected Liens against the Bossier Casino, which Liens are subject to
no outstanding Liens securing monetary obligations other than junior
Liens securing the notes outstanding under the Senior Note Indenture;
(e) title policies (collectively, the "Title Policies") in favor
of the Agent on behalf of the Lenders in amounts and in form and
substance reasonably satisfactory to the Agent and issued by the Title
Company, with respect to the Bossier Casino;
(f) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of the HE First Preferred
Ship Mortgage Assignment as may be necessary or, in the reasonable
opinion of the Agent, desirable effectively to assign the HE First
Preferred Ship Mortgage to the Agent as a valid, perfected Lien against
the vessel described therein, which Lien is subject to no outstanding
Liens securing monetary obligations other than junior Liens securing the
notes outstanding under the Senior Note Indenture; and
(g) such other approvals, opinions or documents in connection
with the foregoing as the Agent may reasonably request.
SECTION V.1.14. Consents, etc. The Agent shall have received
certified copies of all documents evidencing any necessary action of the
Borrower and each Guarantor, material consents, shareholder, creditor, material
lessor, governmental and material regulatory approvals or exemptions in
connection with this Agreement and the other Loan Documents, all in form and
substance reasonably satisfactory to the Agent and, as to legal matters, its
counsel.
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SECTION V.1.15. Insurance Coverages. The Borrower shall have
delivered to the Agent the insurance certificates and policies identified on
Schedule III, together with loss payable endorsements in favor of the Agent
under all such insurance policies.
SECTION V.1.16. Solvency. The Agent shall have received a
certificate substantially in the form of Exhibit K hereto from the president,
the chief executive or chief financial Authorized Officer of the Borrower as to
solvency of the Borrower and each of the Guarantors, both before and after
giving effect to the transactions contemplated by this Agreement.
SECTION V.1.17. Opinions of Counsel. The Agent shall have
received opinions, dated the date of the initial Borrowing and addressed to the
Agent and all Lenders, from Riordan & McKinzie, counsel to the Borrower, Eaton &
Cottrell, special Mississippi counsel to the Borrower, Adams & Reese, special
Louisiana and maritime counsel to the Borrower, Richards & O'Neil, LLP, special
New York counsel to the Borrower, Richards, Layton & Finger, special Delaware
counsel to the Borrower and Schreck Morris, special Nevada counsel to the
Borrower substantially in the form of Exhibit F hereto.
SECTION V.1.18. Other Debt Documentation. The Agent shall have
received a certificate signed by an Authorized Officer of the Borrower stating
that attached thereto are true and complete copies of (i) the definitive Senior
Note Indenture and all collateral documents as in effect on the date of the
initial Borrowing securing the Existing Senior Notes and (ii) the definitive
Subordinated Debt Indenture as in effect on such date.
SECTION V.1.19. Intercreditor Agreement. An amended and restated
intercreditor agreement, substantially in the form of Exhibit H hereto, between
the Agent and the trustee for the holders of the Senior Notes.
SECTION V.1.20. Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, as the case may
be, all fees, costs and expenses due and payable pursuant to Sections 3.3 and
10.3, if then invoiced.
SECTION V.2. All Borrowings. Subject to the provisions of Section 3.1.2,
the obligation of the L/C Issuer to issue any
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Letter of Credit or of each Lender to fund any Loan on the occasion of any
Borrowing (including the initial Borrowing) shall be subject to the satisfaction
of each of the conditions precedent set forth in this Section 5.2.
SECTION V.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to the issuance of a Letter of Credit or any
Borrowing (but, if any Default of the nature referred to in Section 8.1.5 shall
have occurred with respect to any other Indebtedness, without giving effect to
the application, directly or indirectly, of the proceeds thereof) the following
statements shall be true and correct
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in Section 6.7) shall be true and
correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date);
(b) except as disclosed by the Borrower to the Agent and the
Lenders pursuant to Section 6.7
(i) no labor controversy, litigation, action, arbitration
or governmental investigation or proceeding shall be pending or,
to the knowledge of the Borrower, threatened against the Borrower
or any of its Subsidiaries which is reasonably likely to have a
Material Adverse Effect; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 6.7
which is reasonably likely to have a Material Adverse Effect;
(c) to the extent that, after giving effect to such Borrowing or
the issuance of such Letter of Credit, the aggregate principal amount of
all outstanding Loans and the face amount of all outstanding Letters of
Credit would exceed $150,000,000, the incurrence thereof shall be
permissible under Section 4.11(g) of the Senior Note Indenture; and
(d) no Default shall have then occurred and be
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continuing, and neither the Borrower, any other Obligor, nor any of its
Subsidiaries are in violation of any law or governmental regulation or
court order or decree which is reasonably likely to have a Material
Adverse Effect.
SECTION V.2.2. Borrowing Request. The Agent shall have received a
Borrowing Request for such Borrowing. Each of the delivery of a Borrowing
Request and the acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof) the statements made in
Subsection 5.2.1 are true and correct. Each request by the Borrower for the
issuance of a Letter of Credit shall be made pursuant to a Letter of Credit
application in the L/C Issuer's then current form. Delivery of such application
and the delivery by the L/C Issuer of the Letter of Credit shall constitute a
representation and warranty by the Borrower that on the date of issuance of such
Letter of Credit (both immediately before and after giving effect thereto) the
statements made in Subsection 5.2.1 are true and correct. Each request by the
Borrower for Borrowings of Swing Loans and the acceptance by the Borrower of the
proceeds of such Swing Loans shall constitute a representation and warranty by
the Borrower that on the date of such Borrowing (both immediately before and
after giving effect to such Borrowing) the statements made in Subsection 5.2.1
are true and correct.
SECTION V.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors shall be satisfactory in form and substance
to the Agent and its counsel; the Agent and its counsel shall have received all
information, approvals, opinions, documents or instruments as the Agent or its
counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans and issue Letters of Credit hereunder, the Borrower
represents and warrants unto the Agent and each Lender as set forth in this
Article VI.
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SECTION VI.1. Organization, etc. The Borrower and each of its
Subsidiaries is a company, corporation or partnership validly organized and
existing and in good standing under the laws of the State of its formation, is
duly qualified to do business and is in good standing as a foreign company,
corporation or partnership in each jurisdiction where the nature of its business
requires such qualification, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Agreement, the Notes and each other Loan
Document to which it is a party and to own and hold under lease its property and
to conduct its business substantially as currently conducted by it, except where
the failure to so qualify or hold such license, permit or approval could have a
Material Adverse Effect.
SECTION VI.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each Guarantor of each Loan Document executed or to
be executed by it, are within each such Person's company, corporate or
partnership powers, have been duly authorized by all necessary company,
corporate or partnership action, and do not
(a) contravene the Person's Organic Documents;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting the Borrower
or any Guarantor; or
(c) result in, or require the creation or imposition of, any Lien
on any of any Obligor's properties.
SECTION VI.3. Government Approval, Regulation, etc. Except for such
authorizations, approvals or notices (a) obtained or delivered as of the
Effective Date, (b) subsequently required in connection with the addition of any
Guarantor pursuant to Section 7.1.10, or (c) set forth in Item 6.3 of the
Disclosure Schedule, no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or other
Person is required for the due execution, delivery or performance by the
Borrower or any other Obligor of this Agreement, the Notes or any other Loan
Document. Neither the Borrower nor any of its Subsidiaries is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or a "holding company", or a "subsidiary company" of a
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"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION VI.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
the Borrower enforceable in accordance with their respective terms; and each
Loan Document executed pursuant hereto by each other Obligor will, on the due
execution and delivery thereof by such Obligor, be the legal, valid and binding
obligation of such Obligor enforceable in accordance with its terms.
SECTION VI.5. Financial Information. The audited balance sheets of the
Borrower and each of its Subsidiaries as at December 31, 1996, and the unaudited
balance sheet of the Borrower and each of its Subsidiaries as at June 30, 1997
and the related statements of earnings and cash flow of the Borrower and each of
its Subsidiaries, copies of which have been furnished to the Agent and each
Lender, have been prepared in accordance with GAAP consistently applied, subject
only to normal year-end accruals and audit adjustments, and present fairly the
consolidated financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods then ended.
SECTION VI.6. No Material Adverse Change. Since December 31, 1996, no
event or condition has occurred which could have a Material Adverse Effect.
SECTION VI.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action, proceeding,
or labor controversy affecting the Borrower or any of its Subsidiaries, or any
of their respective properties, businesses, assets or revenues, which may
materially adversely affect the consolidated financial condition, operations,
assets, business, properties or prospects of the Borrower and its Subsidiaries
or which purports to affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document, except as disclosed in Item 6.7
("Litigation") of the Disclosure Schedule.
SECTION VI.8. Subsidiaries. The Borrower has no Subsidiaries, except
those Subsidiaries
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(a) which are identified in Item 6.8 ("Existing Subsidiaries") of
the Disclosure Schedule; or
(b) which are permitted to have been acquired in accordance with
Section 7.2.5 or 7.2.9.
SECTION VI.9. Ownership of Properties. The Borrower and each of its
Subsidiaries owns good and marketable title to, or possess the right to use to
the extent necessary, all of its properties and assets, real and personal,
tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and clear of all
Liens, charges or claims (including infringement claims with respect to patents,
trademarks, copyrights and the like) except as permitted pursuant to Section
7.2.3. The provisions of the HE Collateral Documents, the Deed of Trust, the RPG
First Preferred Ship Mortgage, the Security Agreement, the Guarantees, the
Borrower Pledge Agreement, the JBB Pledge Agreement and the Amended and Restated
Note Assignment are effective to create, in favor of the Agent (for the benefit
of the Lenders), valid and perfected first priority Liens on the property
described therein, subject only to the Permitted Liens. All governmental
approvals necessary or, in the reasonable opinion of the Agent, desirable to
perfect and protect, and establish and maintain the priority of, such Liens have
been duly effected or taken.
SECTION VI.10. Compliance. The Borrower and the Guarantors are in
compliance with all presently existing applicable statutes, laws, regulations,
rules, ordinances and orders of any kind whatsoever (including, but not limited
to, any zoning and building laws or ordinances, subdivision laws or ordinances,
any Environmental Laws, or any presently existing rules, regulations or orders
of any governmental entity, authority or agency) (all of which are sometimes
hereinafter collectively referred to as "Laws"), and with all presently existing
covenants and restrictions of record relating to the use and occupancy of any of
their respective properties, except where the failure to so qualify or hold such
license, permit or approval could have a Material Adverse Effect.
SECTION VI.11. Taxes. The Borrower and each of its Subsidiaries have
filed all income tax returns and all other material tax returns and reports
required by law to have been filed by it and has paid all taxes and governmental
charges thereby shown to be owing, except any such taxes or charges which
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are being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION VI.12. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Borrowing hereunder, no steps
have been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any material liability,
fine or penalty. Except as disclosed in Item 6.12 ("Employee Benefit Plans") of
the Disclosure Schedule, neither the Borrower nor any member of the Controlled
Group has any contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.
SECTION VI.13. Environmental Warranties. Except as set forth in Item
6.13 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its Subsidiaries
have been, and continue to be, owned or leased by the Borrower and its
Subsidiaries in material compliance with all Environmental Laws , except
where any such failure to comply could not reasonably be expected to
have a Material Adverse Effect;
(b) except where any of the following could not reasonably be
expected to have a Material Adverse Effect, there have been no past, and
there are no pending or, to the Borrower's knowledge, threatened
(i) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries with respect to
any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower or any of
its Subsidiaries regarding potential liability under any
Environmental Law;
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(c) there have been no Releases of Hazardous Materials at, on or
under any property now, or to the Borrower's knowledge previously, owned
or leased by the Borrower or any of its Subsidiaries that, singly or in
the aggregate, have, or may reasonably be expected to have a Material
Adverse Effect;
(d) the Borrower and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses
and other authorizations relating to environmental matters and necessary
or desirable for their businesses, except where the failure to obtain or
comply with any such permits could not reasonably be expected to have a
Material Adverse Effect;
(e) no property now, or to the Borrower's knowledge previously,
owned or leased by the Borrower or any of its Subsidiaries is listed or
proposed for listing (with respect to owned property only) on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now, or to
the Borrower's knowledge previously, owned or leased by the Borrower or
any of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a Material Adverse Effect;
(g) neither the Borrower nor any Subsidiary of the Borrower has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of federal,
state or local enforcement actions or other investigations which may
lead to material claims against the Borrower or such Subsidiary thereof
for any remedial work, damage to natural resources or personal injury,
including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now, or to the Borrower's knowledge previously,
owned or leased by the Borrower or any Subsidiary of the Borrower that,
singly or in the aggregate, have, or may reasonably be expected to have,
a Material
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Adverse Effect; and
(i) no conditions exist at, on or under any property now, or to
the Borrower's knowledge previously, owned or leased by the Borrower
which, with the passage of time, or the giving of notice or both, could
reasonably be expected to have a Material Adverse Effect.
SECTION VI.14. HE Notes. As of the date of the initial Borrowing, the
outstanding principal amount of the HE Notes is not less than $182,000,000.
SECTION VI.15. Senior Debt. All Indebtedness of the Borrower under this
Agreement shall be "Senior Debt" for purposes of the Subordinated Debt
Indenture.
SECTION VI.16. Regulations G, U and X. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Loans will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation G, U or X.
Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section with such meanings.
SECTION VI.17. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of the Borrower to the Agent or
any Lender will be, true and accurate in every material respect on the date as
of which such information is dated or certified and as of the date of execution
and delivery of this Agreement by the Agent and such Lender, and such
information is not, or shall not be, as the case may be, incomplete by omitting
to state any material fact necessary to make such information not misleading.
ARTICLE VII
COVENANTS
SECTION VII.1. Affirmative Covenants. The Borrower agrees with the Agent
and each Lender that, until all Commitments have
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terminated, all Letters of Credit have expired or been cash-collateralized and
all Obligations have been paid and performed in full, the Borrower will perform
the obligations set forth in this Section 7.1.
SECTION VII.1.1. Financial Information, Reports, Notices, etc.
The Borrower will furnish, or will cause to be furnished, to each Lender and the
Agent copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
of the Borrower, consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such Fiscal Quarter, consolidating balance
sheets of the Borrower, its Subsidiaries and its Unrestricted
Subsidiaries as of the end of such Fiscal Quarter, consolidated
statements of earnings of the Borrower and its Subsidiaries for such
Fiscal Quarter and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter and
consolidating statements of earnings of the Borrower, its Subsidiaries
and its Unrestricted Subsidiaries for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and ending with
the end of such Fiscal Quarter, certified by the chief financial
Authorized Officer of the Borrower;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of the Borrower, a copy of the annual audit
report for such Fiscal Year for the Borrower, its Subsidiaries and its
Unrestricted Subsidiaries, including therein consolidated balance sheets
of the Borrower, its Subsidiaries and its Unrestricted Subsidiaries as
of the end of such Fiscal Year and consolidated statements of earnings
and cash flow of the Borrower, its Subsidiaries and its Unrestricted
Subsidiaries for such Fiscal Year, in each case certified (without any
Impermissible Qualification) in a manner acceptable to the Agent and the
Required Lenders by Arthur Andersen LLP or other independent public
accountants reasonably acceptable to the Agent and the Required Lenders,
together with a certificate from such accountants to the effect that, in
making the examination necessary for the signing of such annual report
by such accountants, they have not become aware of any Default or Event
of Default that has occurred
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and is continuing, or, if they have become aware of such Default or
Event of Default, describing such Default or Event of Default and the
steps, if any, being taken to cure it;
(c) as soon as available and in any event within 90 days after
the end of each Fiscal Year of the Borrower, consolidating balance
sheets of the Borrower, its Subsidiaries and its Unrestricted
Subsidiaries as of the end of such Fiscal Year and consolidating
statements of earnings of the Borrower, its Subsidiaries and its
Unrestricted Subsidiaries for such Fiscal Year and for the final Fiscal
Quarter of such Fiscal Year, consolidated balance sheets of the Borrower
and its Subsidiaries as of the end of such Fiscal Year and for the final
Fiscal Quarter of such Fiscal Year, and consolidated statements of
earnings of the Borrower and its Subsidiaries for such Fiscal Year,
certified by the chief financial Authorized Officer of the Borrower;
(d) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
and within 90 days after the end of the final Fiscal Quarter of each
Fiscal Year, a certificate in substantially the form of Exhibit I,
executed by the chief financial Authorized Officer of the Borrower,
showing (in reasonable detail and with appropriate calculations and
computations in all respects reasonably satisfactory to the Agent)
compliance with the financial covenants set forth in Section 7.2;
(e) as soon as possible and in any event within 45 days after the
end of each Fiscal Quarter, a computation of the Leverage Ratio as of
the end of such Fiscal Quarter and a written report, in form and detail
reasonably acceptable to the Agent, with respect to the status of each
Pledged Casino, including the amounts of Expansion Capital Expenditures
and Investments made, and reasonably anticipated to be made, with
respect thereto, each certified by the chief Financial Authorized
Officer of the Borrower;
(f) as soon as possible and in any event within 30 days after the
end of each month, monthly and year-to-date (i) consolidated operating
statements for the Borrower and its Subsidiaries, which statements shall
compare the financial performance of the Borrower and its Subsidiaries
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to the Borrower's projections and to the performance of such Persons for
the comparable period of the previous Fiscal Year, (ii) consolidating
operating statements for the Borrower, its Subsidiaries and its
Unrestricted Subsidiaries, and (iii) operating statements for each
Pledged Casino, which statements shall compare the financial performance
of such Pledged Casino to the Borrower's projections and to the
performance of such Pledged Casino for the comparable period of the
previous Fiscal Year; and each of which shall be certified by the chief
financial Authorized Officer of the Borrower and accompanied by a
narrative report describing the results of operations of the Borrower,
each Pledged Casino and each Unrestricted Subsidiary during such month;
(g) as soon as possible and in any event within three Business
Days after the occurrence of each Default, a statement of the chief
financial Authorized Officer of the Borrower setting forth details of
such Default and the action which the Borrower has
taken and proposes to take with respect thereto;
(h) as soon as possible and in any event within three Business
Days after the Borrower has knowledge of (x) the occurrence of any
material adverse development with respect to any litigation, action,
proceeding, or labor controversy described in Section 6.7 or (y) the
commencement of any material labor controversy, litigation, action,
proceeding of the type described in Section 6.7, notice thereof and
copies of all available documentation relating thereto;
(i) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its security holders, and all
reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(j) within 30 days after the beginning of each Fiscal Year of the
Borrower, financial projections for the Borrower and its Subsidiaries
and each Pledged Casino for such Fiscal Year, in reasonable detail and
in all respects satisfactory to the Agent;
(k) immediately upon becoming aware of the institution of any
steps by the Borrower or any other Person to
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terminate any Pension Plan, or the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under section 302(f) of ERISA, or the taking of any
action with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect
to any Pension Plan which could result in the incurrence by the Borrower
of any material liability, fine or penalty, or any material increase in
the contingent liability of the Borrower with respect to any
post-retirement Welfare Plan benefit, notice thereof and copies of all
documentation relating thereto; and
(l) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
SECTION VII.1.2. Compliance with Laws, etc. The Borrower will,
and will cause each of its Subsidiaries to, comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its existence and
qualification as a foreign company, partnership or corporation except
(i) as permitted by Section 7.2.9 and (ii) where the failure to so
qualify or remain qualified could not reasonably be expected to have a
Material Adverse Effect; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its
property except (i) to the extent being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books, and (ii)
any immaterial tax so long as no Collateral or other material property
of the Borrower or its Subsidiaries is at impending risk of being
seized, levied upon or forfeited.
SECTION VII.1.3. Maintenance of Properties. The Borrower will,
and will cause each of its Subsidiaries to, maintain, preserve, protect and keep
its properties in good repair, working order and condition, subject to wear and
tear in
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the ordinary course of business, and make necessary and proper repairs, renewals
and replacements so that its business carried on in connection therewith may be
properly conducted at all times unless the Borrower determines in good faith
that the continued maintenance of any of its properties is no longer
economically desirable. The Borrower shall not permit all or any portion of any
of the Pledged Casinos to be removed, demolished or materially altered, except
in connection with the improvement, renovation or expansion thereof and to the
extent that the value thereof is not materially impaired, and shall restore,
replace or rebuild any Pledged Casino, or any part thereof now or hereafter
damaged or destroyed by any casualty (whether or not insured against or
insurable), unless the insurance proceeds attributable to such casualty shall,
pursuant to the terms of the applicable Collateral Document, not be released to
the Borrower for such purpose by the Agent and the Lenders.
SECTION VII.1.4. Insurance. The Borrower will, and will cause
each of its Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance (subject to customary deductibles and retentions)
with respect to its properties and business (including business interruption
insurance) against such casualties and contingencies and of such types and in
such amounts as is customary in the case of similar businesses and will, upon
request of the Agent, furnish to each Lender at reasonable intervals (not to
exceed more than one request per Fiscal Quarter) a certificate of an Authorized
Officer of the Borrower setting forth the nature and extent of all insurance
maintained by the Borrower and its Subsidiaries in accordance with this Section.
SECTION VII.1.5. Books and Records. The Borrower will, and will
cause each of its Subsidiaries to, keep books and records which accurately
reflect all of its business affairs and transactions and permit the Agent and
each Lender or any of their respective representatives, at reasonable times and
intervals (but not so as to materially interfere with the business of the
Borrower or any of its Subsidiaries), to visit all of its offices, to discuss
its financial matters with its officers and independent public accountant (and
the Borrower hereby authorizes such independent public accountant to discuss the
Borrower's financial matters with each Lender or its representatives whether or
not any representative of the Borrower is present) and to examine (and, at the
expense of the Borrower, photocopy extracts from) any of its books or other
corporate records. The Borrower shall pay any reasonable fees of such
independent public
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accountant incurred in connection with the Agent's or any Lender's exercise of
its rights pursuant to this Section. The Agent and the Lenders shall keep all
information obtained pursuant to the Section 7.1.5 in confidence unless and
until it is publicly disclosed by the Borrower, provided that such information
may be transmitted to the Agent or another Lender in connection with the
exercise or enforcement of the rights of the Agent or the Lenders herein.
SECTION VII.1.6. Environmental Covenant. The Borrower will, and
will cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws, except where the
failure to comply with any of the foregoing could not reasonably be
expected to have a Material Adverse Effect;
(b) immediately notify the Agent and provide copies upon receipt
of all written claims, complaints, notices or inquiries relating to the
environmental condition of its facilities and properties or compliance
with Environmental Laws, and shall promptly commence and diligently
proceed to cure, to the reasonable satisfaction of the Agent any actions
and proceedings relating to violations of compliance with applicable
Environmental Laws; and
(c) provide such information and certifications which the Agent
may reasonably request from time to time to evidence compliance with
this Section 7.1.6.
SECTION VII.1.7. Maintenance of Existence. The Borrower will take
all action necessary to maintain its corporate existence and the corporate
existence of each Guarantor.
SECTION VII.1.8. Gaming and Liquor Licenses. The Borrower will
maintain, and will cause each Guarantor to maintain, (i) such valid gaming
licenses, registrations and findings of suitability in all jurisdictions as may
be necessary to conduct its casino businesses and (ii) all liquor licenses and
registrations as may be necessary to sell alcoholic beverages
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from and in its Casinos.
SECTION VII.1.9. Accuracy of Information. All factual information
furnished after the date of execution and delivery of this Agreement by or on
behalf of the Borrower or any Guarantor in writing to the Agent or any Lender
for purposes of or in connection with this Agreement or any transaction
contemplated hereby will present fairly in every material respect on the date as
of which such information is dated or certified, and such information shall not
be incomplete by omitting to state any material fact necessary to make such
information not misleading.
SECTION VII.1.10. Additional Guarantees and Collateral
Documentation. Promptly upon the determination that any Subsidiary has become a
Significant Subsidiary or upon written notice from the Borrower to the Agent
that it wishes to redesignate an Unrestricted Subsidiary as a Subsidiary, the
Borrower will cause such Subsidiary to execute and deliver a Guarantee and such
collateral documentation as the Agent may reasonably request to effect the
pledge to the Agent of all of such Person's tangible and intangible assets. In
addition, the Borrower may, from time to time, cause any Subsidiary to execute
and deliver a Guarantee substantially in the form of Exhibit G hereto, and such
Subsidiary shall thereafter be a Guarantor for purposes hereof.
SECTION VII.1.11. Additional HE Pledges. Promptly upon the
elimination of all minority interests in HE, the Borrower will cause HE to
execute a Guarantee and such collateral documentation as the Agent may
reasonably request to effect the direct pledge of all of such Person's tangible
and intangible assets. Upon completion of such documentation, the Borrower's
obligations under Section 7.1.12 shall terminate.
SECTION VII.1.12. Additional HE or RPG Notes. Promptly upon its
receipt of any new HE Notes or RPG Notes, the Borrower will deliver such notes
to the Agent as additional Collateral pursuant to the Amended and Restated Note
Assignment.
SECTION VII.1.13. Outstandings Under This Agreement. After the
initial Borrowing hereunder, the Borrower will at all times have outstanding
Loans or Letters of Credit in an aggregate principal or face amount of not less
than $100,000.
SECTION VII.2. Negative Covenants. The Borrower agrees with the Agent
and each Lender that from and after the Effective
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Date, until all Commitments have terminated, all Letters of Credit have expired
or been cash-collateralized and all Obligations have been paid and performed in
full, the Borrower will perform the obligations set forth in this Section 7.2.
SECTION VII.2.1. Business Activities. The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly engage in any
line of business activity other than a Related Business.
SECTION VII.2.2. Indebtedness. The Borrower will not, and will
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
or otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Loans and other Obligations;
(b) until the date of the initial Borrowing, Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule;
(c) Indebtedness existing as of the Effective Date which is
identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure
Schedule;
(d) a completion guaranty by the Borrower for the Vicksburg Joint
Venture; provided, however, in no event shall the Borrower's liability
thereunder exceed $20,000,000;
(e) unsecured Indebtedness incurred in the ordinary course of
business (including open accounts extended by suppliers on normal trade
terms in connection with purchases of goods and services, but excluding
Indebtedness incurred through the borrowing of money or Contingent
Liabilities) and in connection with any Expansion Capital Expenditures
otherwise permitted by Section 7.2.7;
(f) Indebtedness in respect of Capitalized Lease Liabilities to
the extent permitted in Section 7.2.7;
(g) the Existing Senior Notes and any refunding, replacement or
refinancing on terms (including without limitation interest rate and
maturity) no less favorable to
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the Borrower and the Lenders than such Existing Senior Notes;
(h) the Existing Subordinated Debt and any refunding, replacement
or refinancing on terms (including without limitation interest rate,
maturity and terms of subordination) no less favorable to the Borrower
and the Lenders;
(i) Subordinated Debt of the Borrower (other than the Existing
Subordinated Debt) on terms acceptable to the Agent in an aggregate
principal amount not to exceed $150,000,000 and any refunding,
replacement or refinancing on terms (including without limitation
interest rate, maturity and terms of subordination) no less favorable to
the Borrower and the Lenders;
(j) senior Indebtedness of the Borrower and its Subsidiaries in
an aggregate amount not to exceed $20,000,000, of which not more than
$10,000,000 may be secured Indebtedness to a vendor of any assets
permitted to be acquired pursuant to Section 7.2.7 to finance the
acquisition of such assets;
(k) Hedging Obligations entered into by the Borrower to hedge the
Borrower's exposure with respect to interest rate fluctuations, which
Hedging Obligations may, to the extent entered into with a Lender, at
such Lender's discretion, be ratably secured by the Collateral;
provided, in no event shall the notional principal amount of such
secured Hedging Obligations exceed $50,000,000 in the aggregate; and
(l) guaranty obligations in support of the obligations of a
wholly-owned Subsidiary, provided that such obligations are permitted by
this Agreement.
provided, however, that no incurrence of Indebtedness otherwise permitted by
clauses (f), (i), (j) or (k) shall be permitted if, after giving effect to the
incurrence thereof, any Default shall have occurred and be continuing.
SECTION VII.2.3. Liens. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its property, revenues or assets, whether now owned or
hereafter acquired, except:
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(a) Liens securing payment of the Obligations, granted pursuant
to any Loan Document;
(b) Liens securing payment of Indebtedness of the type permitted
and described in clause (c) of Section 7.2.2;
(c) Liens securing payment of Indebtedness of the type permitted
and described in clause (f) of Section 7.2.2.
(d) Junior Liens granted prior to the Effective Date to secure
payment of Indebtedness of the type permitted and described in clause
(g) of Section 7.2.2;
(e) Liens granted to secure payment of Indebtedness of the type
permitted and described in clause (j) of Section 7.2.2 and covering only
those assets acquired with the proceeds of such Indebtedness;
(f) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty
or being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been
set aside on its books;
(g) Liens described in, and securing indebtedness permitted by,
Section 7.2.2(k), which Liens shall be secured ratably with the
Obligations;
(h) inchoate Liens incident to construction on or maintenance of
property; or Liens incident to construction on or maintenance of
property now or hereafter filed of record for which adequate reserves
have been set aside (or deposits made pursuant to applicable law) and
which are being contested in good faith by appropriate proceedings and
have not proceeded to judgment; provided, however, to the extent such
Liens relate to a Pledged Casino, (a) the Title Company shall have
insured the Agent and Lenders against any loss therefrom or (b) such
Liens shall be junior to the Liens securing the Obligations;
(i) statutory Liens arising in the ordinary course of business
with respect to obligations which are not delinquent or are being
contested in good faith; provided that, if delinquent, adequate reserves
have been set aside with respect thereto and, by reason of nonpayment,
no
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property is subject to a material impending risk of loss or forfeiture;
(j) Liens consisting of pledges or deposits to secure obligations
under workers' compensation laws or similar legislation, including Liens
of judgments thereunder which are not currently dischargeable;
(k) Liens consisting of pledges or deposits of property to secure
performance in connection with operating leases made in the ordinary
course of business, provided the aggregate value of all such pledges and
deposits in connection with any such lease does not at any time exceed
20% of the annual fixed rentals payable under such lease;
(l) Liens consisting of any right of offset or statutory bankers'
lien, on bank deposit accounts maintained in the ordinary course of
business so long as such bank deposit accounts are not established or
maintained for the purpose of providing such right of offset or bankers'
lien;
(m) Liens consisting of deposits of property to secure statutory
obligations of Borrower;
(n) Liens consisting of deposits of property to secure (or in
lieu of) surety, appeal or customs bonds;
(o) Liens created by or resulting from any litigation or legal
proceeding in the ordinary course of business which is currently being
contested in good faith by appropriate proceedings, provided that,
adequate reserves have been set aside and no material property is
subject to a material impending risk of loss or forfeiture and provided
further that if such Liens relate to a Pledged Casino, (a) the Title
Company shall have insured the Agent and Lenders against any loss
therefrom or (b) such Liens shall be junior to the Liens securing the
Obligations; and
(p) other non-consensual Liens incurred in the ordinary course of
business but not in connection with the incurrence of any Indebtedness,
which do not in the aggregate, when taken together with all other Liens,
materially impair the fair market value or use of the property for the
purposes for which it is or may reasonably be expected to be held
provided that if such Liens relate to a Pledged Casino, (a) the Title
Company shall have insured
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the Agent and Lenders against any loss therefrom or (b) such Liens shall
be junior to the Liens securing the Obligations.
SECTION VII.2.4. Financial Condition. The Borrower will not
permit:
(a) Consolidated Net Worth to be less than the sum of (i) 90% of
Consolidated Net Worth as of September 30, 1997, plus (ii) 50% of the
Borrower's Consolidated Earnings After Permitted Tax Distributions
(without giving effect to any losses) for each Fiscal Quarter ending on
or after September 30, 1997, plus (iii) an amount equal to 75% of the
net proceeds from any sales and issuances of the Borrower's capital
stock, minus (iv) in the event an IPO is consummated, the amount of a
one-time dividend declared and paid within five days after consummation
of an IPO, in an amount not to exceed the net proceeds received by the
Borrower from such IPO and minus (v) without duplication, the amount of
dividends and distributions paid by the Borrower on or before June 30,
1998 pursuant to clause (a) of the definition of "Permitted Distribution
Amount".
(b) the Leverage Ratio for any period of four consecutive Fiscal
Quarters ending on a date set forth below, to be greater than the ratio
set forth below opposite such
date:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
December 31, 1997 and
March 31, 1998 4.00 to 1.0
June 30, 1998 3.75 to 1.0
September 30, 1998 3.50 to 1.0
December 31, 1998 and each Quarterly Payment 3.25 to 1.0; or
Date thereafter
</TABLE>
(c) the Fixed Charge Coverage Ratio at the end of any Fiscal
Quarter, for the period of four consecutive Fiscal Quarters ending on
such date, to be less than 1.5 to 1.0.
SECTION VII.2.5. Investments. Except with the approval of the
Majority Lenders, the Borrower will not, and will not permit any of its
Subsidiaries to, make, incur, assume or suffer to exist any Investment in any
other Person, except:
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(a) Investments existing on the Effective Date and identified in
Item 7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) Investments permitted as Indebtedness pursuant to Section
7.2.2;
(d) Investments permitted as Capital Expenditures pursuant to
Section 7.2.7;
(e) in the ordinary course of business, Investments by the
Borrower in any Guarantor or HE or by any Guarantor or HE in the
Borrower or another Guarantor or HE;
(f) the contribution by HE of the purchase price of the riverboat
known as the Queen of the Red, together with all furniture, fixtures and
equipment associated therewith, to the Vicksburg Joint Venture (or
another similar transaction); provided, however, that on or before such
contribution the Agent shall have received a first preferred ship
mortgage on the riverboat known as the King of the Red; and
(g) Investments in Persons other than Guarantors in an aggregate
amount at any one time which, when added to the aggregate amount of
dividends and distributions paid pursuant to Section 7.2.6(b)(b), does
not exceed the Permitted Distribution Amount;
provided, however, that no Investment otherwise permitted by clauses (d),(f) or
(g) shall be permitted to be made if, immediately before or after giving effect
thereto, any Specified Default shall have occurred and be continuing.
SECTION VII.2.6. Restricted Payments, etc. On and at all times
after the Effective Date:
(a) Prior to the occurrence of a Non-Tax Distribution Event (and
after such Non-Tax Distribution Event shall have been cured and no
longer be continuing), and without limiting the payments that may be
made to the Borrower or to any of its Subsidiaries by any of its
Subsidiaries, each of the Borrower and its Subsidiaries may make
Permitted Tax
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Distributions. From and after the occurrence of a Non-Tax Distribution
Event (and during the entire time such Non-Tax Distribution Event shall
be continuing and shall not have been cured), no Permitted Tax
Distributions shall be made until such Non-Tax Distribution Event shall
have been cured. In addition, if the Borrower or any of its Subsidiaries
was prohibited, as a result of the occurrence of a Non- Tax Distribution
Event, from making any distributions which would otherwise have been
Permitted Tax Distributions (referred to herein as "Delayed Permitted
Tax Distributions"), the Borrower shall be permitted to make such
Delayed Permitted Tax Distributions after such Non-Tax Distribution
Event shall have been cured;
(b) Except as permitted by clause (a) above, the Borrower will
not declare, pay or make any dividend or distribution (in cash, property
or obligations) on any Capital of the Borrower other than, so long as no
Specified Default shall have occurred and be continuing, (a)
distributions permitted by the provisos to the following sentence and
(b) dividends and distributions the aggregate amount of which, when
added to the amount of Investments outstanding at any one time pursuant
to Section 7.2.5(g), do not exceed the Permitted Distribution Amount.
The Borrower will not apply, or permit any of its Subsidiaries to apply,
any of its funds, property or assets to the purchase, redemption,
sinking fund or other retirement of, or agree or permit any of its
Subsidiaries to purchase or redeem, any Capital of the Borrower or
redeem any minority interests of any Subsidiary, provided, however that
so long as no Specified Default shall have occurred and be continuing or
would result therefrom, the Borrower or NGCP may redeem or repurchase
the minority limited partnership interests in HE so long as the
aggregate purchase price thereof does not exceed $10,000,000 and, in
addition to the foregoing, as long as no Specified Default has occurred
and is continuing or would result therefrom, the Borrower may redeem the
membership interests of officers or employees of the Borrower at the
time of their termination of employment in accordance with the
employment agreements with such Persons;
(c) the Borrower will not, and will not permit any of its
Subsidiaries to
(i) make any payment or prepayment of principal of, or
make any payment of interest on, any
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Subordinated Debt on any day other than the stated, scheduled
date for such payment or prepayment set forth in the documents
and instruments memorializing such Subordinated Debt, or which
would violate the subordination provisions of such Subordinated
Debt; or
(ii) redeem, purchase or defease, any Subordinated Debt;
(d) the Borrower's Subsidiaries will not declare, pay or make any
dividend or distribution (in cash, property or obligations) on any
shares of any class of capital stock (now or hereafter outstanding)
unless such dividends are paid to all shareholders of such Subsidiary on
a ratable basis;
(e) the Borrower will not redeem, repurchase or defease any of
its Existing Senior Notes if immediately before or after giving effect
thereto, any Default shall have occurred and be continuing and in no
event shall the Borrower redeem, repurchase or defease Existing Senior
Notes having an aggregate principal balance in excess of the sum of (i)
$50,000,000 plus (ii) the amount of any increase in the Commitment
pursuant to Section 2.8; provided, however, that the Borrower may at any
time refinance, on terms acceptable to the Agent, any portion of the
Existing Senior Notes with proceeds from an issuance of Subordinated
Debt; and
(f) the Borrower will not, and will not permit any Subsidiary to,
make any deposit for any of the foregoing purposes.
SECTION VII.2.7. Capital Expenditures. Except as otherwise
approved by the Majority Lenders, the Borrower will not, and will not permit and
of its Subsidiaries to, make or commit to make any Capital Expenditure other
than:
(a) Expansion Capital Expenditures in respect of the current
expansion of the Bossier Casino in an aggregate amount not to exceed
$210,000,000;
(b) Expansion Capital Expenditure in respect of the current
expansion of the Tunica Casino in an aggregate amount not to exceed
$110,000,000;
(c) After the Borrower shall have received an
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additional gaming license for the Bossier Casino, Expansion Capital
Expenditures in an aggregate amount not to exceed $65,000,000 in
respect of such property;
(d) other Expansion Capital Expenditures and/or acquisitions
described in Section 7.2.9 so long as the aggregate amount thereof does
not exceed $80,000,000 during the term of this Agreement and no single
acquisition or development project exceeds $50,000,000; and
(e) Maintenance Capital Expenditures in any Fiscal Year
(including the 1997 Fiscal Year) in an amount not to exceed $15,000,000.
SECTION VII.2.8. Rental Obligations. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into at any time any
arrangement which does not create a Capitalized Lease Liability and which
involves the leasing by the Borrower or any of its Subsidiaries from any lessor
of any real or personal property (or any interest therein), except arrangements
which, together with all other such arrangements which shall then be in effect,
will not require the payment of an aggregate amount of rentals by the Borrower
and its Subsidiaries in excess of (excluding escalations resulting from a rise
in the consumer price or similar index) $2,500,000 for any Fiscal Year;
provided, however, that any calculation made for purposes of this Section shall
exclude any amounts required to be expended for maintenance and repairs,
insurance, taxes, assessments, and other similar charges.
SECTION VII.2.9. Consolidation, Merger, etc. The Borrower will
not, and will not permit any of its Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) except
(a) any such Subsidiary may liquidate or dissolve voluntarily
into, and may merge with and into, the Borrower or any other Subsidiary,
and the assets or stock of any Subsidiary may be purchased or otherwise
acquired by the Borrower or any other Subsidiary; and
(b) so long as no Specified Default has occurred and is
continuing or would occur after giving effect thereto, the Borrower or
any of its Subsidiaries may purchase all or substantially all of the
assets of any Person, or acquire
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such Person by merger, if permitted (without duplication) by Section
7.2.7 to be made as a Capital Expenditure.
SECTION VII.2.10. Asset Dispositions, etc. Except for the
Permitted Dispositions, the Borrower will not, and will not permit any of its
Subsidiaries to, sell or dispose of any of the Collateral without the prior
written consent of all Lenders unless such sale or disposition is in the
ordinary course of business. The Borrower will not, and will not permit any of
its Subsidiaries to, sell, transfer, lease, contribute or otherwise convey, or
grant options, warrants or other rights with respect to, all or any substantial
part of its assets (including accounts receivable and capital stock of
Subsidiaries) to any Person, unless such sale, transfer, lease, contribution or
conveyance is in the ordinary course of its business or is permitted by Section
7.2.9.
SECTION VII.2.11. Modification of Certain Agreements. The
Borrower will not consent to any amendment, supplement or other modification of
any of the terms or provisions contained in, or applicable to, the Senior Note
Indenture, the Existing Senior Notes and the collateral documents securing such
notes, the Subordinated Note Indenture, or any document or instrument evidencing
or applicable to any other Subordinated Debt, other than (a) any amendment,
supplement or other modification to any of the foregoing agreements which
extends the date or reduces the amount of any required repayment or redemption,
(b) amendments to the Senior Note Indenture executed by the trustee thereunder
pursuant to Section 9.1 thereof and (c) amendments to the Subordinated Note
Indenture executed by the trustee thereunder pursuant to Section 9.1 thereof.
SECTION VII.2.12. Transactions with Affiliates. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into, or cause,
suffer or permit to exist any arrangement or contract with any of its other
Affiliates unless such arrangement or contract is fair and equitable to the
Borrower or such Subsidiary and is an arrangement or contract of the kind which
would be entered into by a prudent Person in the position of the Borrower or
such Subsidiary with a Person which is not one of its Affiliates.
SECTION VII.2.13. Negative Pledges, Restrictive Agreements, etc.
The Borrower will not, and will not permit any of its Subsidiaries to, enter
into any agreement (excluding this Agreement, any other Loan Document and the
Senior Note Indenture)
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prohibiting
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or the
ability of the Borrower or any other Obligor to amend or otherwise
modify this Agreement or any other Loan Document; or
(b) except in the case of HE so long as its minority ownership
interests shall be outstanding, the ability of any Subsidiary to make
any payments, directly or indirectly, to the Borrower by way of
dividends, advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and accruals or
other returns on investments, or any other agreement or arrangement
which restricts the ability of any such Subsidiary to make any payment,
directly or indirectly, to the Borrower.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION VIII.1. Listing of Events of Default. Each of the
following events or occurrences described in this Section 8.1 shall constitute
an "Event of Default".
SECTION VIII.1.1. Non-Payment of Obligations. The Borrower shall
default in the payment or prepayment when due of any principal of any Loan, or
the Borrower shall default (and such default shall continue unremedied for a
period of three Business Days) in the payment when due of any interest on any
Loan, any Commitment Fee or of any other payment Obligation owing hereunder.
SECTION VIII.1.2. Breach of Warranty. Any representation or
warranty of the Borrower or any other Obligor made or deemed to be made
hereunder or in any other Loan Document or any other writing or certificate
furnished by or on behalf of the Borrower or any other Obligor to the Agent or
any Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article V)
is or shall be incorrect when made in any material respect unless such default
shall have resulted solely from a representation or warranty being incorrect as
a result of the existence of a Default under Section 8.1.4.
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SECTION VIII.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower shall default in the due performance and observance of
any of its obligations under Section 7.2 and such default shall continue
unremedied for a period of five Business Days after the earlier of (a) notice
thereof shall have been given to the Borrower by the Agent or any Lender or (b)
the Borrower shall have knowledge of such default.
SECTION VIII.1.4. Non-Performance of Other Covenants and
Obligations. The Borrower shall default in the due performance and observance of
any other agreement contained herein or in any other Loan Document, and such
default shall continue unremedied for a period of 30 days after notice thereof
shall have been given to the Borrower by the Agent or any Lender.
SECTION VIII.1.5. Default on Other Indebtedness. A default shall
occur in the payment when due (subject to any applicable grace period), whether
by acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of $10,000,000, or
a default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default is to
accelerate the maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit the holder or
holders of such Indebtedness, or any trustee or agent for such holders, to cause
such Indebtedness to become due and payable prior to its expressed maturity.
SECTION VIII.1.6. Judgments. Any judgment or order for the
payment of money in excess of $10,000,000 shall be rendered against the Borrower
or any of its Subsidiaries and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 20 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION VIII.1.7. Pension Plans. Any of the following events
shall occur with respect to any Pension Plan
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(a) the institution of any steps by the Borrower, any member of
its Controlled Group or any other Person to terminate a Pension Plan if,
as a result of such termination, the Borrower or any such member could
be required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension
Plan, in excess of $10,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION VIII.1.8. Bankruptcy, Insolvency, etc. The Borrower or
any of its Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or
any of its Subsidiaries or any other Obligor or any property of any
thereof, or make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its
Subsidiaries or for a substantial part of the property of any thereof,
and such trustee, receiver, sequestrator or other custodian shall not be
discharged within 60 days, provided that the Borrower, each Subsidiary
and each other Obligor hereby expressly authorizes the Agent and each
Lender to appear in any court conducting any relevant proceeding during
such 60-day period to preserve, protect and defend their rights under
the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of the Borrower or any of its
Subsidiaries, and, if any such case or proceeding is not commenced by
the Borrower or such Subsidiary, such case or proceeding shall be
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consented to or acquiesced in by the Borrower or such Subsidiary or
shall result in the entry of an order for relief or shall remain for 60
days undismissed, provided that the Borrower and each Subsidiary hereby
expressly authorizes the Agent and each Lender to appear in any court
conducting any such case or proceeding during such 60-day period to
preserve, protect and defend their rights under the Loan Documents; or
(e) take any corporate action authorizing, or in furtherance of,
any of the foregoing.
SECTION VIII.1.9. Impairment of Security, etc. Any Loan Document,
or any Lien granted thereunder, shall (except in accordance with its terms), in
whole or in part, in any material respect, terminate, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of any Obligor
party thereto; the Borrower, any other Obligor or any other party shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; or any Lien securing any Obligation shall, in
whole or in part, cease to be a perfected first priority Lien, subject only to
those exceptions permitted by the Loan Documents.
SECTION VIII.1.10. Gaming License. Once licensed by a Gaming
Board, the Borrower or a Guarantor shall fail to possess a valid gaming license
for each Casino owned by it or such license shall be suspended for a period of
fifteen days or longer.
SECTION VIII.1.11. Government Approvals. Any Obligor under any of
the Loan Documents shall fail to obtain, renew, maintain or comply with any such
governmental approvals as shall be necessary (1) for the execution, delivery or
performance by such Obligors of their respective obligations, or the exercise of
their respective rights, under the Loan Documents, or (2) for the grant of the
Liens created under the Collateral Documents or for the validity and
enforceability or the perfection of or exercise by the Agent of its rights and
remedies under the Collateral Documents; or any such governmental approval shall
be revoked, terminated, withdrawn, suspended, modified or withheld or shall
cease to be effective; or any proceeding shall be commenced by or before any
governmental person for the purpose of revoking, terminating, withdrawing,
suspending, modifying or withholding any such governmental approval and such
proceeding is not dismissed within 60 days; and in each case such failure,
revocation, termination, withdrawal, suspension, modification,
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cessation or commencement is reasonably likely to materially adversely affect
(i) the rights or the interests of the Lenders under the Loan Documents or (ii)
the ability of any Obligor to perform its obligations under the Loan Documents.
SECTION VIII.1.12. Liens on Shares of Significant Subsidiaries.
Any Lien, other than (a) a Lien in favor of the Agent on behalf of the Lenders
or (b) a subordinate Lien in favor of the trustee for the Existing Senior Notes,
shall be placed on any capital stock of any Subsidiary of the Borrower.
SECTION VIII.2. Action if Bankruptcy. If any Event of Default
described in clauses (a) through (d) of Section 8.1.8 shall occur with respect
to the Borrower or any Significant Subsidiary or any other Obligor, the
Commitments (if not theretofore terminated) shall automatically terminate and
the outstanding principal amount of all outstanding Loans and all other
Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION VIII.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through (d) of
Section 8.1.8 with respect to the Borrower or any Significant Subsidiary or any
other Obligor) shall occur for any reason, whether voluntary or involuntary, and
be continuing, the Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare all or any portion of the outstanding principal
amount of the Loans and other Obligations to be due and payable and/or the
Commitments (if not theretofore terminated) to be terminated, whereupon the full
unpaid amount of such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable and/or (ii) except
as otherwise provided in the immediately following sentence, the Commitments
(including, without limitation, the commitment of the Lenders to issue any
additional Letters of Credit) to be terminated, without further notice, demand
or presentment. Notwithstanding any termination of the Revolving Loan Commitment
prior to the Stated Maturity Date, Revolving Loans may thereafter be made to
reimburse the L/C Issuer for any drafts paid on or before the Stated Maturity
Date under any Letter of Credit outstanding on the date of such termination.
ARTICLE IX
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THE AGENT
SECTION IX.1. Actions. Each Lender hereby appoints the Agent as its
agent under and for purposes of this Agreement, the Notes and each other Loan
Document. Each Lender authorizes the Agent to act on behalf of such Lender under
this Agreement, the Notes and each other Loan Document and, in the absence of
other written instructions from the Required Lenders received from time to time
by the Agent (with respect to which the Agent agrees that it will comply, except
as otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) the Agent and
the Arranger, pro rata according to such Lender's Revolving Percentage, from and
against any and all liabilities, obligations, losses, damages, claims, costs or
expenses of any kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against, the Agent or the Arranger in any way relating
to or arising out of this Agreement, the Notes and any other Loan Document,
including reasonable attorneys' fees, and as to which the Agent or the Arranger
is not reimbursed by the Borrower; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted from the Agent's or the
Arranger's gross negligence or wilful misconduct. The Agent shall not be
required to take any action hereunder, under the Notes or under any other Loan
Document, or to prosecute or defend any suit in respect of this Agreement, the
Notes or any other Loan Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be or become, in the
Agent's determination, inadequate, the Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION IX.2. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New
York time, on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Revolving Percentage of such
Borrowing on the date specified therefor, the Agent may assume that such Lender
has made such amount available to the Agent and, in
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reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Agent, such Lender and the Borrower severally agree to repay
the Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date the Agent made such amount available to the
Borrower to the date such amount is repaid to the Agent, at the interest rate
applicable at the time to Loans comprising such Borrowing.
SECTION IX.3. Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under any other Loan Document. Any
such inquiry which may be made by the Agent shall not obligate it to make any
further inquiry or to take any action. The Agent shall be entitled to rely upon
advice of counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which the Agent believes to be genuine and to
have been presented by a proper Person.
SECTION IX.4. Successor. The Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrower and all Lenders. If the Agent at
any time shall resign, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be one of the Lenders or a commercial
banking institution organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall
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be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as the Agent, the provisions of
(a) this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this
Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it
was the Agent under this Agreement.
SECTION IX.5. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Revolving
Loan Commitment. Each Lender also acknowledges that it will, independently of
the Agent and each other Lender, and based on such other documents, information
and investigations as it shall deem appropriate at any time, continue to make
its own credit decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Agreement or any other Loan
Document.
SECTION IX.6. Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the Agent
by the Borrower pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and copies of all
other communications received by the Agent from the Borrower for distribution to
the Lenders by the Agent in accordance with the terms of this Agreement.
SECTION IX.7. Co-Agents. Neither Hibernia National Bank nor Wells Fargo,
Bank National Association, in their capacity as "co-agents" shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without limiting the
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foregoing, none of the Lenders so identified as a "co- agent" shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION X.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders (except where the applicable provision
of this Agreement or such other Loan Document specifies that a determination is
to be governed by all Lenders or the Majority Lenders); provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 10.1, change the definitions of "Majority
Lenders" or "Required Lenders", increase the Revolving Loan Commitment
Amount (except as otherwise provided in Section 2.8) or the Revolving
Percentage of any Lender, reduce any fees described in Article III,
release any collateral security, release or amend the RPG Guarantee and
Security Agreement, except as otherwise specifically provided in any
Loan Document or extend the Commitment Termination Date shall be made
without the consent of each Lender;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any Loan)
shall be made without the consent of the holder of that Note evidencing
such Loan;
(d) affect adversely the interests, rights or obligations of the
Agent qua the Agent shall be made without
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consent of the Agent;
(e) modify Section 3.1.2 shall be made without the consent of the
Swingline Lender; or
(f) modify Sections 2.7, 3.4 or 3.5 shall be made without the
consent of the L/C Issuer.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION X.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid or if properly addressed and sent by pre-paid courier service, shall be
deemed given when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted.
SECTION X.3. Payment of Costs and Expenses. The Borrower agrees to pay
on demand all expenses of the Agent (including the fees and out-of-pocket
expenses of counsel to the Agent and of local counsel, if any, who may be
retained by counsel to the Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time
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to time hereafter be required, whether or not the transactions
contemplated hereby are consummated,
(b) the filing, recording, refiling or rerecording of the
Collateral Documents and/or any Uniform Commercial Code financing
statements relating thereto and all amendments, supplements and
modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or of the Collateral Documents
and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp or other Taxes which may be payable
in connection with the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Notes or any other Loan Documents. The
Borrower also agrees to reimburse the Agent and each Lender upon demand for all
reasonable out-of-pocket expenses (including attorneys' fees and legal expenses)
incurred by the Agent or such Lender in connection with (x) the negotiation of
any restructuring or "work-out", whether or not consummated, of any Obligations
and (y) the enforcement of any Obligations.
SECTION X.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent, the Arranger
and each Lender and each of their respective officers, directors, employees and
agents (collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs, liabilities
and damages, and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or Letter of
Credit;
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(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article V not to fund
any Borrowing);
(c) any investigation, litigation or proceeding related to the
Borrower or any Affiliate of the Borrower by any Gaming Board or other
governmental authority;
(d) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Agent or such Lender is party thereto;
(e) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by the Borrower or any of
its Subsidiaries of any Hazardous Material; or
(f) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. If any claim,
demand, action or cause of action is asserted against any Indemnified Party,
such Indemnified Party shall promptly notify the Borrower, but the failure to so
promptly notify the Borrower shall not affect the Borrower's obligations under
this Section unless such failure materially prejudices the Borrower's right to
participate in the contest of such claim, demand, action or cause of action, as
hereinafter
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provided. Such Indemnified Party may (and shall, if requested by the Borrower in
writing), contest the validity, applicability and amount of such claim, demand,
action or cause of action and shall permit the Borrower to participate in such
contest. In connection with any claim, demand, action or cause of action covered
by this Section 10.4 against more than one Indemnified Party, all such
Indemnified Parties shall be represented by the same legal counsel (which may be
a law firm engaged by the Indemnified Parties or attorneys employed by an
Indemnified Party or a combination of the foregoing) selected by the Indemnified
Parties and reasonably acceptable to the Borrower; provided, that if such legal
counsel determines in good faith that representing all such Indemnified Parties
would or could result in a conflict of interest under laws or ethical principles
applicable to such legal counsel or that a defense or counterclaim is available
to an Indemnified Party that is not available to all such Indemnified Parties,
then to the extent reasonably necessary to avoid such a conflict of interest or
to permit unqualified assertion of such a defense or counterclaim, each
Indemnified Party shall be entitled to separate representation by legal counsel
selected by that Indemnified Party and reasonably acceptable to the Borrower,
with all such legal counsel using reasonable efforts to avoid unnecessary
duplication of effort by counsel for all Indemnified Parties.
SECTION X.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
Section 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION X.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION X.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or
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interpretation of this Agreement or such other Loan Document or any provisions
hereof or thereof.
SECTION X.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Borrower and the Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to the Borrower and each Lender.
SECTION X.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT THAT THE
PROVISIONS FOR THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS CREATED
PURSUANT TO THE (A) HE MORTGAGES AND THE DEED OF TRUST SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE APPLICABLE REAL
PROPERTY IS LOCATED AND (B) FIRST PREFERRED SHIP MORTGAGES SHALL BE GOVERNED BY
AND CONSTRUED ACCORDING TO FEDERAL LAW. This Agreement, the Notes and the other
Loan Documents constitute the entire understanding among the parties hereto with
respect to the subject matter hereof and supersede any prior agreements, written
or oral, with respect thereto.
SECTION X.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the Agent and
all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 10.11.
SECTION X.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
and Revolving Loan Commitments
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to one or more other Persons in accordance with this Section 10.11.
SECTION X.11.1. Assignments. Any Lender,
(a) with the written consent of the Agent and, so long as no
Event of Default shall be continuing, the Borrower (which consent shall
not be unreasonably delayed or withheld) may at any time assign and
delegate to an Eligible Assignee, and
(b) with notice to the Borrower and the Agent, and with the
consent of the Agent (which consent shall not be unreasonably delayed or
withheld) but without the consent of the Borrower, may assign and
delegate to any of its Affiliates and with notice to the Borrower and
the Agent, may assign and delegate to any other existing Lender (each
Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such
Lender's Revolving Loans (and such fraction of any outstanding Letters
of Credit) and the corresponding Revolving Loan Commitments therefor
(which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Revolving Loans (and
such fraction of any outstanding Letters of Credit) and the
corresponding Revolving Loan Commitments therefor) in a minimum
aggregate amount of $5,000,000 or, if less, the entire amount of such
Lender's total Revolving Loan Commitments; provided, if the Borrower
objects to such proposed assignment, the Borrower shall state in
reasonable detail the reasons why the Borrower proposes to withhold such
consent; and provided, further that any such Assignee Lender will
comply, if applicable, with the provisions contained in the final
paragraph of Section 4.6 and further provided, however, that, the
Borrower and the Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests proposed to
be so assigned and delegated to an Assignee Lender until
(i) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower
and the Agent by such Lender and such Assignee Lender,
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(ii) such Assignee Lender shall have executed and delivered to
the Borrower and the Agent a Lender Assignment Agreement, accepted by
the Agent and the Borrower, and
(iii) the processing fees described below shall have been paid.
From and after the date that the Agent and the Borrower accept such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of an executed,
acknowledged and effective Lender Assignment Agreement, the Borrower shall
execute and deliver to the Agent's counsel (for delivery to the relevant
Assignee Lender as hereinafter provided) new Notes evidencing such Assignee
Lender's assigned Loans and Revolving Loan Commitments and, if the assignor
Lender has retained Loans and Revolving Loan Commitments hereunder, replacement
Notes in the principal amount of the Loans and Revolving Loan Commitments
retained by the assignor Lender hereunder (such Notes to be in exchange for, but
not in payment of, those Notes then held by such assignor Lender). Each such
Note shall be dated the date of the predecessor Notes. The assignor Lender shall
mark the predecessor Notes "exchanged" and deliver them to the Agent's counsel,
who shall deliver the new Notes to the Assignee Lender and return the
predecessor Notes to the Borrower. Accrued interest on that part of the
predecessor Notes evidenced by the new Notes, and accrued fees, shall be paid as
provided in the Lender Assignment Agreement. Accrued interest on that part of
the predecessor Notes evidenced by the replacement Notes shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Agent (for the sole account of the Agent) upon delivery of any Lender Assignment
Agreement in the amount of $3,000 except in the case of an assignment by a
Lender to one of its Affiliates. Any Lender may at any time pledge its Note or
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any other instrument evidencing its rights as a Lender under this Agreement to a
Federal Reserve Bank, but no such pledge shall release that Lender from its
obligations hereunder or grant to such Federal Reserve Bank the rights of a
Lender hereunder absent foreclosure of such pledge. Notwithstanding anything in
this Section 10.11.1 to the contrary, the rights of the Lenders to make
assignments of their Revolving Loans and corresponding Revolving Loan
Commitments therefor shall be subject to the approval of any Gaming Board, to
the extent required by applicable Gaming Laws.
SECTION X.11.2. Participations. Any Lender may at any time sell
to one or more commercial banks or other Persons (each of such commercial banks
and other Persons being herein called a "Participant") participating interests
in any of the Loans, Revolving Loan Commitments, or other interests of such
Lender hereunder; provided, however, that
(a) no participation contemplated in this Section 10.11.2 shall
relieve such Lender from its Revolving Loan Commitments or its other
obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Revolving Loan Commitments and such other
obligations,
(c) the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents,
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c) of
Section 10.1,
(e) no Participant shall be entitled to payment of any amount
under Article IV that would not have been required to be paid to such
Lender had no participation occurred, and
(f) notwithstanding anything in this Section 10.11.2 to the
contrary, the rights of the Lenders to grant
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participations in any of the Loans, Revolving Loan Commitments, or other
interests of any Lender hereunder shall be subject to the approval of
any Gaming Board, to the extent required by applicable Gaming Laws.
The Borrower acknowledge and agree that, subject to the provisions of clause (e)
above, each Participant, for purposes of Sections 4.3, 4.4, 4.5, 4.8, 4.9 and
4.11, shall be considered a Lender.
SECTION X.12. Other Transactions. Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION X.13. Removal of a Lender. The Borrower shall have the right to
remove a Lender as a party to this Agreement in accordance with this Section if
such Lender is the subject of a Lender Disqualification. If the Borrower is so
entitled to remove a Lender pursuant to this Section either:
(x) Upon notice from the Borrower, the Lender being removed shall
execute and deliver a Lender Assignment Agreement covering that Lender's
Revolving Loan Commitment in favor of one or more Eligible Assignees
designated by the Borrower (and acceptable to the Agent, which
acceptance shall not be unreasonably delayed or withheld), subject to
(i) payment of a purchase price by such Eligible Assignee equal to all
principal and accrued interest, fees and other amounts payable to such
Lender under this Agreement subject to applicable Gaming Law through the
date of assignment and (ii) the written release of the L/C Issuer and
the Swing Line Lender of such Lender's obligations under Sections 3.1.2
and 3.5 or delivery by such Eligible Assignee of such appropriate
assurances and indemnities (which may include letters of credit) as such
Lender may reasonably require with respect to its participation interest
in any Letters of Credit then outstanding or any Outstanding Swing
Loans; or
(y) The Borrower may reduce the Revolving Loan Commitment Amount
pursuant to Section 2.2 (and, for this purpose, the numerical
requirements of such Section shall not apply) by an amount equal to that
Lender's Revolving Loan Commitment, pay and provide to such Lender the
amounts,
-107-
<PAGE> 114
assurances and indemnities described in subclauses (i) and (ii) of
clause (x) above and release such Lender from its Revolving Loan
Commitment, subject in all cases to applicable Gaming Law.
SECTION X.14. Nonrecourse. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, the Lenders agree that
the constituent shareholders, members, directors, officers, managers and
employees of the Borrower or the Guarantors (the "Nonrecourse Parties") shall
not be personally liable for the payment of the Obligations, except as set forth
in this Section 10.14. If an Event of Default should occur hereunder or under
the other Loan Documents, each Lender agrees that its rights, as to the
Nonrecourse Parties, shall be limited to proceeding against the Borrower and the
security for the Obligations, against any Guarantor (including, without
limitation, any Nonrecourse Party that is a Guarantor) or against any party
other than the Nonrecourse Parties and that it shall have no right to proceed
directly against the Nonrecourse Parties for the satisfaction of any Obligations
owed to Lenders hereunder or under the other Loan Documents. It is expressly
understood and agreed that nothing contained in this Section 10.14 shall in any
manner or way constitute or be deemed a release of the Borrower, any Guarantor
or the debt evidenced by the Notes or otherwise affect or impair the
enforceability against the Borrower or any Guarantor of the Liens of the Loan
Documents securing the Obligations or any other instrument or agreement
evidencing, securing or related to the Obligations. Nothing in this Section
10.14 shall: (a) preclude the Agent or any Lender from enforcing any of its
rights or remedies in law or in equity against the Borrower or its assets
(including, without limitation, any or all of the Collateral) except as stated
in this Section 10.14; (b) impair, in any manner, any right, remedy or recourse
the Agent or any Lender may have against the Borrower or against any Guarantor
(including, without limitation, any Nonrecourse Party that is a Guarantor); or
(c) impair, in any manner, any right, remedy or recourse the Agent or any Lender
may have against the Nonrecourse Parties for fraud or for fraudulent
misapplication of insurance proceeds or condemnation awards.
SECTION X.15. Waiver of Jury Trial. EACH OF THE AGENT, THE LENDERS AND
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER
-108-
<PAGE> 115
LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER. THE
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
SECTION X.16. Amendment and Restatement. This Agreement amends and
restates the Note Purchase Agreement, and all loans and commitments outstanding
under the Note Purchase Agreement shall be deemed Loans and Commitments
outstanding under this Agreement.
-109-
<PAGE> 116
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
HORSESHOE GAMING, L.L.C.
By Horseshoe Gaming, Inc.,
Its Sole Manager
By:
-------------------------------------
Name: Walter J. Haybert
Title: Chief Financial Officer
Address: 568 Colonial Road
Memphis, Tennessee 38117
Facsimile No.: (901) 820-2461
Attention: Chief Financial Officer
-110-
<PAGE> 117
CIBC OPPENHEIMER CORP.,
as Arranger
By:
-------------------------------------
Title: Managing Director
Address: 350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Facsimile No.: (213) 346-0157
Attention: Mr. Paul Chakmak
-111-
<PAGE> 118
CANADIAN IMPERIAL BANK OF COMMERCE,
AS AGENT AND L/C ISSUER
By:
-------------------------------------
Title:
Address: 425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 856-3799
Attention: Agency Services Department
-112-
<PAGE> 119
LENDERS
CIBC INC., as Lender
By:
-------------------------------------
Title:
CIBC Oppenheimer Corp., AS
AGENT
Notice Address:
425 Lexington Avenue
New York, New York 10071
Facsimile No.: (212) 856-3991
Attention: Ms. Cheryl Root
with a copy to:
350 South Grand Avenue
Suite 2600
Los Angeles, CA 90071
Facsimile No.: (213) 346-0157
Attention: Mr. Paul Chakmak
Domestic
Office: Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Facsimile No.: (770) 319-4817
-113-
<PAGE> 120
Attention: Ms. Kelli Jones
-114-
<PAGE> 121
HIBERNIA NATIONAL BANK,
as Co-Agent and Lender
By:
-------------------------------------
Title:
Notice Address:
333 Travis Street, 3rd Floor
Shreveport, Louisiana 71101
Facsimile No.: (318) 674-3758
Attention: James F. Waugh
Domestic Office:
333 Travis Street, 3rd Floor
Shreveport, Louisiana 71101
Facsimile No.: (318) 674-3758
Attention: James F. Waugh
LIBOR Office:
333 Travis Street, 3rd Floor
Shreveport, Louisiana 71101
Facsimile No.: (318) 674-3758
Attention: James F. Waugh
-115-
<PAGE> 122
WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Co-Agent
and Lender
By
---------------------------------------------------------------------------
Kathleen Stone
Title: Vice President
Notice Address:
3800 Howard Hughes Parkway
Las Vegas, Nevada 89109
Attention: Kathleen Stone
Gaming Industry Division
Facsimile No.: (702) 791-6248
Domestic Office:
Loan Center Accounting
201 Third Street
8th Floor
San Francisco, CA 94163
Attention: Oscar Enriquez
LIBOR Office:
Loan Center Accounting
201 Third Street
8th Floor
San Francisco, CA 94163
Attention: Oscar Enriquez
-116-
<PAGE> 123
BANK OF SCOTLAND, as Lender
By:
-------------------------------------
Title:
Notice Address:
660 South Figueroa Street
Suite 1760
Los Angeles, California 90017
Facsimile No.: (213) 489-3594
Domestic Office:
660 South Figueroa Street
Suite 1760
Los Angeles, California 90017
Facsimile No.: (213) 489-3594
LIBOR Office:
565 5th Avenue
New York, New York 10017
Facsimile No.: (212) 557-9460
-117-
<PAGE> 124
FIRST NATIONAL BANK OF COMMERCE,
as Lender
By:
------------------------------------
Title:
Notice Address:
201 St. Charles Avenue, 28th Floor
New Orleans, Louisiana 70170
Facsimile No.: (504) 623-1738
Attention: Louis Ballero
Domestic Office:
201 St. Charles Avenue, 28th Floor
New Orleans, Louisiana 70170
Facsimile No.: (504) 623-1738
Attention: Louis Ballero
LIBOR Office:
201 St. Charles Avenue, 28th Floor
New Orleans, Louisiana 70170
Facsimile No.: (504) 623-1738
Attention: Louis Ballero
-118-
<PAGE> 125
IMPERIAL BANK, as Lender
By:
------------------------------------
Title:
Notice Address:
9920 South La Cienega Boulevard
14th Floor
Inglewood, California 90301
Facsimile No.: (310) 417-5997
Attention: Steven K. Johnson
Senior Vice President
Domestic Office:
9920 South La Cienega Boulevard
14th Floor
Inglewood, California 90301
Facsimile No.: (310) 417-5997
Attention: Steven K. Johnson
Senior Vice President
LIBOR Office:
9920 South La Cienega Boulevard
14th Floor
Inglewood, California 90301
Facsimile No.: (310) 417-5997
Attention: Steven K. Johnson
Senior Vice President
-119-
<PAGE> 126
U.S. BANK NATIONAL ASSOCIATION,
as Lender
By:
------------------------------------
Title:
Notice Address:
2300 West Sahara, Suite 120
Las Vegas, Nevada 89102
Facsimile No.: (702) 386-3916
Attention: David Walquist
Domestic Office:
2300 West Sahara, Suite 120
Las Vegas, Nevada 89102
Facsimile No.: (702) 386-3916
Attention: David Walquist
LIBOR Office:
2300 West Sahara, Suite 120
Las Vegas, Nevada 89102
Facsimile No.: (702) 386-3916
Attention: David Walquist
-120-
<PAGE> 127
DEPOSIT GUARANTY NATIONAL BANK,
as Lender
By:
------------------------------------
Title:
Notice Address:
210 East Capitol Street
P.O. Box 1200
Jackson, Mississippi 39215-1200
Facsimile No.: (601) 354-8315
Attention: Larry C. Ratzlaff
Senior Vice President
Domestic Office:
210 East Capitol Street
P.O. Box 1200
Jackson, Mississippi 39215-1200
Facsimile No.: (601) 354-8315
Attention: Larry C. Ratzlaff
Senior Vice President
LIBOR Office:
210 East Capitol Street
P.O. Box 1200
Jackson, Mississippi 39215-1200
Facsimile No.: (601) 354-8315
Attention: Larry C. Ratzlaff
Senior Vice President
-121-
<PAGE> 128
FIRST SECURITY BANK, N.A., as Lender
By:
-------------------------------
Title:
Notice Address:
Corporate Banking Division
2nd Floor
P.O. Box 30004 (84130)
15 East 100 South
Salt Lake City, Utah 84111
Facsimile No.: (801) 246-5532
Attention: David P. Williams
Domestic Office:
Corporate Banking Division
2nd Floor
P.O. Box 30004 (84130)
15 East 100 South
Salt Lake City, Utah 84111
Facsimile No.: (801) 246-5532
Attention: David P. Williams
-122-
<PAGE> 129
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
as Lender
By:
-------------------------------
Title:
Notice Address:
801 South Figueroa Street
Suite 500
Los Angeles, California 90017
Facsimile No.: (213) 687-4631
Attention: Dean Kawai
Vice President
Domestic Office:
801 South Figueroa Street
Suite 500
Los Angeles, California 90017
Facsimile No.: (213) 687-4631
Attention: Dean Kawai
Vice President
-123-
<PAGE> 130
SOCIETE GENERALE, as Lender
By:
-------------------------------
Title:
Notice Address:
2029 Century Park East, #2900
Los Angeles, California 90067
Facsimile No.: (310) 551-1537
Attention: Donald Schubert
Vice President
Domestic Office/LIBOR Office:
2029 Century Park East, #2900
Los Angeles, California 90067
Facsimile No.: (310) 203-0539
Attention: Doris Yun/Tulinh Wu
-124-
<PAGE> 1
EXHIBIT 4.51
REVOLVING NOTE
$_____________________ November 12, 1997
FOR VALUE RECEIVED, the undersigned, HORSESHOE GAMING, L.L.C., a
Delaware limited liability company (the "Borrower"), promises to pay to the
order of ______________ (the "Lender") on June 15, 2000 the principal sum of
________ DOLLARS ($___ ) or, if less, the aggregate unpaid principal amount of
all Loans shown on the schedule attached hereto (and any continuation thereof)
made by the Lender pursuant to that certain Amended and Restated Credit Facility
Agreement, dated as of November 12, 1997 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among the Borrower, CANADIAN IMPERIAL BANK OF COMMERCE, as Agent,
and the various financial institutions (including the Lender) as are, or may
from time to time become, parties thereto.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Agent pursuant to the Credit Agreement.
This Note is a Note referred to in, and evidences Indebtedness incurred
under, the Credit Agreement, to which reference is made for a description of the
security for this Note and for a statement of the terms and conditions on which
the Borrower is permitted and required to make prepayments and repayments of
principal of the Indebtedness evidenced by this Note and on which such
Indebtedness may be declared to be immediately due and payable. Unless otherwise
defined, terms used herein have the meanings provided in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
<PAGE> 2
THIS NOTE HAS BEEN DELIVERED IN __________, __________ AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
HORSESHOE GAMING, L.L.C.
By Horseshoe Gaming, Inc.,
Its Sole Manager
By:____________________________________
Title:
-2-
<PAGE> 3
LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
==============================================================================================================
Date Amount of Loan Made Interest Amount of Principal Unpaid Principal Total Notation
Period (if Repaid Balance Made By
applicable)
---------------------- --------------------------------------------
Base Eurodollar Base Eurodollar Base Eurodollar
Rate Rate Rate Rate Rate Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
=================================================================================================
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 1
EXHIBIT 4.52
SWINGLINE NOTE
$5,000,000 November 12, 1997
FOR VALUE RECEIVED, the undersigned, HORSESHOE GAMING, L.L.C., a
Delaware limited liability company (the "Borrower"), promises to pay to the
order of CIBC INC.(the "Swingline Lender") on June 15, 2000 the principal sum of
FIVE MILLION DOLLARS ($5,000,000) or, if less, the aggregate unpaid principal
amount of all Swing Loans made by the Swingling Lender pursuant to that certain
Amended and Restated Credit Facility Agreement, dated as of even date herewith
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "Credit Agreement"), among the Borrower, CANADIAN
IMPERIAL BANK OF COMMERCE, as Agent, and the various financial institutions
(including the Swingline Lender) as are, or may from time to time become,
parties thereto.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Agent pursuant to the Credit Agreement.
This Note is the Swingline Note referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
<PAGE> 2
THIS SWINGLINE NOTE HAS BEEN DELIVERED IN __________, __________ AND
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK.
HORSESHOE GAMING, L.L.C.
By Horseshoe Gaming, Inc.,
Its Sole Manager
By:_________________________________
Title:
<PAGE> 1
EXHIBIT 4.53
SECURITY AGREEMENT
Dated as of November 12, 1997
From
HORSESHOE GAMING, L.L.C.,
A Delaware Limited Liability Company
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
and
CERTAIN COMMERCIAL
LENDING INSTITUTIONS
as Lenders
<PAGE> 2
SECURITY AGREEMENT
This SECURITY AGREEMENT dated as of November 12, 1997 (this
"Agreement"), is made by HORSESHOE GAMING, L.L.C., a Delaware limited liability
company with an office located at 4024 Industrial Road, Las Vegas, Nevada 89103
(the "Company"), in favor of the Lenders (as herein defined) and Canadian
Imperial Bank of Commerce ("CIBC"), in its capacity as agent for the Lenders (in
such capacity, the "Agent").
R E C I T A L S:
WHEREAS, on October 10, 1995, the Company authorized the issuance of up
to $150,000,000 of its Senior Secured Credit Facility Notes due September 30,
1999 pursuant to a Senior Secured Credit Facility Note Purchase Agreement dated
as of October 10, 1995, between the Company and the Purchasers named therein
(the "Note Purchasers"), as amended prior to the date hereof (as so amended, the
"Senior Secured Credit Facility Note Purchase Agreement");
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Note Purchaser and CIBC, the remaining Note Purchaser
assigned to CIBC all of the rights, duties and obligations of the Note
Purchasers in connection with the Senior Secured Credit Facility Note Purchase
Agreement and the security documents and other documents executed in connection
therewith;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Company, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;
WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders and the
Agent that the Company execute this Agreement on the terms, and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders and the Agent, including the extension of availability of credit
to the Company and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged by the Company, the Company hereby
agrees as follows:
SECTION 1. TERMS AND DEFINITIONS.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
<PAGE> 3
"Chattel Paper" has the meaning provided in the UCC.
"Contract Rights" means all rights of the Company (including, without
limitation, all rights to payment) under each Contract.
"Contracts" means all contracts between the Company and one or more
additional parties.
"Copyrights" means any copyright registered with the United States
Copyright Office, as well as any application for a United States copyright
registration made with the United States Copyright Office.
"Documents" has the meaning provided in the UCC.
"Equipment" means any "equipment," as such term is defined in the UCC
and, in any event, shall include, but shall not be limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"General Intangibles" has the meaning provided in the UCC and in any
event includes all claims, rights, powers, privileges, authority, options,
security interests, liens and remedies under any partnership agreement to which
the Company is a party or with respect to any partnership of which the Company
is a partner.
"Goods" has the meaning provided in the UCC.
"Instrument" has the meaning provided in Article 9 of the UCC.
"Intercompany Notes" means a promissory note evidencing indebtedness of
a Subsidiary of the Company to the Company.
"Inventory" means merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing, packaging or shipping
same; in all stages of production--from raw materials through work-in-process to
finished goods--and all products and proceeds of whatever sort and wherever
located and any portion thereof which may be returned, rejected, reclaimed or
repossessed by the Agent, and shall specifically include all "inventory" as such
term is defined in the UCC.
"Marks" means any trademarks and service marks registered in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any political subdivision thereof any
application for such trademarks and service marks, as well as any unregistered
marks used in the United States and trade dress, logos, designs, trade names,
-2-
<PAGE> 4
company names, business names, fictitious business names and other business
identifiers used in the United States.
"Obligations" means any and all Obligations of the Company to the Agent
and the Lenders now or hereafter existing under the Notes, the Letters of
Credit, the Secured Hedging Obligations and the Amended and Restated Credit
Agreement, without regard to the Company's use of the proceeds of the Loans, the
Letters of Credit or the Secured Hedging Obligations, whether for principal,
premium, interest, fees, costs, expenses or otherwise, including, without
prejudice to the generality of the foregoing, the prompt payment of the Notes
and payment of interest and premium thereon at the times and in the manner
specified in the Notes and the Amended and Restated Credit Agreement, prompt
payment of amounts owing pursuant to the issuance of the Letters of Credit,
prompt payment of the Secured Hedging Obligations at the times and in the manner
specified in the documentation therefor and the payment of any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent and the
Lenders in enforcing any rights under the Notes, the Letters of Credit, the
Secured Hedging Obligations, the Amended and Restated Credit Agreement and this
Agreement.
"Patents" means any patent registered with the United States Patent and
Trademark Office, as well as any application for a United States patent
registration made with the United States Patent and Trademark Office.
"Pledged Stock" means the shares of capital stock described in Schedule
A hereto, as it may, from time to time, be supplemented in accordance with the
terms of the Agreement.
"Proceeds" shall mean all "proceeds", as such term is defined in the
UCC and, in any event, shall mean and include, but not be limited to (i) any and
all proceeds of any insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the Pledged Collateral (as
defined in Section 3), (ii) any and all payments (in any form whatsoever) made
or due and payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Collateral by any governmental authority, bureau or agency
(or any Person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
"Receivables" means any "account" as such term is defined in the UCC,
and, in any event, shall include, but shall not be limited to, all rights to
payment for goods sold or leased or services performed, whether now in existence
or arising from time to time hereafter, including, without limitation, such
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held to secure the
foregoing; (ii) all right, title and interest in and to any goods, the sale of
which gave rise thereto; (iii) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing; (iv) all powers of attorney for the execution
-3-
<PAGE> 5
of any evidence of indebtedness or security or other writing in connection
therewith; (v) all books, records, ledger cards, and invoices relating thereto;
(vi) all evidences of the filing of financing statements and other statements
and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from
filing or other registration officers; (vii) all credit information reports and
memoranda relating thereto; and (viii) all other writings related in any way to
the foregoing.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Amended and Restated Credit Agreement.
Section 1.3 Action by the Agent or the Lenders. Whenever any action is
required or permitted to be taken by the Agent or the Lenders, except for such
action which is expressly provided herein to be taken by an individual Lender or
by all the Lenders, such action, including, without limitation, in connection
with the exercise of any remedy granted herein, shall be taken by the Agent,
acting at the direction of Majority Lenders or the Required Lenders, as provided
in the Amended and Restated Credit Agreement.
SECTION 2. GRANT OF SECURITY.
Section 2.1 Pledged Collateral.
(a) The Company, to secure its punctual payment and performance
hereunder in respect of the Obligations hereby pledges, assigns and transfers
unto the Agent, and does hereby grant to the Agent, for the benefit of the
Lenders, a continuing security interest of first priority in, all of the right,
title and interest of the Company in, to and under all of the following, whether
now existing or hereafter from time to time acquired: (i) all cash, accounts,
deposits, securities and insurance policies now or at any time hereafter in the
possession or under control of the Company or its respective bailees and any
interest therein, (ii) each and every Receivable, (iii) all Contract Rights
arising under all Contracts, and all equity and debt securities and other
interests in any and all Subsidiaries (other than Unrestricted Subsidiaries),
(iv) all Inventory, (v) all Equipment, (vi) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of the Company symbolized by the Marks, (vii) all Patents and
Copyrights, and all reissues, renewals or extensions thereof, (viii) all
computer programs and all intellectual property rights therein and all other
proprietary information, (ix) (A) the indebtedness of the Company's Subsidiaries
to the Company; (B) all Intercompany Notes listed on Schedule A (as it may, from
time to time, be supplemented in accordance with the terms hereof) and all
promissory notes which are pledged to the Agent; and (C) all shares of capital
stock described in Schedule A (as it may, from time to time, be supplemented in
accordance with the terms hereof) and all other shares of capital stock or other
-4-
<PAGE> 6
equity interests, (x) all books and records, customer lists, ledger cards,
credit files, print-outs, and other materials and records pertaining to any of
the foregoing, whether now owned or hereafter acquired, (xi) all other Goods,
General Intangibles, investment property (as defined in Article 9 of the UCC),
Chattel Paper, Documents and Instruments, (xiii) all other personal property of
the Company, whether now owned or hereafter acquired, (xiv) all documents of
title evidencing or issued with respect to any of the foregoing, and (xv) all
Proceeds and products of any and all of the foregoing (collectively, the
"Pledged Collateral").
(b) The Pledged Collateral secures the payment of all obligations of
every kind and character now or hereafter existing (whether matured or
unmatured, contingent or liquidated) of the Company under Section 2 with respect
to the Obligations and under each other provision of this Agreement (in each
case as this Agreement hereafter may be amended, supplemented or otherwise
modified from time to time), whether for principal, interest, premium, fees,
expenses, reimbursement, indemnification or otherwise.
(c) The Intercompany Notes and the certificates representing the
Pledged Stock listed on Schedule A shall be delivered to the Agent
contemporaneously herewith together with appropriate undated note powers and
stock powers duly executed in blank. Neither the Agent nor any Lender shall be
obligated to preserve or protect any rights with respect to the Intercompany
Notes or the Pledged Stock or to receive or give any notice with respect thereto
whether or not the Agent or any Lender is deemed to have knowledge of such
matters.
(d) The assignments and security interests under this Agreement granted
to the Agent shall not relieve the Company from the performance of any term,
covenant, condition or agreement on the Company's part to be performed or
observed under or in respect of the Pledged Collateral or from any liability to
any Person under or in respect of any of such Pledged Collateral or impose any
obligation on the Agent to perform or observe any such term, covenant, condition
or agreement on the Company's part to be so performed or observed or impose any
liability on the Agent for any act or omission on the part of the Company
relative thereto or for any breach of any representation or warranty on the part
of the Company contained in this Agreement or any other Loan Document, or in
respect of the Pledged Collateral or made in connection herewith or therewith.
The obligations of the Company contained in this paragraph shall survive the
termination of this Agreement and the discharge of the Company's other
obligations hereunder.
SECTION 3. OBLIGATIONS UNCONDITIONAL.
The obligations of the Company set forth in this Agreement and all
rights of the Agent and the Lenders shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deferment, reduction or diminution
of any obligation or defense of any kind or nature (other than full,
indefeasible and timely payment of the Obligations) based upon any claim the
Company or any other party may have against the Agent, the Lenders, the Company,
any of their Affiliates, or any other party, shall remain in full force and
effect without regard to, and
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<PAGE> 7
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Agent, the Lenders, or the Company
shall have any knowledge or notice thereof).
SECTION 4. APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Effective upon the occurrence and during the continuance of an
Event of Default, the Company hereby irrevocably constitutes and appoints the
Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of attorney), and,
without limiting the generality of the foregoing, hereby gives the Agent in its
sole discretion the power and right, on behalf of the Company, without notice to
or assent by the Company, to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due and to become due under any Pledged
Collateral and, in the name of the Company or its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Pledged Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting
any and all such monies due under any Pledged Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Agent for the purpose of collecting any and all such moneys due under
any Pledged Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof and acknowledges that this power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Pledged Collateral and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither the Agent nor any of its
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<PAGE> 8
agents, representatives or designees shall be responsible to the Company for any
act or failure to act, except for any act involving their gross negligence or
willful misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior to an
Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or (ii) to control decisions regarding
the disposal or other management of hazardous substances generated, used or
handled by the Company or any of its Affiliates.
SECTION 5. WAIVERS.
(a) The Company hereby irrevocably waives promptness, diligence, notice
of acceptance, nonpayment, nonperformance, dishonor or protest and any other
notice with respect to any of the Obligations and this Agreement and any other
circumstance which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety or which might otherwise limit the
obligations of the Company under this Agreement. The Company hereby irrevocably
waives any requirement that the Agent or the Lenders protect, secure, perfect or
insure any Lien on the Pledged Collateral or exhaust any right or take any
action against the Company, or any other Person or mitigate the damages
resulting from default by the Company under the Amended and Restated Credit
Agreement or any Secured Hedging Obligations, or by the Company under this
Agreement.
(b) The Company hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim based upon, arising out of, or relating
to, this Agreement, the transactions contemplated by the Amended and Restated
Credit Agreement or the Secured Hedging Obligations or the actions of the Agent
and the Lenders in the negotiation, administration, performance or enforcement
thereof. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. The
Company acknowledges that this waiver is a material inducement to the Agent and
the Lenders to enter into a business relationship with the Company and its
Subsidiaries and Affiliates and that the Agent and the Lenders have each already
relied on this waiver in entering into this Agreement and the Loan Documents and
that each will continue to rely on this waiver in their related future dealings.
The Company further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
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<PAGE> 9
(c) The Company hereby irrevocably waives, until the end of the term of
this Agreement as set forth in Section 10.9, any claim or other rights that it
may now or hereafter acquire against the Company or any other guarantor of the
obligations of the Company that arise from the existence, payment, performance
or enforcement of the Obligations, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Agent or the Lenders against
the Company or any other guarantor or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from the Company or
any other guarantor directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right. If any amount shall be paid to the Company in violation of the
preceding sentence at any time prior to the payment in full in cash of the
Obligations, such amount shall be held in trust for the benefit of the Agent and
the Lenders and shall forthwith be paid to the Agent to be credited and applied
to the Obligations, whether matured or unmatured, in accordance with the terms
of this Agreement and the Amended and Restated Credit Agreement or to be held as
Pledged Collateral for any Obligations thereafter arising. The Company
acknowledges it will derive substantial economic benefits from the financing
arrangements contemplated by the Amended and Restated Credit Agreement and the
Secured Hedging Obligations and that the waiver set forth in this subsection (c)
is knowingly made in contemplation of such benefits.
SECTION 6. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants to the Agent and the Lenders as follows:
Section 6.1 Location. The chief place of business and chief executive
office of the Company is located at the address first specified above for the
Company.
Section 6.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken.
SECTION 7. COVENANTS. The Company hereby covenants and agrees that on
and after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 7.1 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent and the Lenders at least 90 days' prior
written notice thereof of its intention to so change and shall
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<PAGE> 10
have taken all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary, or reasonably requested by the Agent and the Lenders, to
amend such financing or continuation statement so that it is not misleading.
Section 7.2 Amendment of Organization Documents. The Company shall not
amend its Limited Partnership Agreement in a manner that affects adversely the
Agent or the Lenders.
Section 7.3 Further Assurances.
(a) From time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action, that may be necessary or desirable, or that the Agent or the
Lenders reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent or the Lenders to exercise and enforce their rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, the Company will execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent or the Lenders may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent or the Lenders to file one
or more financing or continuation statements, and assignments thereof and
amendments thereto, relating to all or any part of the Pledged Collateral
without the signature of the Company where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Pledged Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) The Company will furnish to the Agent and the Lenders from time to
time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent, the Lenders or the Company reasonably may request, all in reasonable
detail.
(d) If the Company shall acquire in any manner any additional
Intercompany Notes, the Company shall forthwith (and without the necessity for
any request or demand by the Agent) deliver such Intercompany Notes to the Agent
in the same manner as described in Section 1.1(c), together with a supplement to
Schedule A reflecting the addition of such additional Intercompany Notes,
whereupon such additional Intercompany Notes shall be deemed to be pledged
hereunder for all purposes hereunder. If the Company shall at any time acquire
any additional shares of the capital stock of any class of Pledged Stock,
whether such acquisition shall be by purchase, exchange, reclassification,
dividend, or otherwise, or acquire any new shares of capital stock of any newly
formed or acquired Subsidiary (as defined under and to the extent permitted by
the
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Amended and Restated Credit Agreement), the Company shall forthwith (and without
the necessity for any request or demand by the Agent) deliver such shares to the
Agent in the same manner as described in Section 1.1(c), together with a
supplement to Schedule A reflecting the addition of such additional shares of
stock, whereupon such additional shares of stock shall be deemed to be Pledged
Stock for all purposes hereunder. The Company will hold in trust for the Agent
upon receipt and immediately thereafter deliver to the Agent any instrument
evidencing or constituting Pledged Collateral (except, so long as no Event of
Default has occurred and is continuing, ordinary cash dividends, if any, paid
with respect to the Pledged Stock and payments in respect of the Intercompany
Notes, in each case as permitted by the Amended and Restated Credit Agreement).
SECTION 8. EVENTS OF DEFAULT; REMEDIES.
Section 8.1 Events of Default Defined. If any Event of Default shall
occur and be continuing (for any reason whatsoever and whether it shall be
voluntary or involuntary or by operation of law or otherwise), then (i) all
payments received by the Company under or in connection with any of the Pledged
Collateral shall be held by the Company in trust for the Agent and the Lenders,
shall be segregated from other funds of the Company and shall forthwith upon
receipt by the Company be turned over to the Agent for the ratable benefit of
the Lenders in the same form as received by the Company (duly endorsed by the
Company to the Agent, if required); (ii) any and all such payments so received
by the Lenders (whether from the Company or otherwise) will be applied by the
Lenders against their Obligations; and (iii) any amount remaining after payment
in full of all of the Obligations shall be paid over to the Company.
Section 8.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the Agent
and the Lenders may exercise in addition to all other rights and remedies
granted to the Agent and the Lenders in this Agreement, and under any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the UCC as applicable to the
Pledged Collateral and all the rights granted to the Agent and the Lenders.
Without limiting the generality of the foregoing, the Company expressly agrees
that in any such event the Agent and the Lenders, without demand of performance
or other demand, advertisement or notice of any kind (except the notice,
specified below of time and place of public or private sale) to or upon the
Company or any other Person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith assume, collect,
receive, appropriate and realize upon the Pledged Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Pledged Collateral
(or contract to do so), or any part thereof, in one or more parcels at a public
or private sale or sales, at any exchange broker's board or at its offices or
elsewhere at such prices as the Agent may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Agent and the
Lenders
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<PAGE> 12
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of said Pledged Collateral so sold, free of any right or equity of
redemption, which equity of redemption the Company hereby releases, and in lieu
of payment of such actual purchase price may set-off the amount of such purchase
price against the Obligations then owing to such purchaser. The Company further
agrees, at the Agent's request, to assemble the Pledged Collateral and make it
available to the Agent at places which the Agent shall reasonably select,
whether at the Company's premises or elsewhere. The Agent and the Lenders shall
retain the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safe keeping
or otherwise of any or all of the Pledged Collateral or in any way relating to
the rights of the Agent and the Lenders hereunder, including reasonable
attorneys' fees and legal expenses, for application to the payment in whole or
in part of the Obligations, and only after so retaining such net proceeds and
after the payment by the Agent and the Lenders of any other amount required by
any provision of law, including Section 9-504 (1)(c) of the UCC, need the Agent
and the Lenders account for the surplus, if any, to the Company. To the extent
permitted by applicable law, the Company waives all claims, damages and demands
against the Agent and the Lenders arising out of the repossession, retention or
sale of the Pledged Collateral, except to the extent that such claims, damages
and demands arise out of the willful misconduct or gross negligence of the Agent
or the Lenders.
(b) The Company also agrees to pay all costs of the Agent and the
Lenders, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Obligations and the enforcement and protection of any
of the rights of the Agent and the Lenders hereunder. All costs and expenses
incurred by each of the Agent and the Lenders with respect to the enforcement,
collection and protection of the Agent's and the Lenders' interest in the
Pledged Collateral shall be additional Obligations of the Company to the Agent
and the Lenders payable on demand, and secured by the Pledged Collateral.
(c) Any notice required to be given by the Agent of a sale, lease or
other disposition or other intended action by it with respect to any of the
Pledged Collateral which is deposited in the United States mails, postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the Company of
any such action. The net proceeds realized by the Agent and the Lenders upon any
such sale or other disposition, after deduction for the expense of retaking,
holding, preparing for sale, selling or the like and the reasonable attorneys'
fees and legal expenses incurred by the Agent and the Lenders in connection
therewith, shall be applied as provided herein toward satisfaction of the
Obligations. The Agent and the Lenders shall account to the Company for any
surplus realized upon such sale or other disposition. The commencement of any
action, legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Agent's and the Lenders' security interest in
the Pledged Collateral until the Obligations are fully paid. The Company agrees
that the Agent and the Lenders have no obligation to preserve their rights to
the Pledged Collateral against any other parties. The
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Agent and the Lenders shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 8.3 Limitation on the Agent's and the Lenders' Duty in Respect
of Pledged Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Lenders be deemed to assume any
responsibility for, or obligation or duty with respect to, any part or all of
the Pledged Collateral, of any nature or kind whatsoever, or any matter or
proceedings arising out of or relating thereto. The Agent and the Lenders shall
not be required to take any action of any kind to collect or protect any
interest in the Pledged Collateral, including, but not limited to, any action
necessary to preserve the rights of the Agent and the Lenders, and the Company
against prior parties to any of the Pledged Collateral. The Agent and the
Lenders shall not be liable or responsible in any way for the safe keeping, care
or custody of any of the Pledged Collateral if the Pledged Collateral is
accorded the same treatment and level of care as their own property, for any
loss or damages thereto, for any diminution in the value thereof, for any act or
default of any agent or bailee of the Agent, the Lenders, the Company or of any
carrier, forwarding agency or other person whomsoever or for the collection of
any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or willful misconduct. The
Company hereby releases the Agent and the Lenders from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement
or the Obligations and any actions taken or omitted to be taken by the Agent and
the Lenders with respect thereto, and the Company hereby agrees to hold the
Agent and the Lenders harmless from and with respect to any and all such claims,
causes of action and demands. The Company hereby releases the Agent and the
Lenders from any claims, causes of action and demands arising under 42 U.S.C.
Section 9607 or 9613 or similar provisions of state or local law.
Section 8.4 Remedies Cumulative. No remedy conferred upon the Agent and
the Lenders is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.
Section 8.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and the Lenders and no delay or failure in exercising any
rights hereunder in respect thereof shall operate as a waiver of any of the
rights of the Agent and the Lenders.
SECTION 9. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and shall
not be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by all
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the Lenders, shall (a) limit the liability of the Company hereunder, (b)
postpone any date fixed for payment hereunder or (c) change the number of
Lenders required to take any action hereunder.
No failure on the part of the Agent or the Lenders to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other, or
further exercise thereof or the exercise of any other right.
SECTION 10. MISCELLANEOUS.
Section 10.1 Expenses. The Company will pay the Agent and the Lenders
for any and all sums, costs and expenses which the Agent or the Lenders may pay
or incur by reason of defending, protecting or enforcing the security interest
herein granted or the priority hereof, enforcing payment of the Obligations,
discharging any Lien or claim against the Pledged Collateral or any part thereof
or, if the Company fails to perform or comply with any of its agreements herein,
performing or complying with such terms. Such sums, costs and expenses shall
include, without limitation, all court costs, collection charges, travel and
reasonable attorneys' fees (including fees and expenses incident to the
enforcement of payment of any obligations of the Company by any action or
participation in, or connection with, a case or proceeding under Chapters 7, 11
or 13 of the Bankruptcy Code). All sums, costs and expenses of the Agent and the
Lenders payable by the Company pursuant to this Agreement shall be payable by
the Company to the Agent and the Lenders on demand and shall constitute
Obligations secured by the Pledged Collateral.
Section 10.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agent and the Lenders or on their behalf and (b) survive the execution and
delivery of this Agreement and of the Notes, and shall continue in effect so
long as any Note or Obligation is outstanding and thereafter as provided in
Sections 10 and 12.1.
Section 10.3 Successors and Assigns; Transfers of the Notes. This
Agreement shall bind and inure to the benefit of, and be enforceable by, the
Company, the Agent, the Lenders, and their respective permitted successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes. The
Company may not assign its rights and obligations under this Agreement, except
pursuant to a reorganization permitted under the Amended and Restated Credit
Agreement. The Lenders may transfer the Notes (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state
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<PAGE> 15
and federal securities laws and the requirements of Section 9 of the Amended and
Restated Credit Agreement.
Section 10.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
(a) if to the Company:
HORSESHOE GAMING, L.L.C.
c/o Horseshoe Gaming, Inc.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Paul Alanis
Telephone: (702) 650-0080
Telecopy: (702) 650-0081
with a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: Jim Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
(b) if to the Agent or the Lenders, at their respective addresses as
set forth in the Amended and Restated Credit Agreement or at such other address
as shall be provided to the Company in accordance to the terms of the Amended
and Restated Credit Agreement.
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 10.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other
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<PAGE> 16
than those as to which it is held invalid or unenforceable. To the fullest
extent permitted by applicable law, the parties hereto hereby waive any
provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
Section 10.6 Governing Law. This Agreement and the Notes, the Letters
of Credit, the Secured Hedging Obligations and (unless otherwise provided) all
amendments, supplements, waivers and consents relating hereto or thereto shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.
Section 10.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Agreement or any course of conduct, course of
dealing, statements or actions of the Company, the Agent or the Lenders related
thereto, the Company hereby submits and consents to the jurisdiction of the
courts of the State of New York and of the United States District Court for the
Southern District of New York, and the Company agrees that any such action, suit
or proceeding may be brought by the Agent or the Lenders in the Supreme Court of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York, and the service of process may be made
upon the Company by mailing a copy of the summons and any complaint to the
Company by registered mail, at the address specified in Section 12.4. The
Company hereby waives and agrees not to assert, by way of motion or otherwise,
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of the above-named courts, that the action is brought in an
inconvenient forum or that the venue of the action is improper. The Agent and
the Lenders, nevertheless, may serve, process or commence any such action, suit
or proceeding in such other jurisdiction(s), and in such other manner as may be
permitted by applicable law. The methods of service of process specified in this
paragraph may be used in the alternative or together as the Agent and the
Lenders may see fit.
Section 10.8 Headings. The headings in this Agreement are for
convenience only and shall not be construed as a part of this Agreement.
Section 10.9 Term of Agreement. This Agreement and all agreements of
the Company contained herein shall continue in full force and effect and shall
not be discharged until such time as the Obligations shall be indefeasibly paid
or performed in full and all of the agreements of (a) the Company under the
Amended and Restated Credit Agreement and the Secured Hedging Obligations and
(b) the Company hereunder shall be fully paid or performed; provided, certain
provisions of this Agreement shall survive such termination as expressly set
forth herein.
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<PAGE> 17
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed delivered as of the date first above written.
HORSESHOE GAMING, L.L.C.
By Horseshoe Gaming, Inc.,
Its Sole Manager
By:________________________________
Name: Walter J. Haybert
Title: Treasurer
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Horseshoe Gaming, L.L.C.
SCHEDULE A
Pledged Stock
1. Stock (10,000 shares) of Horseshoe G.P., Inc.
2. Limited Partner Interest in Robinson Property Group L.P.
(uncertificated).
3. Limited Partner Interest in New Gaming Capital Partnership
(uncertificated).
4. Membership Interest in Horseshoe Ventures, LLC (uncertificated).
Intercompany Notes
1. Horseshoe Entertainment Intercompany Note dated October 10, 1995, in
the amount of $82,000,000.
2. Robinson Property Group L.P. Intercompany Note dated October 10,
1995, in the amount of $74,500,000.
3. Horseshoe Ventures, LLC Intercompany Note dated October 20, 1995, in
the amount of $6,000,000.
4. Horseshoe Entertainment Intercompany Note dated April 1, 1997, in
the amount of $168,000,000.
5. Robinson Property Group L.P. Intercompany Note dated April 1, 1997,
in the amount of $50,500,000.
6. Horseshoe Entertainment Intercompany Note dated June 25, 1997, in
the amount of $50,000,000.
7. Robinson Property Group L.P. Intercompany Note dated June 25, 1997,
in the amount of $25,000,000.
<PAGE> 19
TABLE OF CONTENTS
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Page
<S> <C>
SECTION 1. TERMS AND DEFINITIONS..........................................................................1
Section 1.1 Definitions............................................................................2
Section 1.2 Additional Terms.......................................................................4
Section 1.3 Action by the Agent or the Lenders.....................................................4
SECTION 2. GRANT OF SECURITY..............................................................................4
Section 2.1 Pledged Collateral.....................................................................4
SECTION 3. OBLIGATIONS UNCONDITIONAL......................................................................5
SECTION 4. APPOINTMENT AS ATTORNEY-IN-FACT................................................................6
SECTION 5. WAIVERS........................................................................................7
SECTION 6. REPRESENTATIONS OF THE COMPANY.................................................................8
Section 6.1 Location...............................................................................8
Section 6.2 Security Interest......................................................................8
SECTION 7. COVENANTS
Section 7.1 Continuous Perfection..................................................................8
Section 7.2 Amendment of Organization Documents....................................................9
Section 7.3 Further Assurances.....................................................................9
SECTION 8. EVENTS OF DEFAULT; REMEDIES...................................................................10
Section 8.1 Events of Default Defined.............................................................10
Section 8.2 Remedies..............................................................................10
Section 8.3 Limitation on the Agent's and the Lenders' Duty in Respect of
Pledged Collateral....................................................................12
Section 8.4 Remedies Cumulative...................................................................12
Section 8.5 Remedies Not Waived...................................................................12
SECTION 9. AMENDMENT AND WAIVER..........................................................................12
SECTION 10. MISCELLANEOUS.................................................................................13
Section 10.1 Expenses..............................................................................13
Section 10.2 Reliance on and Survival of Representations...........................................13
Section 10.3 Successors and Assigns; Transfers of the Notes........................................13
Section 10.4 Notices...............................................................................14
Section 10.5 Severability..........................................................................14
</TABLE>
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<TABLE>
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Section 10.6 Governing Law.........................................................................15
Section 10.7 Forum and Jurisdiction................................................................15
Section 10.8 Headings..............................................................................15
Section 10.9 Term of Agreement.....................................................................15
</TABLE>
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<PAGE> 1
EXHIBIT 4.54
GUARANTEE AND SECURITY AGREEMENT
Dated as of November 12, 1997
From
HORSESHOE GAMING, INC.,
A Delaware corporation
as Guarantor
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
and
CERTAIN COMMERCIAL
LENDING INSTITUTIONS
as Lenders
<PAGE> 2
GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT dated as of November 12, 1997
(this "Guarantee" or this "Agreement"), is made by HORSESHOE GAMING, INC., a
Delaware corporation with an office located at 4024 Industrial Road, Las Vegas,
Nevada 89103 (the "Company"), in favor of the Lenders (as herein defined) and
Canadian Imperial Bank of Commerce ("CIBC"), in its capacity as agent for the
Lenders (in such capacity, the "Agent").
R E C I T A L S:
WHEREAS, on October 10, 1995, Horseshoe Gaming, L.L.C., a Delaware
limited liability company (the "Borrower") authorized the issuance of up to
$150,000,000 of its Senior Secured Credit Facility Notes due September 30, 1999
pursuant to a Senior Secured Credit Facility Note Purchase Agreement dated as of
October 10, 1995, between the Borrower and the Purchasers named therein (the
"Note Purchasers"), as amended prior to the date hereof (as so amended, the
"Senior Secured Credit Facility Note Purchase Agreement");
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Note Purchaser and CIBC, the remaining Note Purchaser
assigned to CIBC all of the rights, duties and obligations of the Note
Purchasers in connection with the Senior Secured Credit Facility Note Purchase
Agreement and the security documents and other documents executed in connection
therewith;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Borrower, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;
WHEREAS, the Company owns 36.61% of the ownership interests of the
Borrower;
WHEREAS, the Company will derive substantial economic benefit from the
availability of credit to the Borrower pursuant to the Amended and Restated
Credit Agreement; and
WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders and the
Agent that the Company execute this Agreement on the terms, and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders and the Agent, including the extension of availability of credit
to the Borrower and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged by the Company, the Company hereby
agrees as follows:
<PAGE> 3
SECTION 1. TERMS AND DEFINITIONS.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Chattel Paper" has the meaning provided in the UCC.
"Contract Rights" means all rights of the Company (including, without
limitation, all rights to payment) under each Contract.
"Contracts" means all contracts between the Company and one or more
additional parties.
"Copyrights" means any copyright registered with the United States
Copyright Office, as well as any application for a United States copyright
registration made with the United States Copyright Office.
"Documents" has the meaning provided in the UCC.
"Equipment" means any "equipment," as such term is defined in the UCC
and, in any event, shall include, but shall not be limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"General Intangibles" has the meaning provided in the UCC and in any
event includes all claims, rights, powers, privileges, authority, options,
security interests, liens and remedies under any partnership agreement to which
the Company is a party or with respect to any partnership of which the Company
is a partner.
"Goods" has the meaning provided in the UCC.
"Instrument" has the meaning provided in Article 9 of the UCC.
"Intercompany Notes" means a promissory note evidencing indebtedness of
a Subsidiary of the Company to the Company.
"Inventory" means merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing, packaging or shipping
same; in all stages of production--from raw materials through work-in-process to
finished goods--and all products and proceeds of whatever sort and wherever
located
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<PAGE> 4
and any portion thereof which may be returned, rejected, reclaimed or
repossessed by the Agent, and shall specifically include all "inventory" as such
term is defined in the UCC.
"Marks" means any trademarks and service marks registered in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any political subdivision thereof any
application for such trademarks and service marks, as well as any unregistered
marks used in the United States and trade dress, logos, designs, trade names,
company names, business names, fictitious business names and other business
identifiers used in the United States.
"Patents" means any patent registered with the United States Patent and
Trademark Office, as well as any application for a United States patent
registration made with the United States Patent and Trademark Office.
"Pledged Stock" means the shares of capital stock described in Schedule
A hereto, as it may, from time to time, be supplemented in accordance with the
terms of the Agreement.
"Proceeds" shall mean all "proceeds", as such term is defined in the
UCC and, in any event, shall mean and include, but not be limited to (i) any and
all proceeds of any insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the Pledged Collateral (as
defined in Section 3), (ii) any and all payments (in any form whatsoever) made
or due and payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Collateral by any governmental authority, bureau or agency
(or any Person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
"Receivables" means any "account" as such term is defined in the UCC,
and, in any event, shall include, but shall not be limited to, all rights to
payment for goods sold or leased or services performed, whether now in existence
or arising from time to time hereafter, including, without limitation, such
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held to secure the
foregoing; (ii) all right, title and interest in and to any goods, the sale of
which gave rise thereto; (iii) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing; (iv) all powers of attorney for the execution
of any evidence of indebtedness or security or other writing in connection
therewith; (v) all books, records, ledger cards, and invoices relating thereto;
(vi) all evidences of the filing of financing statements and other statements
and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from
filing or other registration officers; (vii) all credit information reports and
memoranda relating thereto; and (viii) all other writings related in any way to
the foregoing.
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<PAGE> 5
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Amended and Restated Credit Agreement.
Section 1.3 Action by the Agent or the Lenders. Whenever any action is
required or permitted to be taken by the Agent or the Lenders, except for such
action which is expressly provided herein to be taken by an individual Lender or
by all the Lenders, such action, including, without limitation, in connection
with the exercise of any remedy granted herein, shall be taken by the Agent,
acting at the direction of Majority Lenders or the Required Lenders, as provided
in the Amended and Restated Credit Agreement.
SECTION 2. GUARANTEE.
Section 2.1 Guaranteed Obligations. The Company, jointly and severally
with any other guarantors, hereby absolutely, unconditionally and irrevocably
guarantees to the Agent and the Lenders on a continuing basis the full, complete
and punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of any and all sums due from, and any and all Obligations of the
Borrower to the Agent and the Lenders now or hereafter existing under the Notes,
the Letters of Credit, the Secured Hedging Obligations and the Amended and
Restated Credit Agreement, without regard to the Borrower's use of the proceeds
of the Loans, the Letters of Credit or the Secured Hedging Obligations, whether
for principal, premium, interest, fees, costs, expenses or otherwise, including,
without prejudice to the generality of the foregoing, the prompt payment of the
Notes and payment of interest and premium thereon at the times and in the manner
specified in the Notes and the Amended and Restated Credit Agreement, prompt
payment of amounts owing pursuant to the issuance of the Letters of Credit,
prompt payment of the Secured Hedging Obligations at the times and in the manner
specified in the documentation therefor and the payment of any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent and the
Lenders in enforcing any rights under the Notes, the Letters of Credit, the
Secured Hedging Obligations, the Amended and Restated Credit Agreement and this
Agreement. Without limiting the generality of the foregoing, the Company's
liability shall extend to all amounts that would be owed by the Borrower to the
Agent and the Lenders under the Amended and Restated Credit Agreement but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower. Each of
the obligations guaranteed as set forth in this Section 2.1 is hereinafter
referred to severally as a "Guaranteed Obligation" and collectively as the
"Guaranteed Obligations".
Section 2.2 Guarantee Absolute. This Guarantee is a guarantee of
payment and not of collection, is in no way conditioned or contingent upon any
attempt to collect from or proceed against the Borrower, any other guarantors or
sureties, any other person or entity or
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<PAGE> 6
any collateral security, or upon any other event, contingency or circumstance
whatsoever and shall be binding upon and against the Company without regard to
the validity, regularity or enforceability of the Amended and Restated Credit
Agreement or any other instrument or agreement. The Company guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the term of the
Amended and Restated Credit Agreement and the documentation evidencing the
Secured Hedging Obligations, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The obligations of the
Company hereunder are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against the Company to enforce
this Agreement, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. If for
any reason whatsoever the Borrower shall fail or be unable duly, punctually and
fully to pay the Guaranteed Obligations or any part thereof as and when the same
shall become payable in accordance with the terms of the Amended and Restated
Credit Agreement, the Company, immediately upon demand, will pay or cause to be
paid the Guaranteed Obligations or such part thereof.
Section 2.3 Subordination. Until payment in full of all sums due to the
Agent and the Lenders under, or in connection with such party's rights relating
to, the Amended and Restated Credit Agreement and the Secured Hedging
Obligations and all other instruments, documents and agreements contemplated
therein and performance of all other obligations thereunder, the Company hereby
covenants and agrees with the Agent and the Lenders that:
(a) the Company shall and does hereby subordinate, to the obligations
of the Borrower to the Agent and the Lenders, all present and future
indebtedness due to the Company from (and shall cause to be subordinated to the
obligations of the Company to the Agent and the Lenders hereunder all present
and future indebtedness due from the Company to) the Borrower; and
(b) the Company shall deliver to the Agent and the Lenders, and shall
cause the Borrower to deliver to the Agent and the Lenders, such agreements and
other evidence of such subordination as the Agent or the Lenders reasonably may
request from time to time.
SECTION 3. GRANT OF SECURITY.
Section 3.1 Pledged Collateral.
(a) The Company, to secure its punctual payment and performance
hereunder in respect of the Guaranteed Obligations hereby pledges, assigns and
transfers unto the Agent, and does hereby grant to the Agent, for the benefit of
the Lenders, a continuing security interest of first priority in, all of the
right, title and interest of the Company in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) all cash,
accounts, deposits, securities and insurance policies now or at any time
hereafter in the possession or under
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<PAGE> 7
control of the Company or its respective bailees and any interest therein, (ii)
each and every Receivable, (iii) all Contract Rights arising under all
Contracts, and all equity and debt securities and other interests in any and all
Subsidiaries (other than Unrestricted Subsidiaries), (iv) all Inventory, (v) all
Equipment, (vi) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of the Company symbolized by
the Marks, (vii) all Patents and Copyrights, and all reissues, renewals or
extensions thereof, (viii) all computer programs and all intellectual property
rights therein and all other proprietary information, (ix) (A) the indebtedness
of the Company's Subsidiaries to the Company; (B) all Intercompany Notes listed
on Schedule A (as it may, from time to time, be supplemented in accordance with
the terms hereof) and all promissory notes which are pledged to the Agent; and
(C) all shares of capital stock described in Schedule A (as it may, from time to
time, be supplemented in accordance with the terms hereof) and all other shares
of capital stock or other equity interests, (x) all books and records, customer
lists, ledger cards, credit files, print-outs, and other materials and records
pertaining to any of the foregoing, whether now owned or hereafter acquired,
(xi) all other Goods, General Intangibles, investment property (as defined in
Article 9 of the UCC), Chattel Paper, Documents and Instruments, (xiii) all
other personal property of the Company, whether now owned or hereafter acquired,
(xiv) all documents of title evidencing or issued with respect to any of the
foregoing, and (xv) all Proceeds and products of any and all of the foregoing
(collectively, the "Pledged Collateral").
(b) The Pledged Collateral secures the payment of all obligations of
every kind and character now or hereafter existing (whether matured or
unmatured, contingent or liquidated) of the Company under Section 2 with respect
to the Guaranteed Obligations and under each other provision of this Agreement
(in each case as this Agreement hereafter may be amended, supplemented or
otherwise modified from time to time), whether for principal, interest, premium,
fees, expenses, reimbursement, indemnification or otherwise.
(c) The Intercompany Notes and the certificates representing the
Pledged Stock listed on Schedule A shall be delivered to the Agent
contemporaneously herewith together with appropriate undated note powers and
stock powers duly executed in blank. Neither the Agent nor any Lender shall be
obligated to preserve or protect any rights with respect to the Intercompany
Notes or the Pledged Stock or to receive or give any notice with respect thereto
whether or not the Agent or any Lender is deemed to have knowledge of such
matters.
(d) The assignments and security interests under this Agreement granted
to the Agent shall not relieve the Company from the performance of any term,
covenant, condition or agreement on the Company's part to be performed or
observed under or in respect of the Pledged Collateral or from any liability to
any Person under or in respect of any of such Pledged Collateral or impose any
obligation on the Agent to perform or observe any such term, covenant, condition
or agreement on the Company's part to be so performed or observed or impose any
liability on the Agent for any act or omission on the part of the Company
relative thereto or for any breach of any representation or warranty on the part
of the Company contained in this Agreement or any other Loan Document, or in
respect of the Pledged Collateral or made in
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<PAGE> 8
connection herewith or therewith. The obligations of the Company contained in
this paragraph shall survive the termination of this Agreement and the discharge
of the Company's other obligations hereunder.
SECTION 4. OBLIGATIONS UNCONDITIONAL.
The obligations of the Company set forth in this Agreement and all
rights of the Agent and the Lenders shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deferment, reduction or diminution
of any obligation or defense of any kind or nature (other than full,
indefeasible and timely payment of the Guaranteed Obligations) based upon any
claim the Company or any other party may have against the Agent, the Lenders,
the Borrower, any of their Affiliates, or any other party, shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether or not
the Agent, the Lenders, or the Company shall have any knowledge or notice
thereof), including without limitation:
(a) any compromise, settlement, release, accord and satisfaction,
termination, modification, amendment, waiver, consent or other change, addition,
deletion or supplement of or to, or any forbearance or indulgence with respect
to, any or all of the obligations, duties, covenants or agreements under the
Amended and Restated Credit Agreement or the Secured Hedging Obligations, or any
other instrument or agreement whatsoever (whether or not referred to in the
Amended and Restated Credit Agreement or applicable to any of the parties to the
Amended and Restated Credit Agreement), or any assignment or transfer of any
interest in any of the foregoing, or any furnishing, acceptance, substitution or
exchange of, any release of or failure to protect, perfect or to continue
perfected, or any other action or inaction in respect of, any direct or indirect
security for or guarantee with respect to the Guaranteed Obligations or any part
thereof (including, without limitation, the Pledged Collateral);
(b) any failure, omission or delay on the part of the Agent or the
Lenders or any party claiming by, through or under any of the foregoing to
conform or comply with any term of any instrument or agreement referred to in
subsection (a) above, or to exercise any right, remedy or power thereunder,
including, but not limited to, the failure to give notice to the Company of the
occurrence of any Event of Default;
(c) any renewal, refinancing or refunding of the Guaranteed Obligations
in whole or in part or extension of the time for payment of any Guaranteed
Obligation or for the payment of any other amount payable under the Amended and
Restated Credit Agreement or any Secured Hedging Obligation or of the time for
performance of any other obligations, covenants or agreements under or arising
out of the Amended and Restated Credit Agreement, any Secured Hedging Obligation
or any other instrument or agreement or the extension or the renewal of any of
the foregoing;
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<PAGE> 9
(d) any voluntary or involuntary liquidation, dissolution, winding-up,
sale or other disposition of all or substantially all the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of the debts of, or other similar events or proceedings affecting,
the Borrower or any of its assets or of any other party, or any action taken by
any trustee or receiver or by any court in any such proceeding, or any
allegation of invalidity of this Guarantee in any such proceeding;
(e) to the extent permitted by law, any release or discharge by
operation of law of the Borrower, or any other party from the performance or
observance of any obligation, covenant or agreement contained in the Amended and
Restated Credit Agreement, any documentation evidencing the Secured Hedging
Obligations or any other instrument or agreement;
(f) any merger or consolidation of the Borrower into or with any entity
or any sale, lease or transfer of any of the assets of the Borrower to any other
party, or any change in the name, objects or governing documents of the Borrower
or otherwise in the Company's relationship to the Borrower;
(g) any impossibility or illegality of performance on the part of the
Borrower of its obligations under the Amended and Restated Credit Agreement or
the Secured Hedging Obligations;
(h) any lack of validity or enforceability of any provisions of the
Amended and Restated Credit Agreement, the documentation for the Secured Hedging
Obligations or any other Loan Document; or
(i) any other occurrence or circumstance whatsoever, whether similar or
dissimilar to the foregoing, and any other circumstance which might otherwise
constitute a legal or equitable defense or discharge of the liabilities of a
Company or surety or which might otherwise limit recourse against the Pledged
Collateral.
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Effective upon the occurrence and during the continuance of an
Event of Default, the Company hereby irrevocably constitutes and appoints the
Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of
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<PAGE> 10
attorney), and, without limiting the generality of the foregoing, hereby gives
the Agent in its sole discretion the power and right, on behalf of the Company,
without notice to or assent by the Company, to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due and to become due under any Pledged
Collateral and, in the name of the Company or its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Pledged Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting
any and all such monies due under any Pledged Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Agent for the purpose of collecting any and all such moneys due under
any Pledged Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof and acknowledges that this power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Pledged Collateral and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither the Agent nor any of its agents,
representatives or designees shall be responsible to the Company for any act or
failure to act, except for any act involving their gross negligence or willful
misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior to an
Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or (ii) to control decisions regarding
the disposal or other management of hazardous substances generated, used or
handled by the Company or any of its Affiliates.
SECTION 6. WAIVERS.
(a) The Company hereby irrevocably waives promptness, diligence, notice
of acceptance, nonpayment, nonperformance, dishonor or protest and any other
notice with respect to any of the Guaranteed Obligations and this Agreement and
any other circumstance which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or which might otherwise
limit the obligations of the Company under this Agreement. The Company hereby
irrevocably waives any requirement that the Agent or the
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<PAGE> 11
Lenders protect, secure, perfect or insure any Lien on the Pledged Collateral or
exhaust any right or take any action against the Borrower, or any other Person
or mitigate the damages resulting from default by the Borrower under the Amended
and Restated Credit Agreement or any Secured Hedging Obligations, or by the
Company under this Agreement.
(b) The Company hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim based upon, arising out of, or relating
to, this Agreement, the transactions contemplated by the Amended and Restated
Credit Agreement or the Secured Hedging Obligations or the actions of the Agent
and the Lenders in the negotiation, administration, performance or enforcement
thereof. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. The
Company acknowledges that this waiver is a material inducement to the Agent and
the Lenders to enter into a business relationship with the Company and its
Subsidiaries and Affiliates and that the Agent and the Lenders have each already
relied on this waiver in entering into this Agreement and the Loan Documents and
that each will continue to rely on this waiver in their related future dealings.
The Company further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
(c) The Company hereby irrevocably waives, until the end of the term of
this Agreement as set forth in Section 12.9, any claim or other rights that it
may now or hereafter acquire against the Borrower or any other guarantor of the
obligations of the Borrower that arise from the existence, payment, performance
or enforcement of the Guaranteed Obligations, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Agent
or the Lenders against the Borrower or any other guarantor or any collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Borrower or any other guarantor directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right. If any amount shall be paid to the
Company in violation of the preceding sentence at any time prior to the payment
in full in cash of the Guaranteed Obligations, such amount shall be held in
trust for the benefit of the Agent and the Lenders and shall forthwith be paid
to the Agent to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of this Agreement and the
Amended and Restated Credit Agreement or to be held as Pledged
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<PAGE> 12
Collateral for any Guaranteed Obligations thereafter arising. The Company
acknowledges it will derive substantial economic benefits from the financing
arrangements contemplated by the Amended and Restated Credit Agreement and the
Secured Hedging Obligations and that the waiver set forth in this subsection (c)
is knowingly made in contemplation of such benefits.
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.; REINSTATEMENT. The
obligations of the Company under this Agreement shall continue to be effective,
or be automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Agent or the Lenders (as a preference,
fraudulent conveyance or otherwise) upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any other person
or entity or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to the Borrower, or
any other party, or any substantial part of its property, or otherwise, all as
though such payments had not been made. If an Event of Default shall at any time
have occurred and be continuing or shall exist and declaration of default or
acceleration under or with respect to the Amended and Restated Credit Agreement
or the Secured Hedging Obligations, or any Guaranteed Obligation shall at such
time be prevented by reason of the pendency against the Borrower or any other
Person or entity of a case or proceeding under a bankruptcy or insolvency law,
the Company agrees that, for purposes of this Agreement and its obligations
hereunder, the Amended and Restated Credit Agreement, the Secured Hedging
Obligations and such Guaranteed Obligation shall be deemed to have been declared
in default or accelerated with the same effect as if the Amended and Restated
Credit Agreement, the Secured Hedging Obligations and such Guaranteed Obligation
had been declared in default and accelerated in accordance with their respective
terms and the Company shall forthwith pay the amounts specified to be paid
thereunder in accordance with their respective terms and all other Guaranteed
Obligations without further notice or demand.
SECTION 8. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants to the Agent and the Lenders as follows:
Section 8.1 Location. The chief place of business and chief executive
office of the Company is located at the address first specified above for the
Company.
Section 8.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Guaranteed Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
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<PAGE> 13
SECTION 9. COVENANTS. The Company hereby covenants and agrees that on
and after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 9.1 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent and the Lenders at least 90 days' prior
written notice thereof of its intention to so change and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary,
or reasonably requested by the Agent and the Lenders, to amend such financing or
continuation statement so that it is not misleading.
Section 9.2 Amendment of Organization Documents. The Company shall not
amend its [Limited Partnership Agreement] in a manner that affects adversely the
Agent or the Lenders.
Section 9.3 Further Assurances.
(a) From time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action, that may be necessary or desirable, or that the Agent or the
Lenders reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent or the Lenders to exercise and enforce their rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, the Company will execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent or the Lenders may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent or the Lenders to file one
or more financing or continuation statements, and assignments thereof and
amendments thereto, relating to all or any part of the Pledged Collateral
without the signature of the Company where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Pledged Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) The Company will furnish to the Agent and the Lenders from time to
time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent, the Lenders or the Company reasonably may request, all in reasonable
detail.
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<PAGE> 14
(d) If the Company shall acquire in any manner any additional
Intercompany Notes, the Company shall forthwith (and without the necessity for
any request or demand by the Agent) deliver such Intercompany Notes to the Agent
in the same manner as described in Section 1.1(c), together with a supplement to
Schedule A reflecting the addition of such additional Intercompany Notes,
whereupon such additional Intercompany Notes shall be deemed to be pledged
hereunder for all purposes hereunder. If the Company shall at any time acquire
any additional shares of the capital stock of any class of Pledged Stock,
whether such acquisition shall be by purchase, exchange, reclassification,
dividend, or otherwise, or acquire any new shares of capital stock of any newly
formed or acquired Subsidiary (as defined under and to the extent permitted by
the Amended and Restated Credit Agreement), the Company shall forthwith (and
without the necessity for any request or demand by the Agent) deliver such
shares to the Agent in the same manner as described in Section 1.1(c), together
with a supplement to Schedule A reflecting the addition of such additional
shares of stock, whereupon such additional shares of stock shall be deemed to be
Pledged Stock for all purposes hereunder. The Company will hold in trust for the
Agent upon receipt and immediately thereafter deliver to the Agent any
instrument evidencing or constituting Pledged Collateral (except, so long as no
Event of Default has occurred and is continuing, ordinary cash dividends, if
any, paid with respect to the Pledged Stock and payments in respect of the
Intercompany Notes, in each case as permitted by the Amended and Restated Credit
Agreement).
SECTION 10. EVENTS OF DEFAULT; REMEDIES.
Section 10.1 Events of Default Defined. If any Event of Default shall
occur and be continuing (for any reason whatsoever and whether it shall be
voluntary or involuntary or by operation of law or otherwise), then (i) all
payments received by the Company under or in connection with any of the Pledged
Collateral shall be held by the Company in trust for the Agent and the Lenders,
shall be segregated from other funds of the Company and shall forthwith upon
receipt by the Company be turned over to the Agent for the ratable benefit of
the Lenders in the same form as received by the Company (duly endorsed by the
Company to the Agent, if required); (ii) any and all such payments so received
by the Lenders (whether from the Company or otherwise) will be applied by the
Lenders against their Guaranteed Obligations; and (iii) any amount remaining
after payment in full of all of the Guaranteed Obligations shall be paid over to
the Company.
Section 10.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the Agent
and the Lenders may exercise in addition to all other rights and remedies
granted to the Agent and the Lenders in this Agreement, and under any other
instrument or agreement securing, evidencing or relating to the Guaranteed
Obligations, all rights and remedies of a secured party under the UCC as
applicable to the Pledged Collateral and all the rights granted to the Agent and
the Lenders. Without limiting the generality of the foregoing, the Company
expressly agrees that in any such event the Agent and the Lenders, without
demand of performance or other
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<PAGE> 15
demand, advertisement or notice of any kind (except the notice, specified below
of time and place of public or private sale) to or upon the Company or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith assume, collect, receive, appropriate and
realize upon the Pledged Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Pledged Collateral (or contract to do so), or any
part thereof, in one or more parcels at a public or private sale or sales, at
any exchange broker's board or at its offices or elsewhere at such prices as the
Agent may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Agent and the Lenders shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of said
Pledged Collateral so sold, free of any right or equity of redemption, which
equity of redemption the Company hereby releases, and in lieu of payment of such
actual purchase price may set-off the amount of such purchase price against the
Guaranteed Obligations then owing to such purchaser. The Company further agrees,
at the Agent's request, to assemble the Pledged Collateral and make it available
to the Agent at places which the Agent shall reasonably select, whether at the
Company's premises or elsewhere. The Agent and the Lenders shall retain the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safe keeping or otherwise of any or
all of the Pledged Collateral or in any way relating to the rights of the Agent
and the Lenders hereunder, including reasonable attorneys' fees and legal
expenses, for application to the payment in whole or in part of the Guaranteed
Obligations, and only after so retaining such net proceeds and after the payment
by the Agent and the Lenders of any other amount required by any provision of
law, including Section 9-504(1)(c) of the UCC, need the Agent and the Lenders
account for the surplus, if any, to the Company. To the extent permitted by
applicable law, the Company waives all claims, damages and demands against the
Agent and the Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, except to the extent that such claims, damages and demands
arise out of the willful misconduct or gross negligence of the Agent or the
Lenders.
(b) The Company also agrees to pay all costs of the Agent and the
Lenders, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Guaranteed Obligations and the enforcement and
protection of any of the rights of the Agent and the Lenders hereunder. All
costs and expenses incurred by each of the Agent and the Lenders with respect to
the enforcement, collection and protection of the Agent's and the Lenders'
interest in the Pledged Collateral shall be additional Guaranteed Obligations of
the Company to the Agent and the Lenders payable on demand, and secured by the
Pledged Collateral.
(c) Any notice required to be given by the Agent of a sale, lease or
other disposition or other intended action by it with respect to any of the
Pledged Collateral which is deposited in the United States mails, postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the
-14-
<PAGE> 16
Company of any such action. The net proceeds realized by the Agent and the
Lenders upon any such sale or other disposition, after deduction for the expense
of retaking, holding, preparing for sale, selling or the like and the reasonable
attorneys' fees and legal expenses incurred by the Agent and the Lenders in
connection therewith, shall be applied as provided herein toward satisfaction of
the Guaranteed Obligations. The Agent and the Lenders shall account to the
Company for any surplus realized upon such sale or other disposition. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect the Agent's and the Lenders'
security interest in the Pledged Collateral until the Guaranteed Obligations are
fully paid. The Company agrees that the Agent and the Lenders have no obligation
to preserve their rights to the Pledged Collateral against any other parties.
The Agent and the Lenders shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect
of Pledged Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Lenders be deemed to assume any
responsibility for, or obligation or duty with respect to, any part or all of
the Pledged Collateral, of any nature or kind whatsoever, or any matter or
proceedings arising out of or relating thereto. The Agent and the Lenders shall
not be required to take any action of any kind to collect or protect any
interest in the Pledged Collateral, including, but not limited to, any action
necessary to preserve the rights of the Agent and the Lenders, and the Company
against prior parties to any of the Pledged Collateral. The Agent and the
Lenders shall not be liable or responsible in any way for the safe keeping, care
or custody of any of the Pledged Collateral if the Pledged Collateral is
accorded the same treatment and level of care as their own property, for any
loss or damages thereto, for any diminution in the value thereof, for any act or
default of any agent or bailee of the Agent, the Lenders, the Company or of any
carrier, forwarding agency or other person whomsoever or for the collection of
any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or willful misconduct. The
Company hereby releases the Agent and the Lenders from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement
or the Guaranteed Obligations and any actions taken or omitted to be taken by
the Agent and the Lenders with respect thereto, and the Company hereby agrees to
hold the Agent and the Lenders harmless from and with respect to any and all
such claims, causes of action and demands. The Company hereby releases the Agent
and the Lenders from any claims, causes of action and demands arising under 42
U.S.C. Section 9607 or 9613 or similar provisions of state or local law.
Section 10.4 Remedies Cumulative. No remedy conferred upon the Agent
and the Lenders is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
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<PAGE> 17
Section 10.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and the Lenders and no delay or failure in exercising any
rights hereunder in respect thereof shall operate as a waiver of any of the
rights of the Agent and the Lenders.
SECTION 11. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and shall
not be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by all the Lenders,
shall (a) limit the liability of the Company hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Lenders required to take
any action hereunder.
No failure on the part of the Agent or the Lenders to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other, or
further exercise thereof or the exercise of any other right.
SECTION 12. MISCELLANEOUS.
Section 12.1 Expenses. The Company will pay the Agent and the Lenders
for any and all sums, costs and expenses which the Agent or the Lenders may pay
or incur by reason of defending, protecting or enforcing the security interest
herein granted or the priority hereof, enforcing payment of the Guaranteed
Obligations, discharging any Lien or claim against the Pledged Collateral or any
part thereof or, if the Company fails to perform or comply with any of its
agreements herein, performing or complying with such terms. Such sums, costs and
expenses shall include, without limitation, all court costs, collection charges,
travel and reasonable attorneys' fees (including fees and expenses incident to
the enforcement of payment of any obligations of the Company by any action or
participation in, or connection with, a case or proceeding under Chapters 7, 11
or 13 of the Bankruptcy Code). All sums, costs and expenses of the Agent and the
Lenders payable by the Company pursuant to this Agreement shall be payable by
the Company to the Agent and the Lenders on demand and shall constitute
Guaranteed Obligations secured by the Pledged Collateral.
Section 12.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agent and the Lenders or on their behalf and (b) survive the execution and
delivery of this Agreement and of the Notes, and shall continue in effect so
long as any Note or Obligation is outstanding and thereafter as provided in
Sections 10 and 12.1.
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<PAGE> 18
Section 12.3 Successors and Assigns; Transfers of the Notes. This
Agreement shall bind and inure to the benefit of, and be enforceable by, the
Company, the Agent, the Lenders, and their respective permitted successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes. The
Company may not assign its rights and obligations under this Agreement, except
pursuant to a reorganization permitted under the Amended and Restated Credit
Agreement. The Lenders may transfer the Notes (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state and federal securities laws and the
requirements of Section 9 of the Amended and Restated Credit Agreement.
Section 12.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
(a) if to the Company:
HORSESHOE GAMING, INC.
c/o Horseshoe Gaming, Inc.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Paul Alanis
Telephone: (702) 650-0080
Telecopy: (702) 650-0081
with a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: Jim Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
(b) if to the Agent or the Lenders, at their respective addresses as
set forth in the Amended and Restated Credit Agreement or at such other address
as shall be provided to the Borrower in accordance to the terms of the Amended
and Restated Credit Agreement.
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<PAGE> 19
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 12.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
Section 12.6 Governing Law. This Agreement and the Notes, the Letters
of Credit, the Secured Hedging Obligations and (unless otherwise provided) all
amendments, supplements, waivers and consents relating hereto or thereto shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.
Section 12.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Agreement or any course of conduct, course of
dealing, statements or actions of the Company, the Agent or the Lenders related
thereto, the Company hereby submits and consents to the jurisdiction of the
courts of the State of New York and of the United States District Court for the
Southern District of New York, and the Company agrees that any such action, suit
or proceeding may be brought by the Agent or the Lenders in the Supreme Court of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York, and the service of process may be made
upon the Company by mailing a copy of the summons and any complaint to the
Company by registered mail, at the address specified in Section 12.4. The
Company hereby waives and agrees not to assert, by way of motion or otherwise,
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of the above-named courts, that the action is brought in an
inconvenient forum or that the venue of the action is improper. The Agent and
the Lenders, nevertheless, may serve, process or commence any such action, suit
or proceeding in such other jurisdiction(s), and in such other manner as may be
permitted by applicable law. The methods of service of process specified in this
paragraph may be used in the alternative or together as the Agent and the
Lenders may see fit.
Section 12.8 Headings. The headings in this Agreement are for
convenience only and shall not be construed as a part of this Agreement.
Section 12.9 Term of Agreement. This Agreement and all agreements of
the Company contained herein shall continue in full force and effect and shall
not be discharged until such time as the Guaranteed Obligations shall be
indefeasibly paid or performed in full
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<PAGE> 20
and all of the agreements of (a) the Borrower under the Amended and Restated
Credit Agreement and the Secured Hedging Obligations and (b) the Company
hereunder shall be fully paid or performed; provided, certain provisions of this
Agreement shall survive such termination as expressly set forth herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed delivered as of the date first above written.
HORSESHOE GAMING, INC.
By: __________________________
Name: Walter J. Haybert
Title: Treasurer
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<PAGE> 21
SCHEDULE A
Pledged Stock
Membership Interest in Horseshoe Gaming, L.L.C. (uncertificated).
Intercompany Notes
None.
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. TERMS AND DEFINITIONS..........................................................................2
Section 1.1 Definitions............................................................................2
Section 1.2 Additional Terms.......................................................................4
Section 1.3 Action by the Agent or the Lenders.....................................................4
SECTION 2. GUARANTEE......................................................................................4
Section 2.1 Guaranteed Obligations.................................................................4
Section 2.2 Guarantee Absolute.....................................................................5
Section 2.3 Subordination..........................................................................5
SECTION 3. GRANT OF SECURITY..............................................................................6
Section 3.1 Pledged Collateral.....................................................................6
SECTION 4. OBLIGATIONS UNCONDITIONAL......................................................................7
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT................................................................8
SECTION 6. WAIVERS........................................................................................9
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.;
REINSTATEMENT.................................................................................11
SECTION 8. REPRESENTATIONS OF THE COMPANY................................................................11
Section 8.1 Location..............................................................................11
Section 8.2 Security Interest.....................................................................11
SECTION 9. COVENANTS.....................................................................................12
Section 9.1 Continuous Perfection.................................................................12
Section 9.2 Amendment of Organization Documents...................................................12
Section 9.3 Further Assurances....................................................................12
SECTION 10. EVENTS OF DEFAULT; REMEDIES...................................................................13
Section 10.1 Events of Default Defined.............................................................13
Section 10.2 Remedies..............................................................................13
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect of
Pledged Collateral....................................................................15
Section 10.4 Remedies Cumulative...................................................................16
Section 10.5 Remedies Not Waived...................................................................16
</TABLE>
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<PAGE> 23
<TABLE>
<S> <C>
SECTION 11. AMENDMENT AND WAIVER..........................................................................16
SECTION 12. MISCELLANEOUS.................................................................................16
Section 12.1 Expenses..............................................................................16
Section 12.2 Reliance on and Survival of Representations...........................................16
Section 12.3 Successors and Assigns; Transfers of the Notes........................................17
Section 12.4 Notices...............................................................................17
Section 12.5 Severability..........................................................................18
Section 12.6 Governing Law.........................................................................18
Section 12.7 Forum and Jurisdiction................................................................18
Section 12.8 Headings..............................................................................18
Section 12.9 Term of Agreement.....................................................................19
</TABLE>
-ii-
<PAGE> 1
EXHIBIT 4.55
GUARANTEE AND SECURITY AGREEMENT
Dated as of November 12, 1997
From
HORSESHOE GP, INC.,
A Nevada Corporation,
as Guarantor
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
and
CERTAIN COMMERCIAL
LENDING INSTITUTIONS
as Lenders
<PAGE> 2
GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT dated as of November 12, 1997
(this "Guarantee" or this "Agreement"), is made by HORSESHOE GP, INC., a Nevada
corporation with an office located at 4024 Industrial Road, Las Vegas, Nevada
89103 (the "Company"), in favor of the Lenders (as herein defined) and Canadian
Imperial Bank of Commerce ("CIBC"), in its capacity as agent for the Lenders (in
such capacity, the "Agent").
R E C I T A L S:
WHEREAS, on October 10, 1995, Horseshoe Gaming, L.L.C., a Delaware
limited liability company (the "Borrower") authorized the issuance of up to
$150,000,000 of its Senior Secured Credit Facility Notes due September 30, 1999
pursuant to a Senior Secured Credit Facility Note Purchase Agreement dated as of
October 10, 1995, between the Borrower and the Purchasers named therein (the
"Note Purchasers"), as amended prior to the date hereof (as so amended, the
"Senior Secured Credit Facility Note Purchase Agreement");
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Note Purchaser and CIBC, the remaining Note Purchaser
assigned to CIBC all of the rights, duties and obligations of the Note
Purchasers in connection with the Senior Secured Credit Facility Note Purchase
Agreement and the security documents and other documents executed in connection
therewith;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Borrower, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;
WHEREAS, the Borrower directly owns a 100% ownership interest in the
Company;
WHEREAS, the Company will derive substantial economic benefit from the
availability of credit to the Borrower pursuant to the Amended and Restated
Credit Agreement; and
WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders and the
Agent that the Company execute this Agreement on the terms, and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders and the Agent, including the extension of availability of credit
to the Borrower and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged by the Company, the Company hereby
agrees as follows:
<PAGE> 3
SECTION 1. TERMS AND DEFINITIONS.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Chattel Paper" has the meaning provided in the UCC.
"Contract Rights" means all rights of the Company (including, without
limitation, all rights to payment) under each Contract.
"Contracts" means all contracts between the Company and one or more
additional parties.
"Copyrights" means any copyright registered with the United States
Copyright Office, as well as any application for a United States copyright
registration made with the United States Copyright Office.
"Documents" has the meaning provided in the UCC.
"Equipment" means any "equipment," as such term is defined in the UCC
and, in any event, shall include, but shall not be limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"General Intangibles" has the meaning provided in the UCC and in any
event includes all claims, rights, powers, privileges, authority, options,
security interests, liens and remedies under any partnership agreement to which
the Company is a party or with respect to any partnership of which the Company
is a partner.
"Goods" has the meaning provided in the UCC.
"Instrument" has the meaning provided in Article 9 of the UCC.
"Intercompany Notes" means a promissory note evidencing indebtedness of
a Subsidiary of the Company to the Company.
"Inventory" means merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing, packaging or shipping
same; in all stages of production--from raw materials through work-in-process to
finished goods--and all products and proceeds of whatever sort and wherever
located
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and any portion thereof which may be returned, rejected, reclaimed or
repossessed by the Agent, and shall specifically include all "inventory" as such
term is defined in the UCC.
"Marks" means any trademarks and service marks registered in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any political subdivision thereof any
application for such trademarks and service marks, as well as any unregistered
marks used in the United States and trade dress, logos, designs, trade names,
company names, business names, fictitious business names and other business
identifiers used in the United States.
"Patents" means any patent registered with the United States Patent and
Trademark Office, as well as any application for a United States patent
registration made with the United States Patent and Trademark Office.
"Pledged Stock" means the shares of capital stock described in Schedule
A hereto, as it may, from time to time, be supplemented in accordance with the
terms of the Agreement.
"Proceeds" shall mean all "proceeds", as such term is defined in the
UCC and, in any event, shall mean and include, but not be limited to (i) any and
all proceeds of any insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the Pledged Collateral (as
defined in Section 3), (ii) any and all payments (in any form whatsoever) made
or due and payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Collateral by any governmental authority, bureau or agency
(or any Person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
"Receivables" means any "account" as such term is defined in the UCC,
and, in any event, shall include, but shall not be limited to, all rights to
payment for goods sold or leased or services performed, whether now in existence
or arising from time to time hereafter, including, without limitation, such
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held to secure the
foregoing; (ii) all right, title and interest in and to any goods, the sale of
which gave rise thereto; (iii) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing; (iv) all powers of attorney for the execution
of any evidence of indebtedness or security or other writing in connection
therewith; (v) all books, records, ledger cards, and invoices relating thereto;
(vi) all evidences of the filing of financing statements and other statements
and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from
filing or other registration officers; (vii) all credit information reports and
memoranda relating thereto; and (viii) all other writings related in any way to
the foregoing.
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"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Amended and Restated Credit Agreement.
Section 1.3 Action by the Agent or the Lenders. Whenever any action is
required or permitted to be taken by the Agent or the Lenders, except for such
action which is expressly provided herein to be taken by an individual Lender or
by all the Lenders, such action, including, without limitation, in connection
with the exercise of any remedy granted herein, shall be taken by the Agent,
acting at the direction of Majority Lenders or the Required Lenders, as provided
in the Amended and Restated Credit Agreement.
SECTION 2. GUARANTEE.
Section 2.1 Guaranteed Obligations. The Company, jointly and severally
with any other guarantors, hereby absolutely, unconditionally and irrevocably
guarantees to the Agent and the Lenders on a continuing basis the full, complete
and punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of any and all sums due from, and any and all Obligations of the
Borrower to the Agent and the Lenders now or hereafter existing under the Notes,
the Letters of Credit, the Secured Hedging Obligations and the Amended and
Restated Credit Agreement, without regard to the Borrower's use of the proceeds
of the Loans, the Letters of Credit or the Secured Hedging Obligations, whether
for principal, premium, interest, fees, costs, expenses or otherwise, including,
without prejudice to the generality of the foregoing, the prompt payment of the
Notes and payment of interest and premium thereon at the times and in the manner
specified in the Notes and the Amended and Restated Credit Agreement, prompt
payment of amounts owing pursuant to the issuance of the Letters of Credit,
prompt payment of the Secured Hedging Obligations at the times and in the manner
specified in the documentation therefor and the payment of any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent and the
Lenders in enforcing any rights under the Notes, the Letters of Credit, the
Secured Hedging Obligations, the Amended and Restated Credit Agreement and this
Agreement. Without limiting the generality of the foregoing, the Company's
liability shall extend to all amounts that would be owed by the Borrower to the
Agent and the Lenders under the Amended and Restated Credit Agreement but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower. Each of
the obligations guaranteed as set forth in this Section 2.1 is hereinafter
referred to severally as a "Guaranteed Obligation" and collectively as the
"Guaranteed Obligations".
Section 2.2 Guarantee Absolute. This Guarantee is a guarantee of
payment and not of collection, is in no way conditioned or contingent upon any
attempt to collect from or proceed against the Borrower, any other guarantors or
sureties, any other person or entity or
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any collateral security, or upon any other event, contingency or circumstance
whatsoever and shall be binding upon and against the Company without regard to
the validity, regularity or enforceability of the Amended and Restated Credit
Agreement or any other instrument or agreement. The Company guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the term of the
Amended and Restated Credit Agreement and the documentation evidencing the
Secured Hedging Obligations, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The obligations of the
Company hereunder are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against the Company to enforce
this Agreement, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. If for
any reason whatsoever the Borrower shall fail or be unable duly, punctually and
fully to pay the Guaranteed Obligations or any part thereof as and when the same
shall become payable in accordance with the terms of the Amended and Restated
Credit Agreement, the Company, immediately upon demand, will pay or cause to be
paid the Guaranteed Obligations or such part thereof.
Section 2.3 Subordination. Until payment in full of all sums due to the
Agent and the Lenders under, or in connection with such party's rights relating
to, the Amended and Restated Credit Agreement and the Secured Hedging
Obligations and all other instruments, documents and agreements contemplated
therein and performance of all other obligations thereunder, the Company hereby
covenants and agrees with the Agent and the Lenders that:
(a) the Company shall and does hereby subordinate, to the obligations
of the Borrower to the Agent and the Lenders, all present and future
indebtedness due to the Company from (and shall cause to be subordinated to the
obligations of the Company to the Agent and the Lenders hereunder all present
and future indebtedness due from the Company to) the Borrower; and
(b) the Company shall deliver to the Agent and the Lenders, and shall
cause the Borrower to deliver to the Agent and the Lenders, such agreements and
other evidence of such subordination as the Agent or the Lenders reasonably may
request from time to time.
SECTION 3. GRANT OF SECURITY.
Section 3.1 Pledged Collateral.
(a) The Company, to secure its punctual payment and performance
hereunder in respect of the Guaranteed Obligations hereby pledges, assigns and
transfers unto the Agent, and does hereby grant to the Agent, for the benefit of
the Lenders, a continuing security interest of first priority in, all of the
right, title and interest of the Company in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) all cash,
accounts, deposits, securities and insurance policies now or at any time
hereafter in the possession or under
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<PAGE> 7
control of the Company or its respective bailees and any interest therein, (ii)
each and every Receivable, (iii) all Contract Rights arising under all
Contracts, and all equity and debt securities and other interests in any and all
Subsidiaries (other than Unrestricted Subsidiaries), (iv) all Inventory, (v) all
Equipment, (vi) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of the Company symbolized by
the Marks, (vii) all Patents and Copyrights, and all reissues, renewals or
extensions thereof, (viii) all computer programs and all intellectual property
rights therein and all other proprietary information, (ix) (A) the indebtedness
of the Company's Subsidiaries to the Company; (B) all Intercompany Notes listed
on Schedule A (as it may, from time to time, be supplemented in accordance with
the terms hereof) and all promissory notes which are pledged to the Agent; and
(C) all shares of capital stock described in Schedule A (as it may, from time to
time, be supplemented in accordance with the terms hereof) and all other shares
of capital stock or other equity interests, (x) all books and records, customer
lists, ledger cards, credit files, print-outs, and other materials and records
pertaining to any of the foregoing, whether now owned or hereafter acquired,
(xi) all other Goods, General Intangibles, investment property (as defined in
Article 9 of the UCC), Chattel Paper, Documents and Instruments, (xiii) all
other personal property of the Company, whether now owned or hereafter acquired,
(xiv) all documents of title evidencing or issued with respect to any of the
foregoing, and (xv) all Proceeds and products of any and all of the foregoing
(collectively, the "Pledged Collateral").
(b) The Pledged Collateral secures the payment of all obligations of
every kind and character now or hereafter existing (whether matured or
unmatured, contingent or liquidated) of the Company under Section 2 with respect
to the Guaranteed Obligations and under each other provision of this Agreement
(in each case as this Agreement hereafter may be amended, supplemented or
otherwise modified from time to time), whether for principal, interest, premium,
fees, expenses, reimbursement, indemnification or otherwise.
(c) The Intercompany Notes and the certificates representing the
Pledged Stock listed on Schedule A shall be delivered to the Agent
contemporaneously herewith together with appropriate undated note powers and
stock powers duly executed in blank. Neither the Agent nor any Lender shall be
obligated to preserve or protect any rights with respect to the Intercompany
Notes or the Pledged Stock or to receive or give any notice with respect thereto
whether or not the Agent or any Lender is deemed to have knowledge of such
matters.
(d) The assignments and security interests under this Agreement granted
to the Agent shall not relieve the Company from the performance of any term,
covenant, condition or agreement on the Company's part to be performed or
observed under or in respect of the Pledged Collateral or from any liability to
any Person under or in respect of any of such Pledged Collateral or impose any
obligation on the Agent to perform or observe any such term, covenant, condition
or agreement on the Company's part to be so performed or observed or impose any
liability on the Agent for any act or omission on the part of the Company
relative thereto or for any breach of any representation or warranty on the part
of the Company contained in this Agreement or any other Loan Document, or in
respect of the Pledged Collateral or made in
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<PAGE> 8
connection herewith or therewith. The obligations of the Company contained in
this paragraph shall survive the termination of this Agreement and the discharge
of the Company's other obligations hereunder.
SECTION 4. OBLIGATIONS UNCONDITIONAL.
The obligations of the Company set forth in this Agreement and all
rights of the Agent and the Lenders shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deferment, reduction or diminution
of any obligation or defense of any kind or nature (other than full,
indefeasible and timely payment of the Guaranteed Obligations) based upon any
claim the Company or any other party may have against the Agent, the Lenders,
the Borrower, any of their Affiliates, or any other party, shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether or not
the Agent, the Lenders, or the Company shall have any knowledge or notice
thereof), including without limitation:
(a) any compromise, settlement, release, accord and satisfaction,
termination, modification, amendment, waiver, consent or other change, addition,
deletion or supplement of or to, or any forbearance or indulgence with respect
to, any or all of the obligations, duties, covenants or agreements under the
Amended and Restated Credit Agreement or the Secured Hedging Obligations, or any
other instrument or agreement whatsoever (whether or not referred to in the
Amended and Restated Credit Agreement or applicable to any of the parties to the
Amended and Restated Credit Agreement), or any assignment or transfer of any
interest in any of the foregoing, or any furnishing, acceptance, substitution or
exchange of, any release of or failure to protect, perfect or to continue
perfected, or any other action or inaction in respect of, any direct or indirect
security for or guarantee with respect to the Guaranteed Obligations or any part
thereof (including, without limitation, the Pledged Collateral);
(b) any failure, omission or delay on the part of the Agent or the
Lenders or any party claiming by, through or under any of the foregoing to
conform or comply with any term of any instrument or agreement referred to in
subsection (a) above, or to exercise any right, remedy or power thereunder,
including, but not limited to, the failure to give notice to the Company of the
occurrence of any Event of Default;
(c) any renewal, refinancing or refunding of the Guaranteed Obligations
in whole or in part or extension of the time for payment of any Guaranteed
Obligation or for the payment of any other amount payable under the Amended and
Restated Credit Agreement or any Secured Hedging Obligation or of the time for
performance of any other obligations, covenants or agreements under or arising
out of the Amended and Restated Credit Agreement, any Secured Hedging Obligation
or any other instrument or agreement or the extension or the renewal of any of
the foregoing;
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<PAGE> 9
(d) any voluntary or involuntary liquidation, dissolution, winding-up,
sale or other disposition of all or substantially all the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of the debts of, or other similar events or proceedings affecting,
the Borrower or any of its assets or of any other party, or any action taken by
any trustee or receiver or by any court in any such proceeding, or any
allegation of invalidity of this Guarantee in any such proceeding;
(e) to the extent permitted by law, any release or discharge by
operation of law of the Borrower, or any other party from the performance or
observance of any obligation, covenant or agreement contained in the Amended and
Restated Credit Agreement, any documentation evidencing the Secured Hedging
Obligations or any other instrument or agreement;
(f) any merger or consolidation of the Borrower into or with any entity
or any sale, lease or transfer of any of the assets of the Borrower to any other
party, or any change in the name, objects or governing documents of the Borrower
or otherwise in the Company's relationship to the Borrower;
(g) any impossibility or illegality of performance on the part of the
Borrower of its obligations under the Amended and Restated Credit Agreement or
the Secured Hedging Obligations;
(h) any lack of validity or enforceability of any provisions of the
Amended and Restated Credit Agreement, the documentation for the Secured Hedging
Obligations or any other Loan Document; or
(i) any other occurrence or circumstance whatsoever, whether similar or
dissimilar to the foregoing, and any other circumstance which might otherwise
constitute a legal or equitable defense or discharge of the liabilities of a
Company or surety or which might otherwise limit recourse against the Pledged
Collateral.
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Effective upon the occurrence and during the continuance of an
Event of Default, the Company hereby irrevocably constitutes and appoints the
Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of
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attorney), and, without limiting the generality of the foregoing, hereby gives
the Agent in its sole discretion the power and right, on behalf of the Company,
without notice to or assent by the Company, to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due and to become due under any Pledged
Collateral and, in the name of the Company or its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Pledged Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting
any and all such monies due under any Pledged Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Agent for the purpose of collecting any and all such moneys due under
any Pledged Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof and acknowledges that this power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Pledged Collateral and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither the Agent nor any of its agents,
representatives or designees shall be responsible to the Company for any act or
failure to act, except for any act involving their gross negligence or willful
misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior to an
Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or (ii) to control decisions regarding
the disposal or other management of hazardous substances generated, used or
handled by the Company or any of its Affiliates.
SECTION 6. WAIVERS.
(a) The Company hereby irrevocably waives promptness, diligence, notice
of acceptance, nonpayment, nonperformance, dishonor or protest and any other
notice with respect to any of the Guaranteed Obligations and this Agreement and
any other circumstance which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or which might otherwise
limit the obligations of the Company under this Agreement. The Company hereby
irrevocably waives any requirement that the Agent or the
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Lenders protect, secure, perfect or insure any Lien on the Pledged Collateral or
exhaust any right or take any action against the Borrower, or any other Person
or mitigate the damages resulting from default by the Borrower under the Amended
and Restated Credit Agreement or any Secured Hedging Obligations, or by the
Company under this Agreement.
(b) The Company hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim based upon, arising out of, or relating
to, this Agreement, the transactions contemplated by the Amended and Restated
Credit Agreement or the Secured Hedging Obligations or the actions of the Agent
and the Lenders in the negotiation, administration, performance or enforcement
thereof. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. The
Company acknowledges that this waiver is a material inducement to the Agent and
the Lenders to enter into a business relationship with the Company and its
Subsidiaries and Affiliates and that the Agent and the Lenders have each already
relied on this waiver in entering into this Agreement and the Loan Documents and
that each will continue to rely on this waiver in their related future dealings.
The Company further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
(c) The Company hereby irrevocably waives, until the end of the term of
this Agreement as set forth in Section 12.9, any claim or other rights that it
may now or hereafter acquire against the Borrower or any other guarantor of the
obligations of the Borrower that arise from the existence, payment, performance
or enforcement of the Guaranteed Obligations, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Agent
or the Lenders against the Borrower or any other guarantor or any collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Borrower or any other guarantor directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right. If any amount shall be paid to the
Company in violation of the preceding sentence at any time prior to the payment
in full in cash of the Guaranteed Obligations, such amount shall be held in
trust for the benefit of the Agent and the Lenders and shall forthwith be paid
to the Agent to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of this Agreement and the
Amended and Restated Credit Agreement or to be held as Pledged
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Collateral for any Guaranteed Obligations thereafter arising. The Company
acknowledges it will derive substantial economic benefits from the financing
arrangements contemplated by the Amended and Restated Credit Agreement and the
Secured Hedging Obligations and that the waiver set forth in this subsection (c)
is knowingly made in contemplation of such benefits.
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.; REINSTATEMENT. The
obligations of the Company under this Agreement shall continue to be effective,
or be automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Agent or the Lenders (as a preference,
fraudulent conveyance or otherwise) upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any other person
or entity or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to the Borrower, or
any other party, or any substantial part of its property, or otherwise, all as
though such payments had not been made. If an Event of Default shall at any time
have occurred and be continuing or shall exist and declaration of default or
acceleration under or with respect to the Amended and Restated Credit Agreement
or the Secured Hedging Obligations, or any Guaranteed Obligation shall at such
time be prevented by reason of the pendency against the Borrower or any other
Person or entity of a case or proceeding under a bankruptcy or insolvency law,
the Company agrees that, for purposes of this Agreement and its obligations
hereunder, the Amended and Restated Credit Agreement, the Secured Hedging
Obligations and such Guaranteed Obligation shall be deemed to have been declared
in default or accelerated with the same effect as if the Amended and Restated
Credit Agreement, the Secured Hedging Obligations and such Guaranteed Obligation
had been declared in default and accelerated in accordance with their respective
terms and the Company shall forthwith pay the amounts specified to be paid
thereunder in accordance with their respective terms and all other Guaranteed
Obligations without further notice or demand.
SECTION 8. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants to the Agent and the Lenders as follows:
Section 8.1 Location. The chief place of business and chief executive
office of the Company is located at the address first specified above for the
Company.
Section 8.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Guaranteed Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
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SECTION 9. COVENANTS. The Company hereby covenants and agrees that on
and after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 9.1 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent and the Lenders at least 90 days' prior
written notice thereof of its intention to so change and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary,
or reasonably requested by the Agent and the Lenders, to amend such financing or
continuation statement so that it is not misleading.
Section 9.2 Amendment of Organization Documents. The Company shall not
amend its [Limited Partnership Agreement] in a manner that affects adversely the
Agent or the Lenders.
Section 9.3 Further Assurances.
(a) From time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action, that may be necessary or desirable, or that the Agent or the
Lenders reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent or the Lenders to exercise and enforce their rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, the Company will execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent or the Lenders may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent or the Lenders to file one
or more financing or continuation statements, and assignments thereof and
amendments thereto, relating to all or any part of the Pledged Collateral
without the signature of the Company where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Pledged Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) The Company will furnish to the Agent and the Lenders from time to
time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent, the Lenders or the Company reasonably may request, all in reasonable
detail.
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(d) If the Company shall acquire in any manner any additional
Intercompany Notes, the Company shall forthwith (and without the necessity for
any request or demand by the Agent) deliver such Intercompany Notes to the Agent
in the same manner as described in Section 1.1(c), together with a supplement to
Schedule A reflecting the addition of such additional Intercompany Notes,
whereupon such additional Intercompany Notes shall be deemed to be pledged
hereunder for all purposes hereunder. If the Company shall at any time acquire
any additional shares of the capital stock of any class of Pledged Stock,
whether such acquisition shall be by purchase, exchange, reclassification,
dividend, or otherwise, or acquire any new shares of capital stock of any newly
formed or acquired Subsidiary (as defined under and to the extent permitted by
the Amended and Restated Credit Agreement), the Company shall forthwith (and
without the necessity for any request or demand by the Agent) deliver such
shares to the Agent in the same manner as described in Section 1.1(c), together
with a supplement to Schedule A reflecting the addition of such additional
shares of stock, whereupon such additional shares of stock shall be deemed to be
Pledged Stock for all purposes hereunder. The Company will hold in trust for the
Agent upon receipt and immediately thereafter deliver to the Agent any
instrument evidencing or constituting Pledged Collateral (except, so long as no
Event of Default has occurred and is continuing, ordinary cash dividends, if
any, paid with respect to the Pledged Stock and payments in respect of the
Intercompany Notes, in each case as permitted by the Amended and Restated Credit
Agreement).
SECTION 10. EVENTS OF DEFAULT; REMEDIES.
Section 10.1 Events of Default Defined. If any Event of Default shall
occur and be continuing (for any reason whatsoever and whether it shall be
voluntary or involuntary or by operation of law or otherwise), then (i) all
payments received by the Company under or in connection with any of the Pledged
Collateral shall be held by the Company in trust for the Agent and the Lenders,
shall be segregated from other funds of the Company and shall forthwith upon
receipt by the Company be turned over to the Agent for the ratable benefit of
the Lenders in the same form as received by the Company (duly endorsed by the
Company to the Agent, if required); (ii) any and all such payments so received
by the Lenders (whether from the Company or otherwise) will be applied by the
Lenders against their Guaranteed Obligations; and (iii) any amount remaining
after payment in full of all of the Guaranteed Obligations shall be paid over to
the Company.
Section 10.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the Agent
and the Lenders may exercise in addition to all other rights and remedies
granted to the Agent and the Lenders in this Agreement, and under any other
instrument or agreement securing, evidencing or relating to the Guaranteed
Obligations, all rights and remedies of a secured party under the UCC as
applicable to the Pledged Collateral and all the rights granted to the Agent and
the Lenders. Without limiting the generality of the foregoing, the Company
expressly agrees that in any such event the Agent and the Lenders, without
demand of performance or other
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<PAGE> 15
demand, advertisement or notice of any kind (except the notice, specified below
of time and place of public or private sale) to or upon the Company or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith assume, collect, receive, appropriate and
realize upon the Pledged Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Pledged Collateral (or contract to do so), or any
part thereof, in one or more parcels at a public or private sale or sales, at
any exchange broker's board or at its offices or elsewhere at such prices as the
Agent may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Agent and the Lenders shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of said
Pledged Collateral so sold, free of any right or equity of redemption, which
equity of redemption the Company hereby releases, and in lieu of payment of such
actual purchase price may set-off the amount of such purchase price against the
Guaranteed Obligations then owing to such purchaser. The Company further agrees,
at the Agent's request, to assemble the Pledged Collateral and make it available
to the Agent at places which the Agent shall reasonably select, whether at the
Company's premises or elsewhere. The Agent and the Lenders shall retain the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safe keeping or otherwise of any or
all of the Pledged Collateral or in any way relating to the rights of the Agent
and the Lenders hereunder, including reasonable attorneys' fees and legal
expenses, for application to the payment in whole or in part of the Guaranteed
Obligations, and only after so retaining such net proceeds and after the payment
by the Agent and the Lenders of any other amount required by any provision of
law, including Section 9-504 (1)(c) of the UCC, need the Agent and the Lenders
account for the surplus, if any, to the Company. To the extent permitted by
applicable law, the Company waives all claims, damages and demands against the
Agent and the Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, except to the extent that such claims, damages and demands
arise out of the willful misconduct or gross negligence of the Agent or the
Lenders.
(b) The Company also agrees to pay all costs of the Agent and the
Lenders, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Guaranteed Obligations and the enforcement and
protection of any of the rights of the Agent and the Lenders hereunder. All
costs and expenses incurred by each of the Agent and the Lenders with respect to
the enforcement, collection and protection of the Agent's and the Lenders'
interest in the Pledged Collateral shall be additional Guaranteed Obligations of
the Company to the Agent and the Lenders payable on demand, and secured by the
Pledged Collateral.
(c) Any notice required to be given by the Agent of a sale, lease or
other disposition or other intended action by it with respect to any of the
Pledged Collateral which is deposited in the United States mails, postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the
-14-
<PAGE> 16
Company of any such action. The net proceeds realized by the Agent and the
Lenders upon any such sale or other disposition, after deduction for the expense
of retaking, holding, preparing for sale, selling or the like and the reasonable
attorneys' fees and legal expenses incurred by the Agent and the Lenders in
connection therewith, shall be applied as provided herein toward satisfaction of
the Guaranteed Obligations. The Agent and the Lenders shall account to the
Company for any surplus realized upon such sale or other disposition. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect the Agent's and the Lenders'
security interest in the Pledged Collateral until the Guaranteed Obligations are
fully paid. The Company agrees that the Agent and the Lenders have no obligation
to preserve their rights to the Pledged Collateral against any other parties.
The Agent and the Lenders shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect
of Pledged Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Lenders be deemed to assume any
responsibility for, or obligation or duty with respect to, any part or all of
the Pledged Collateral, of any nature or kind whatsoever, or any matter or
proceedings arising out of or relating thereto. The Agent and the Lenders shall
not be required to take any action of any kind to collect or protect any
interest in the Pledged Collateral, including, but not limited to, any action
necessary to preserve the rights of the Agent and the Lenders, and the Company
against prior parties to any of the Pledged Collateral. The Agent and the
Lenders shall not be liable or responsible in any way for the safe keeping, care
or custody of any of the Pledged Collateral if the Pledged Collateral is
accorded the same treatment and level of care as their own property, for any
loss or damages thereto, for any diminution in the value thereof, for any act or
default of any agent or bailee of the Agent, the Lenders, the Company or of any
carrier, forwarding agency or other person whomsoever or for the collection of
any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or willful misconduct. The
Company hereby releases the Agent and the Lenders from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement
or the Guaranteed Obligations and any actions taken or omitted to be taken by
the Agent and the Lenders with respect thereto, and the Company hereby agrees to
hold the Agent and the Lenders harmless from and with respect to any and all
such claims, causes of action and demands. The Company hereby releases the Agent
and the Lenders from any claims, causes of action and demands arising under 42
U.S.C. Section 9607 or 9613 or similar provisions of state or local law.
Section 10.4 Remedies Cumulative. No remedy conferred upon the Agent
and the Lenders is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
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<PAGE> 17
Section 10.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and the Lenders and no delay or failure in exercising any
rights hereunder in respect thereof shall operate as a waiver of any of the
rights of the Agent and the Lenders.
SECTION 11. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and shall
not be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by all the Lenders,
shall (a) limit the liability of the Company hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Lenders required to take
any action hereunder.
No failure on the part of the Agent or the Lenders to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other, or
further exercise thereof or the exercise of any other right.
SECTION 12. MISCELLANEOUS.
Section 12.1 Expenses. The Company will pay the Agent and the Lenders
for any and all sums, costs and expenses which the Agent or the Lenders may pay
or incur by reason of defending, protecting or enforcing the security interest
herein granted or the priority hereof, enforcing payment of the Guaranteed
Obligations, discharging any Lien or claim against the Pledged Collateral or any
part thereof or, if the Company fails to perform or comply with any of its
agreements herein, performing or complying with such terms. Such sums, costs and
expenses shall include, without limitation, all court costs, collection charges,
travel and reasonable attorneys' fees (including fees and expenses incident to
the enforcement of payment of any obligations of the Company by any action or
participation in, or connection with, a case or proceeding under Chapters 7, 11
or 13 of the Bankruptcy Code). All sums, costs and expenses of the Agent and the
Lenders payable by the Company pursuant to this Agreement shall be payable by
the Company to the Agent and the Lenders on demand and shall constitute
Guaranteed Obligations secured by the Pledged Collateral.
Section 12.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agent and the Lenders or on their behalf and (b) survive the execution and
delivery of this Agreement and of the Notes, and shall continue in effect so
long as any Note or Obligation is outstanding and thereafter as provided in
Sections 10 and 12.1.
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<PAGE> 18
Section 12.3 Successors and Assigns; Transfers of the Notes. This
Agreement shall bind and inure to the benefit of, and be enforceable by, the
Company, the Agent, the Lenders, and their respective permitted successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes. The
Company may not assign its rights and obligations under this Agreement, except
pursuant to a reorganization permitted under the Amended and Restated Credit
Agreement. The Lenders may transfer the Notes (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state and federal securities laws and the
requirements of Section 9 of the Amended and Restated Credit Agreement.
Section 12.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
(a) if to the Company:
c/o Horseshoe Gaming, Inc.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Paul Alanis
Telephone: (702) 650-0080
Telecopy: (702) 650-0081
with a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: Jim Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
(b) if to the Agent or the Lenders, at their respective addresses as
set forth in the Amended and Restated Credit Agreement or at such other address
as shall be provided to the Borrower in accordance to the terms of the Amended
and Restated Credit Agreement.
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<PAGE> 19
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 12.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
Section 12.6 Governing Law. This Agreement and the Notes, the Letters
of Credit, the Secured Hedging Obligations and (unless otherwise provided) all
amendments, supplements, waivers and consents relating hereto or thereto shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.
Section 12.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Agreement or any course of conduct, course of
dealing, statements or actions of the Company, the Agent or the Lenders related
thereto, the Company hereby submits and consents to the jurisdiction of the
courts of the State of New York and of the United States District Court for the
Southern District of New York, and the Company agrees that any such action, suit
or proceeding may be brought by the Agent or the Lenders in the Supreme Court of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York, and the service of process may be made
upon the Company by mailing a copy of the summons and any complaint to the
Company by registered mail, at the address specified in Section 12.4. The
Company hereby waives and agrees not to assert, by way of motion or otherwise,
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of the above-named courts, that the action is brought in an
inconvenient forum or that the venue of the action is improper. The Agent and
the Lenders, nevertheless, may serve, process or commence any such action, suit
or proceeding in such other jurisdiction(s), and in such other manner as may be
permitted by applicable law. The methods of service of process specified in this
paragraph may be used in the alternative or together as the Agent and the
Lenders may see fit.
Section 12.8 Headings. The headings in this Agreement are for
convenience only and shall not be construed as a part of this Agreement.
Section 12.9 Term of Agreement. This Agreement and all agreements of
the Company contained herein shall continue in full force and effect and shall
not be discharged until such time as the Guaranteed Obligations shall be
indefeasibly paid or performed in full
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<PAGE> 20
and all of the agreements of (a) the Borrower under the Amended and Restated
Credit Agreement and the Secured Hedging Obligations and (b) the Company
hereunder shall be fully paid or performed; provided, certain provisions of this
Agreement shall survive such termination as expressly set forth herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed delivered as of the date first above written.
HORSESHOE GP, INC.
By:_________________________________
Name: Walter J. Haybert
Title: Treasurer
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<PAGE> 21
SCHEDULE A
Pledged Stock
General Partner Interest in Robinson Property Group Limited Partnership
(uncertificated).
General Partner Interest in New Gaming Capital Partnership
(uncertificated).
Intercompany Notes
None.
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. TERMS AND DEFINITIONS..........................................................................2
Section 1.1 Definitions...................................................................2
Section 1.2 Additional Terms..............................................................4
Section 1.3 Action by the Agent or the Lenders............................................4
SECTION 2. GUARANTEE......................................................................................4
Section 2.1 Guaranteed Obligations........................................................4
Section 2.2 Guarantee Absolute............................................................5
Section 2.3 Subordination.................................................................5
SECTION 3. GRANT OF SECURITY..............................................................................6
Section 3.1 Pledged Collateral............................................................6
SECTION 4. OBLIGATIONS UNCONDITIONAL......................................................................7
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT................................................................8
SECTION 6. WAIVERS........................................................................................9
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.;
REINSTATEMENT.................................................................................11
SECTION 8. REPRESENTATIONS OF THE COMPANY................................................................11
Section 8.1 Location.....................................................................11
Section 8.2 Security Interest............................................................11
SECTION 9. COVENANTS.....................................................................................12
Section 9.1 Continuous Perfection........................................................12
Section 9.2 Amendment of Organization Documents..........................................12
Section 9.3 Further Assurances...........................................................12
SECTION 10. EVENTS OF DEFAULT; REMEDIES...................................................................13
Section 10.1 Events of Default Defined....................................................13
Section 10.2 Remedies.....................................................................13
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect of
Pledged Collateral...........................................................15
Section 10.4 Remedies Cumulative..........................................................16
Section 10.5 Remedies Not Waived..........................................................16
</TABLE>
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<PAGE> 23
<TABLE>
<CAPTION>
<S> <C>
SECTION 11. AMENDMENT AND WAIVER..................................................................16
SECTION 12. MISCELLANEOUS.........................................................................16
Section 12.1 Expenses.....................................................................16
Section 12.2 Reliance on and Survival of Representations..................................16
Section 12.3 Successors and Assigns; Transfers of the Notes...............................17
Section 12.4 Notices......................................................................17
Section 12.5 Severability.................................................................18
Section 12.6 Governing Law................................................................18
Section 12.7 Forum and Jurisdiction.......................................................18
Section 12.8 Headings.....................................................................18
Section 12.9 Term of Agreement............................................................19
</TABLE>
-ii-
<PAGE> 1
EXHIBIT 4.56
AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT
Dated as of November 12, 1997
From
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
as Guarantor
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
and
CERTAIN COMMERCIAL
LENDING INSTITUTIONS
as Lenders
<PAGE> 2
AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT
This AMENDED AND RESTATED GUARANTEE AND SECURITY AGREEMENT
dated as of November 12, 1997 (this "Guarantee" or this "Agreement"), is made by
Robinson Property Group Limited Partnership, a Mississippi Limited Partnership
with an office located at 1021 Casino Center Drive, Robinsonville, Mississippi
38664 (the "Guarantor"), in favor of the Lenders (as herein defined) and
Canadian Imperial Bank of Commerce ("CIBC"), in its capacity as agent for the
Lenders (in such capacity, the "Agent").
R E C I T A L S:
WHEREAS, on October 10, 1995, Horseshoe Gaming, L.L.C., a Delaware
limited liability company (the "Company") authorized the issuance of up to
$150,000,000 of its Senior Secured Credit Facility Notes due September 30, 1999
(the "Senior Secured Credit Facility Notes") pursuant to a Senior Secured Credit
Facility Note Purchase Agreement dated as of October 10, 1995, between the
Company and the Purchasers named therein (the "Note Purchasers"), as amended
prior to the date hereof (as so amended, the "Senior Secured Credit Facility
Note Purchase Agreement");
WHEREAS, pursuant to a Guarantee and Security Agreement dated as of
October 10, 1995 (the "Original RPG Guarantee and Security Agreement"),
Guarantor unconditionally guaranteed the obligations of the Company in respect
of the Senior Secured Credit Facility Notes;
WHEREAS, the obligations of the Company and Guarantor under the Senior
Secured Credit Facility Note Purchase Agreement and the Original RPG Guarantee
and Security Agreement were secured by various mortgages, deeds of trust, first
preferred ship mortgages and other collateral more particularly described
therein (the "Security Documents");
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the Note Purchasers and CIBC, the Note Purchasers assigned to CIBC
all of the rights, duties and obligations of the Note Purchasers in connection
with the Senior Secured Credit Facility Note Purchase Agreement, the Security
Documents and the documents executed in connection therewith;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Company, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;
WHEREAS, the Company directly owns a 99% limited partnership interest
in the Guarantor and, indirectly through a wholly-owned subsidiary, owns a 1%
general partnership interest in the Guarantor;
<PAGE> 3
WHEREAS, the Guarantor will derive substantial economic benefit from
the availability of credit to the Company pursuant to the Amended and Restated
Credit Agreement; and
WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders and the
Agent, including the extension of availability of credit to the Company, that
the Guarantor amend and restate its obligations under the Original RPG Guarantee
and Security Agreement on the terms, and subject to the conditions set forth
herein, it being understood that in so doing the Guarantor expressly disclaims
any interest to effect a novation or extinguishment or discharge of the Original
RPG Guarantee and Security Agreement or discharge of any obligations under the
Security Documents as a result of entering into this Agreement and the other
documents contemplated herein;
NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders and the Agent, including the extension of availability of credit
to the Company and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged by the Guarantor, the Guarantor hereby
amends and restates the Original RPG Guarantee and the Security Agreement in its
entirety as follows:
SECTION 1. TERMS AND DEFINITIONS.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
(a) "Proceeds" shall mean all "proceeds", as such term is defined in
the UCC and, in any event, shall mean and include, but not be limited to (i) any
and all proceeds of any insurance, indemnity, warranty or guarantee payable to
the Guarantor from time to time with respect to any of the Pledged Collateral
(as defined in Section 3), (ii) any and all payments (in any form whatsoever)
made or due and payable to the Guarantor from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Collateral by any governmental authority, bureau or agency
(or any Person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
(b) "Senior Secured Credit Facility Notes" shall have the meaning
ascribed thereto in the Recitals of this Agreement.
(c) "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York.
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<PAGE> 4
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto Amended and Restated Credit Agreement.
Section 1.3 Action by the Agent or the Lenders. Whenever any action is
required or permitted to be taken by the Agent or the Lenders, except for such
action which is expressly provided herein to be taken by an individual Lender or
by all the Lenders, such action, including, without limitation, in connection
with the exercise of any remedy granted herein, shall be taken by the Agent,
acting at the direction of Majority Lenders or the Required Lenders, as provided
in the Amended and Restated Credit Agreement.
SECTION 2. GUARANTEE.
Section 2.1 Guaranteed Obligations. The Guarantor, jointly and
severally with any other guarantors, hereby absolutely, unconditionally and
irrevocably guarantees to the Agent and the Lenders on a continuing basis the
full, complete and punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of any and all sums due from, and any and all
Obligations of the Company to the Agent and the Lenders now or hereafter
existing under the Notes, the Letters of Credit, the Secured Hedging Obligations
and the Amended and Restated Credit Agreement, without regard to the Company's
use of the proceeds of the Loans, the Letters of Credit or the Secured Hedging
Obligations, whether for principal, premium, interest, fees, costs, expenses or
otherwise, including, without prejudice to the generality of the foregoing, the
prompt payment of the Notes and payment of interest and premium thereon at the
times and in the manner specified in the Notes and the Amended and Restated
Credit Agreement, prompt payment of amounts owing pursuant to the issuance of
the Letters of Credit, prompt payment of the Secured Hedging Obligations at the
times and in the manner specified in the documentation therefor and the payment
of any and all expenses (including reasonable counsel fees and expenses)
incurred by the Agent and the Lenders in enforcing any rights under the Notes,
the Letters of Credit, the Secured Hedging Obligations, the Amended and Restated
Credit Agreement and this Agreement. Without limiting the generality of the
foregoing, the Guarantor's liability shall extend to all amounts that would be
owed by the Company to the Agent and the Lenders under the Amended and Restated
Credit Agreement but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Company. Each of the obligations guaranteed as set forth in this
Section 2.1 is hereinafter referred to severally as a "Guaranteed Obligation"
and collectively as the "Guaranteed Obligations".
Section 2.2 Guarantee Absolute. This Guarantee is a guarantee of
payment and not of collection, is in no way conditioned or contingent upon any
attempt to collect from or proceed against the Company, any other guarantors or
sureties, any other person or entity or any collateral security, or upon any
other event, contingency or circumstance whatsoever and shall be binding upon
and against the Guarantor without regard to the validity, regularity or
enforceability of the Amended and Restated Credit Agreement or any other
instrument or
-3-
<PAGE> 5
agreement. The Guarantor guarantees that the Guaranteed Obligations will be paid
strictly in accordance with the term of the Amended and Restated Credit
Agreement and the documentation evidencing the Secured Hedging Obligations,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent or the
Lenders with respect thereto. The obligations of the Guarantor hereunder are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against the Guarantor to enforce this Agreement,
irrespective of whether any action is brought against the Company or whether the
Company is joined in any such action or actions. If for any reason whatsoever
the Company shall fail or be unable duly, punctually and fully to pay the
Guaranteed Obligations or any part thereof as and when the same shall become
payable in accordance with the terms of the Amended and Restated Credit
Agreement, the Guarantor, immediately upon demand, will pay or cause to be paid
the Guaranteed Obligations or such part thereof.
Section 2.3 Subordination. Until payment in full of all sums due to the
Agent and the Lenders under, or in connection with such party's rights relating
to, the Amended and Restated Credit Agreement and the Secured Hedging
Obligations and all other instruments, documents and agreements contemplated
therein and performance of all other obligations thereunder, the Guarantor
hereby covenants and agrees with the Lenders that:
(a) the Guarantor shall and does hereby subordinate, to the obligations
of the Company to the Agent and the Lenders, all present and future indebtedness
due to the Guarantor from (and shall cause to be subordinated to the obligations
of the Guarantor to the Agent and the Lenders hereunder all present and future
indebtedness due from the Guarantor to) the Company; and
(b) the Guarantor shall deliver to the Agent and the Lenders, and shall
cause the Company to deliver to the Agent and the Lenders, such agreements and
other evidence of such subordination as the Agent or the Lenders reasonably may
request from time to time.
SECTION 3. GRANT OF SECURITY.
Section 3.1 Pledged Collateral.
(a) The Guarantor, to secure its punctual payment and performance
hereunder in respect of the Guaranteed Obligations hereby agrees to deliver to
and for the benefit of the Agent and the Lenders (i) a first mortgage
encumbering all of the land in Tunica County, Mississippi on which the Horseshoe
Tunica Casino is located and certain other land owned by the Guarantor pursuant
to the Deed of Trust in substantially the form attached to the Amended and
Restated Credit Agreement, (ii) a first mortgage on the Horseshoe Tunica Casino
(and all related fixtures and equipment) pursuant to the RPG First Preferred
Ship Mortgage in substantially the form attached to the Amended and Restated
Credit Agreement (collectively,
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<PAGE> 6
the "Pledged Collateral") and (iii) all Proceeds of any and all of the foregoing
Pledged Collateral.
(b) The Pledged Collateral secures the payment of all obligations of
every kind and character now or hereafter existing (whether matured or
unmatured, contingent or liquidated) of the Guarantor under Section 2 with
respect to the Guaranteed Obligations and under each other provision of this
Agreement (in each case as this Agreement hereafter may be amended, supplemented
or otherwise modified from time to time), whether for principal, interest,
premium, fees, expenses, reimbursement, indemnification or otherwise.
SECTION 4. OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantor set forth in this Guarantee and all
rights of the Agent and the Lenders shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deferment, reduction or diminution
of any obligation or defense of any kind or nature (other than full,
indefeasible and timely payment of the Guaranteed Obligations) based upon any
claim the Guarantor or any other party may have against the Agent, the Lenders,
the Company, any of their Affiliates, or any other party, shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether or not
the Agent, the Lenders, or the Guarantor shall have any knowledge or notice
thereof), including without limitation:
(a) any compromise, settlement, release, accord and satisfaction,
termination, modification, amendment, waiver, consent or other change, addition,
deletion or supplement of or to, or any forbearance or indulgence with respect
to, any or all of the obligations, duties, covenants or agreements under the
Amended and Restated Credit Agreement, or any other instrument or agreement
whatsoever (whether or not referred to in the Amended and Restated Credit
Agreement or applicable to any of the parties to the Amended and Restated Credit
Agreement), or any assignment or transfer of any interest in any of the
foregoing, or any furnishing, acceptance, substitution or exchange of, any
release of or failure to protect, perfect or to continue perfected, or any other
action or inaction in respect of, any direct or indirect security for or
guarantee with respect to the Guaranteed Obligations or any part thereof
(including, without limitation, the Pledged Collateral);
(b) any failure, omission or delay on the part of the Agent or the
Lenders or any party claiming by, through or under any of the foregoing to
conform or comply with any term of any instrument or agreement referred to in
subsection (a) above, or to exercise any right, remedy or power thereunder,
including, but not limited to, the failure to give notice to the Guarantor of
the occurrence of any Event of Default;
(c) any renewal, refinancing or refunding of the Guaranteed Obligations
in whole or in part or extension of the time for payment of any Guaranteed
Obligation or for the payment of any other amount payable under the Amended and
Restated Credit Agreement or any
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Secured Hedging Obligation or of the time for performance of any other
obligations, covenants or agreements under or arising out of the Amended and
Restated Credit Agreement, any Secured Hedging Obligation or any other
instrument or agreement or the extension or the renewal of any of the foregoing;
(d) any voluntary or involuntary liquidation, dissolution, winding-up,
sale or other disposition of all or substantially all the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of the debts of, or other similar events or proceedings affecting,
the Company or any of its assets or of any other party, or any action taken by
any trustee or receiver or by any court in any such proceeding, or any
allegation of invalidity of this Guarantee in any such proceeding;
(e) to the extent permitted by law, any release or discharge by
operation of law of the Company, or any other party from the performance or
observance of any obligation, covenant or agreement contained in the Amended and
Restated Credit Agreement, any documentation evidencing the Secured Hedging
Obligations or any other instrument or agreement;
(f) any merger or consolidation of the Company into or with any entity
or any sale, lease or transfer of any of the assets of the Company to any other
party, or any change in the name, objects or governing documents of the Company
or otherwise in the Guarantor's relationship to the Company;
(g) any impossibility or illegality of performance on the part of the
Company of its obligations under the Amended and Restated Credit Agreement or
the Secured Hedging Obligations;
(h) any lack of validity or enforceability of any provisions of the
Amended and Restated Credit Agreement, the documentation for the Secured Hedging
Obligations or any other Loan Document; or
(i) any other occurrence or circumstance whatsoever, whether similar or
dissimilar to the foregoing, and any other circumstance which might otherwise
constitute a legal or equitable defense or discharge of the liabilities of a
guarantor or surety or which might otherwise limit recourse against the Pledged
Collateral.
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Effective upon the occurrence and during the continuance of an
Event of Default, the Guarantor hereby irrevocably constitutes and appoints the
Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Guarantor and in
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the name of the Guarantor or in its own name, from time to time in the Agent's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement (except, without limiting the generality of the foregoing, that
the Agent shall not ratify any of its own actions pursuant to this power of
attorney), and, without limiting the generality of the foregoing, hereby gives
the Agent in its sole discretion the power and right, on behalf of the
Guarantor, without notice to or assent by the Guarantor, to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due and to become due under any Pledged
Collateral and, in the name of the Guarantor or its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Pledged Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting
any and all such monies due under any Pledged Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Lenders for the purpose of collecting any and all such moneys due under
any Pledged Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Guarantor hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue hereof and acknowledges that this power of
attorney is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Pledged Collateral and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither the Agent nor any of its agents,
representatives or designees shall be responsible to the Guarantor for any act
or failure to act, except for any act involving their gross negligence or
willful misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior to an
Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Guarantor or (ii) to control decisions
regarding the disposal or other management of hazardous substances generated,
used or handled by the Guarantor or any of its Affiliates.
SECTION 6. WAIVERS.
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(a) The Guarantor hereby irrevocably waives promptness, diligence,
notice of acceptance, nonpayment, nonperformance, dishonor or protest and any
other notice with respect to any of the Guaranteed Obligations and this
Agreement and any other circumstance which might otherwise constitute a legal or
equitable discharge, release or defense of a guarantor or surety or which might
otherwise limit the obligations of the Guarantor under this Guarantee. The
Guarantor hereby irrevocably waives any requirement that the Agent or the
Lenders protect, secure, perfect or insure any Lien on the Pledged Collateral or
exhaust any right or take any action against the Company, or any other Person or
mitigate the damages resulting from default by the Company under the Amended and
Restated Credit Agreement or any Secured Hedging Obligations, or by the
Guarantor under this Guarantee.
(b) The Guarantor hereby irrevocably waives all right to trial by jury
in any action, proceeding or counterclaim based upon, arising out of, or
relating to, this Guarantee, the transactions contemplated by the Amended and
Restated Credit Agreement or the Secured Hedging Obligations or the actions of
the Agent and the Lenders in the negotiation, administration, performance or
enforcement thereof. The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including, without limitation, contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. The Guarantor acknowledges that this waiver is a material
inducement to the Agent and the Lenders to enter into a business relationship
with the Guarantor and its Subsidiaries and Affiliates and that the Agent and
the Lenders have each already relied on this waiver in entering into this
Agreement and the Loan Documents and that each will continue to rely on this
waiver in their related future dealings. The Guarantor further warrants and
represents that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY,
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING HERETO. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
(c) The Guarantor hereby irrevocably waives, until the end of the term
of this Guarantee as set forth in Section 12.9, any claim or other rights that
it may now or hereafter acquire against the Company or any other guarantor of
the obligations of the Company that arise from the existence, payment,
performance or enforcement of the Guaranteed Obligations, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Agent or the Lenders against the Company or any other guarantor or any
collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company or any other guarantor directly or indirectly,
in cash or other property or by set-off or in any other manner,
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<PAGE> 10
payment or security on account of such claim, remedy or right. If any amount
shall be paid to the Guarantor in violation of the preceding sentence at any
time prior to the payment in full in cash of the Guaranteed Obligations, such
amount shall be held in trust for the benefit of the Agent and the Lenders and
shall forthwith be paid to the Agent to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of this Guarantee and, the Amended and Restated Credit Agreement or to be
held as Pledged Collateral for any Guaranteed Obligations thereafter arising.
The Guarantor acknowledges it will derive substantial economic benefits from the
financing arrangements contemplated by the Amended and Restated Credit Agreement
and the Secured Hedging Obligations and that the waiver set forth in this
subsection (c) is knowingly made in contemplation of such benefits.
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.; REINSTATEMENT. The
obligations of the Guarantor under this Guarantee shall continue to be
effective, or be automatically reinstated, as the case may be, if at any time
payment, in whole or in part, of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by the Agent or the Lenders (as a
preference, fraudulent conveyance or otherwise) upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company or any other person or
entity or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to the Company, or any
other party, or any substantial part of its property, or otherwise, all as
though such payments had not been made. If an Event of Default shall at any time
have occurred and be continuing or shall exist and declaration of default or
acceleration under or with respect to the Amended and Restated Credit Agreement
or the Secured Hedging Obligations, or any Guaranteed Obligation shall at such
time be prevented by reason of the pendency against the Company or any other
Person or entity of a case or proceeding under a bankruptcy or insolvency law,
the Guarantor agrees that, for purposes of this Guarantee and its obligations
hereunder, the Amended and Restated Credit Agreement, the Secured Hedging
Obligations and such Guaranteed Obligation shall be deemed to have been declared
in default or accelerated with the same effect as if the Amended and Restated
Credit Agreement, the Secured Hedging Obligations and such Guaranteed Obligation
had been declared in default and accelerated in accordance with their respective
terms and the Guarantor shall forthwith pay the amounts specified to be paid
thereunder in accordance with their respective terms and all other Guaranteed
Obligations without further notice or demand.
SECTION 8. REPRESENTATIONS OF THE GUARANTOR. The Guarantor hereby
represents and warrants to the Agent and the Lenders as follows:
Section 8.1 Location. The chief place of business and chief executive
office of the Guarantor is located at the address first specified above for the
Guarantor.
Section 8.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto and the Deed of Trust and the
RPG First Preferred Ship Mortgage constitute a valid and continuing Lien on the
Pledged Collateral and create a valid
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and perfected first priority security interest in the Pledged Collateral in
favor of the Agent securing the payment of the Guaranteed Obligations, and all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken.
SECTION 9. COVENANTS. The Guarantor hereby covenants and agrees that on
and after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 9.1 Continuous Perfection. The Guarantor shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Guarantor shall have given the Agent and the Lenders at least 90 days' prior
written notice thereof of its intention to so change and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary,
or reasonably requested by the Agent and the Lenders, to amend such financing or
continuation statement so that it is not misleading.
Section 9.2 Amendment of Organization Documents. The Guarantor shall
not amend its Limited Partnership Agreement in a manner that affects adversely
the Agent or the Lenders.
Section 9.3 Further Assurances.
(a) From time to time, at the expense of the Guarantor, the Guarantor
will promptly execute and deliver all further instruments and documents and take
all further action, that may be necessary or desirable, or that the Agent or the
Lenders reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent or the Lenders to exercise and enforce their rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, the Guarantor will execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent or the Lenders may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) The Guarantor hereby authorizes the Agent or the Lenders to file
one or more financing or continuation statements, and assignments thereof and
amendments thereto, relating to all or any part of the Pledged Collateral
without the signature of the Guarantor where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Pledged Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
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(c) The Guarantor will furnish to the Agent and the Lenders from time
to time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent, the Lenders or the Company reasonably may request, all in reasonable
detail.
SECTION 10. EVENTS OF DEFAULT; REMEDIES.
Section 10.1 Events of Default Defined. If any Event of Default shall
occur and be continuing (for any reason whatsoever and whether it shall be
voluntary or involuntary or by operation of law or otherwise), then (i) all
payments received by the Guarantor under or in connection with any of the
Pledged Collateral shall be held by the Guarantor in trust for the Agent and the
Lenders, shall be segregated from other funds of the Guarantor and shall
forthwith upon receipt by the Guarantor be turned over to the Agent for the
ratable benefit of the Lenders in the same form as received by the Guarantor
(duly endorsed by the Guarantor to the Agent, if required); (ii) any and all
such payments so received by the Lenders (whether from the Guarantor or
otherwise) will be applied by the Lenders against their Guaranteed Obligations;
and (iii) any amount remaining after payment in full of all of the Guaranteed
Obligations shall be paid over to the Guarantor.
Section 10.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the Agent
and the Lenders may exercise in addition to all other rights and remedies
granted to the Agent and the Lenders in this Agreement, under the Deed of Trust
and the RPG First Preferred Ship Mortgage and under any other instrument or
agreement securing, evidencing or relating to the Guaranteed Obligations, all
rights and remedies of a secured party under the UCC as applicable to the
Pledged Collateral and all the rights granted to the Agent and the Lenders.
Without limiting the generality of the foregoing and to the extent not
inconsistent with the remedies granted to the Agent and the Lenders in the Deed
of Trust and the RPG Preferred Ship Mortgage, the Guarantor expressly agrees
that in any such event the Agent and the Lenders, without demand of performance
or other demand, advertisement or notice of any kind (except the notice,
specified below of time and place of public or private sale) to or upon the
Guarantor or any other Person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith assume, collect,
receive, appropriate and realize upon the Pledged Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Pledged Collateral
(or contract to do so), or any part thereof, in one or more parcels at a public
or private sale or sales, at any exchange broker's board or at its offices or
elsewhere at such prices as the Agent may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Agent and the
Lenders shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of said Pledged Collateral so sold, free of any right or
equity of redemption, which equity of redemption the Guarantor hereby releases,
and in lieu of payment
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of such actual purchase price may set-off the amount of such purchase price
against the Guaranteed Obligations then owing to such purchaser. The Guarantor
further agrees, at the Agent's request, to assemble the Pledged Collateral and
make it available to the Agent at places which the Agent shall reasonably
select, whether at the Guarantor's premises or elsewhere. The Agent and the
Lenders shall retain the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safe keeping
or otherwise of any or all of the Pledged Collateral or in any way relating to
the rights of the Agent and the Lenders hereunder, including reasonable
attorneys' fees and legal expenses, for application to the payment in whole or
in part of the Guaranteed Obligations, and only after so retaining such net
proceeds and after the payment by the Agent and the Lenders of any other amount
required by any provision of law, including Section 9-504 (1)(c) of the UCC,
need the Agent and the Lenders account for the surplus, if any, to the
Guarantor. To the extent permitted by applicable law, the Guarantor waives all
claims, damages and demands against the Agent and the Lenders arising out of the
repossession, retention or sale of the Pledged Collateral, except to the extent
that such claims, damages and demands arise out of the willful misconduct or
gross negligence of the Agent or the Lenders.
(b) The Guarantor also agrees to pay all costs of the Agent and the
Lenders, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Guaranteed Obligations and the enforcement and
protection of any of the rights of the Agent and the Lenders hereunder. All
costs and expenses incurred by each of the Agent and the Lenders with respect to
the enforcement, collection and protection of the Agent's and the Lenders'
interest in the Pledged Collateral shall be additional Guaranteed Obligations of
the Guarantor to the Agent and the Lenders payable on demand, and secured by the
Pledged Collateral.
(c) Any notice required to be given by the Agent of a sale, lease or
other disposition or other intended action by it with respect to any of the
Pledged Collateral which is deposited in the United States mails, postage
prepaid and duly addressed to the Guarantor, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the Guarantor of
any such action. The net proceeds realized by the Agent and the Lenders upon any
such sale or other disposition, after deduction for the expense of retaking,
holding, preparing for sale, selling or the like and the reasonable attorneys'
fees and legal expenses incurred by the Agent and the Lenders in connection
therewith, shall be applied as provided herein toward satisfaction of the
Guaranteed Obligations. The Agent and the Lenders shall account to the Guarantor
for any surplus realized upon such sale or other disposition. The commencement
of any action, legal or equitable, or the rendering of any judgment or decree
for any deficiency shall not affect the Agent's and the Lenders' security
interest in the Pledged Collateral until the Guaranteed Obligations are fully
paid. The Guarantor agrees that the Agent and the Lenders have no obligation to
preserve their rights to the Pledged Collateral against any other parties. The
Agent and the Lenders shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may adjourn
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any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect
of Pledged Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Lenders be deemed to assume any
responsibility for, or obligation or duty with respect to, any part or all of
the Pledged Collateral, of any nature or kind whatsoever, or any matter or
proceedings arising out of or relating thereto. The Agent and the Lenders shall
not be required to take any action of any kind to collect or protect any
interest in the Pledged Collateral, including, but not limited to, any action
necessary to preserve the rights of the Agent and the Lenders, and the Guarantor
against prior parties to any of the Pledged Collateral. The Agent and the
Lenders shall not be liable or responsible in any way for the safe keeping, care
or custody of any of the Pledged Collateral if the Pledged Collateral is
accorded the same treatment and level of care as their own property, for any
loss or damages thereto, for any diminution in the value thereof, for any act or
default of any agent or bailee of the Agent, the Lenders, the Guarantor or of
any carrier, forwarding agency or other person whomsoever or for the collection
of any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or willful misconduct. The
Guarantor hereby releases the Agent and the Lenders from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement
or the Guaranteed Obligations and any actions taken or omitted to be taken by
the Agent and the Lenders with respect thereto, and the Guarantor hereby agrees
to hold the Agent and the Lenders harmless from and with respect to any and all
such claims, causes of action and demands. The Guarantor hereby releases the
Agent and the Lenders from any claims, causes of action and demands arising
under 42 U.S.C. Section 9607 or 9613 or similar provisions of state or local
law.
Section 10.4 Remedies Cumulative. No remedy conferred upon the Agent
and the Lenders is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
Section 10.5 Remedies Not Waived. No course of dealing between the
Guarantor and the Agent and the Lenders and no delay or failure in exercising
any rights hereunder in respect thereof shall operate as a waiver of any of the
rights of the Agent and the Lenders.
SECTION 11. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and shall
not be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by all the Lenders,
shall (a) limit the liability of the Guarantor hereunder, (b) postpone any date
fixed
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for payment hereunder or (c) change the number of Lenders required to take any
action hereunder.
No failure on the part of the Agent or the Lenders to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other, or
further exercise thereof or the exercise of any other right.
SECTION 12. MISCELLANEOUS.
Section 12.1 Expenses. The Guarantor will pay the Agent and the Lenders
for any and all sums, costs and expenses which the Agent or the Lenders may pay
or incur by reason of defending, protecting or enforcing the security interest
herein granted or the priority hereof, enforcing payment of the Guaranteed
Obligations, discharging any Lien or claim against the Pledged Collateral or any
part thereof or, if the Guarantor fails to perform or comply with any of its
agreements herein, performing or complying with such terms. Such sums, costs and
expenses shall include, without limitation, all court costs, collection charges,
travel and reasonable attorneys' fees (including fees and expenses incident to
the enforcement of payment of any obligations of the Guarantor by any action or
participation in, or connection with, a case or proceeding under Chapters 7, 11
or 13 of the Bankruptcy Code). All sums, costs and expenses of the Agent and the
Lenders payable by the Guarantor pursuant to this Agreement shall be payable by
the Guarantor to the Agent and the Lenders on demand and shall constitute
Guaranteed Obligations secured by the Pledged Collateral.
Section 12.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Guarantor herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agent and the Lenders or on their behalf and (b) survive the execution and
delivery of this Agreement and of the Notes, and shall continue in effect so
long as any Note or Obligation is outstanding and thereafter as provided in
Sections 10 and 12.1.
Section 12.3 Successors and Assigns; Transfers of the Notes. This
Agreement shall bind and inure to the benefit of, and be enforceable by, the
Guarantor, the Agent, the Lenders, and their respective permitted successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes. The
Guarantor may not assign its rights and obligations under this Agreement, except
pursuant to a reorganization permitted under the Amended and Restated Credit
Agreement. The Lenders may transfer the Notes (and any portion thereof) at any
time without the consent of the Guarantor, subject to compliance with all
applicable Gaming Laws and state and federal securities laws and the
requirements of Section 9 of the Amended and Restated Credit Agreement.
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Section 12.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
(a) if to the Guarantor:
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
1021 Casino Center Drive
Robinsonville, Mississippi 38664
Attention: Jack Binion
Telephone: (601) 342-7350
Telecopy: (601) 357-5514
with a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: Jim Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
(b) if to the Agent or the Lenders, at their respective addresses as
set forth in the Amended and Restated Credit Agreement or at such other address
as shall be provided to the Company in accordance to the terms of the Amended
and Restated Credit Agreement.
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 12.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
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Section 12.6 Governing Law. This Agreement and the Notes, the Letters
of Credit, the Secured Hedging Obligations and (unless otherwise provided) all
amendments, supplements, waivers and consents relating hereto or thereto shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.
Section 12.7 Forum and Jurisdiction. The Guarantor represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Guarantee or any course of conduct, course of
dealing, statements or actions of the Guarantor, the Agent or the Lenders
related thereto, the Guarantor hereby submits and consents to the jurisdiction
of the courts of the State of New York and of the United States District Court
for the Southern District of New York, and the Guarantor agrees that any such
action, suit or proceeding may be brought by the Agent or the Lenders in the
Supreme Court of the State of New York, New York County, or in the United States
District Court for the Southern District of New York, and the service of process
may be made upon the Guarantor by mailing a copy of the summons and any
complaint to the Guarantor by registered mail, at the address specified in
Section 12.4. The Guarantor hereby waives and agrees not to assert, by way of
motion or otherwise, in any action, suit or proceeding, any claim that it is not
personally subject to the jurisdiction of the above-named courts, that the
action is brought in an inconvenient forum or that the venue of the action is
improper. The Agent and the Lenders, nevertheless, may serve, process or
commence any such action, suit or proceeding in such other jurisdiction(s), and
in such other manner as may be permitted by applicable law. The methods of
service of process specified in this paragraph may be used in the alternative or
together as the Agent and the Lenders may see fit.
Section 12.8 Headings. The headings in this Guarantee are for
convenience only and shall not be construed as a part of this Guarantee.
Section 12.9 Term of Agreement. This Guarantee and all agreements of
the Guarantor contained herein shall continue in full force and effect and shall
not be discharged until such time as the Guaranteed Obligations shall be
indefeasibly paid or performed in full and all of the agreements of (a) the
Company under the Amended and Restated Credit Agreement and the Secured Hedging
Obligations and (b) the Guarantor hereunder shall be fully paid or performed;
provided, certain provisions of this Guarantee shall survive such termination as
expressly set forth herein.
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<PAGE> 18
IN WITNESS WHEREOF, the Guarantor has caused this Agreement to be duly
executed delivered as of the date first above written.
ROBINSON PROPERTY GROUP LIMITED
PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
By: Horseshoe GP, Inc.,
its general partner
By: _____________________________
Name: Walter J. Haybert
Title: Treasurer
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<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. TERMS AND DEFINITIONS...............................................................................2
Section 1.1 Definitions...............................................................................2
Section 1.2 Additional Terms..........................................................................3
Section 1.3 Action by the Agent or the Lenders........................................................3
SECTION 2. GUARANTEE...........................................................................................3
Section 2.1 Guaranteed Obligations....................................................................3
Section 2.2 Guarantee Absolute........................................................................3
Section 2.3 Subordination.............................................................................4
SECTION 3. GRANT OF SECURITY...................................................................................4
Section 3.1 Pledged Collateral........................................................................4
SECTION 4. OBLIGATIONS UNCONDITIONAL...........................................................................5
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.....................................................................6
SECTION 6. WAIVERS.............................................................................................7
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.;
REINSTATEMENT.......................................................................................9
SECTION 8. REPRESENTATIONS OF THE GUARANTOR....................................................................9
Section 8.1 Location..................................................................................9
Section 8.2 Security Interest.........................................................................9
SECTION 9. COVENANTS..........................................................................................10
Section 9.1 Continuous Perfection....................................................................10
Section 9.2 Amendment of Organization Documents......................................................10
Section 9.3 Further Assurances.......................................................................10
SECTION 10. EVENTS OF DEFAULT; REMEDIES........................................................................11
Section 10.1 Events of Default Defined................................................................11
Section 10.2 Remedies.................................................................................11
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect of
Pledged Collateral.......................................................................12
Section 10.4 Remedies Cumulative......................................................................13
Section 10.5 Remedies Not Waived......................................................................13
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C>
SECTION 11. AMENDMENT AND WAIVER.................................................................................13
SECTION 12. MISCELLANEOUS........................................................................................14
Section 12.1 Expenses...................................................................................14
Section 12.2 Reliance on and Survival of Representations................................................14
Section 12.3 Successors and Assigns; Transfers of the Notes.............................................14
Section 12.4 Notices....................................................................................14
Section 12.5 Severability...............................................................................15
Section 12.6 Governing Law..............................................................................15
Section 12.7 Forum and Jurisdiction.....................................................................16
Section 12.8 Headings...................................................................................16
Section 12.9 Term of Agreement..........................................................................16
</TABLE>
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<PAGE> 1
EXHIBIT 4.57
GUARANTEE AND SECURITY AGREEMENT
Dated as of November 12, 1997
From
NEW GAMING CAPITAL PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP,
as Guarantor
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
and
CERTAIN COMMERCIAL
LENDING INSTITUTIONS
as Lenders
<PAGE> 2
GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT dated as of November 12, 1997
(this "Guarantee" or this "Agreement"), is made by New Gaming Capital
Partnership, a Nevada limited partnership, with an office located at 4024
Industrial Road, Las Vegas, Nevada 89103 (the "Company"), in favor of the
Lenders (as herein defined) and Canadian Imperial Bank of Commerce ("CIBC"), in
its capacity as agent for the Lenders (in such capacity, the "Agent").
R E C I T A L S:
WHEREAS, on October 10, 1995, Horseshoe Gaming, L.L.C., a Delaware
limited liability company (the "Borrower") authorized the issuance of up to
$150,000,000 of its Senior Secured Credit Facility Notes due September 30, 1999
pursuant to a Senior Secured Credit Facility Note Purchase Agreement dated as of
October 10, 1995, between the Borrower and the Purchasers named therein (the
"Note Purchasers"), as amended prior to the date hereof (as so amended, the
"Senior Secured Credit Facility Note Purchase Agreement");
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Note Purchaser and CIBC, the remaining Note Purchaser
assigned to CIBC all of the rights, duties and obligations of the Note
Purchasers in connection with the Senior Secured Credit Facility Note Purchase
Agreement and the security documents and other documents executed in connection
therewith;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Borrower, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;
WHEREAS, the Company directly owns a 99% limited partnership interest
in the Guarantor;
WHEREAS, the Company will derive substantial economic benefit from the
availability of credit to the Borrower pursuant to the Amended and Restated
Credit Agreement; and
WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders and the
Agent that the Company execute this Agreement on the terms, and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders and the Agent, including the extension of availability of credit
to the Borrower and for other good
<PAGE> 3
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged by the Company, the Company hereby agrees as follows:
SECTION 1. TERMS AND DEFINITIONS.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Chattel Paper" has the meaning provided in the UCC.
"Contract Rights" means all rights of the Company (including, without
limitation, all rights to payment) under each Contract.
"Contracts" means all contracts between the Company and one or more
additional parties.
"Copyrights" means any copyright registered with the United States
Copyright Office, as well as any application for a United States copyright
registration made with the United States Copyright Office.
"Documents" has the meaning provided in the UCC.
"Equipment" means any "equipment," as such term is defined in the UCC
and, in any event, shall include, but shall not be limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"General Intangibles" has the meaning provided in the UCC and in any
event includes all claims, rights, powers, privileges, authority, options,
security interests, liens and remedies under any partnership agreement to which
the Company is a party or with respect to any partnership of which the Company
is a partner.
"Goods" has the meaning provided in the UCC.
"Instrument" has the meaning provided in Article 9 of the UCC.
"Intercompany Notes" means a promissory note evidencing indebtedness of
a Subsidiary of the Company to the Company.
"Inventory" means merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing,
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<PAGE> 4
packaging or shipping same; in all stages of production--from raw materials
through work-in-process to finished goods--and all products and proceeds of
whatever sort and wherever located and any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Agent, and shall
specifically include all "inventory" as such term is defined in the UCC.
"Marks" means any trademarks and service marks registered in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any political subdivision thereof any
application for such trademarks and service marks, as well as any unregistered
marks used in the United States and trade dress, logos, designs, trade names,
company names, business names, fictitious business names and other business
identifiers used in the United States.
"Patents" means any patent registered with the United States Patent and
Trademark Office, as well as any application for a United States patent
registration made with the United States Patent and Trademark Office.
"Pledged Stock" means the shares of capital stock described in Schedule
A hereto, as it may, from time to time, be supplemented in accordance with the
terms of the Agreement.
"Proceeds" shall mean all "proceeds", as such term is defined in the
UCC and, in any event, shall mean and include, but not be limited to (i) any and
all proceeds of any insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the Pledged Collateral (as
defined in Section 3), (ii) any and all payments (in any form whatsoever) made
or due and payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Collateral by any governmental authority, bureau or agency
(or any Person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
"Receivables" means any "account" as such term is defined in the UCC,
and, in any event, shall include, but shall not be limited to, all rights to
payment for goods sold or leased or services performed, whether now in existence
or arising from time to time hereafter, including, without limitation, such
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held to secure the
foregoing; (ii) all right, title and interest in and to any goods, the sale of
which gave rise thereto; (iii) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing; (iv) all powers of attorney for the execution
of any evidence of indebtedness or security or other writing in connection
therewith; (v) all books, records, ledger cards, and invoices relating thereto;
(vi) all evidences of the filing of financing statements and other statements
and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from
filing or other registration officers; (vii) all credit information reports and
memoranda relating thereto; and (viii) all other writings related in any way to
the foregoing.
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<PAGE> 5
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Amended and Restated Credit Agreement.
Section 1.3 Action by the Agent or the Lenders. Whenever any action is
required or permitted to be taken by the Agent or the Lenders, except for such
action which is expressly provided herein to be taken by an individual Lender or
by all the Lenders, such action, including, without limitation, in connection
with the exercise of any remedy granted herein, shall be taken by the Agent,
acting at the direction of Majority Lenders or the Required Lenders, as provided
in the Amended and Restated Credit Agreement.
SECTION 2. GUARANTEE.
Section 2.1 Guaranteed Obligations. The Company, jointly and severally
with any other guarantors, hereby absolutely, unconditionally and irrevocably
guarantees to the Agent and the Lenders on a continuing basis the full, complete
and punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of any and all sums due from, and any and all Obligations of the
Borrower to the Agent and the Lenders now or hereafter existing under the Notes,
the Letters of Credit, the Secured Hedging Obligations and the Amended and
Restated Credit Agreement, without regard to the Borrower's use of the proceeds
of the Loans, the Letters of Credit or the Secured Hedging Obligations, whether
for principal, premium, interest, fees, costs, expenses or otherwise, including,
without prejudice to the generality of the foregoing, the prompt payment of the
Notes and payment of interest and premium thereon at the times and in the manner
specified in the Notes and the Amended and Restated Credit Agreement, prompt
payment of amounts owing pursuant to the issuance of the Letters of Credit,
prompt payment of the Secured Hedging Obligations at the times and in the manner
specified in the documentation therefor and the payment of any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent and the
Lenders in enforcing any rights under the Notes, the Letters of Credit, the
Secured Hedging Obligations, the Amended and Restated Credit Agreement and this
Agreement. Without limiting the generality of the foregoing, the Company's
liability shall extend to all amounts that would be owed by the Borrower to the
Agent and the Lenders under the Amended and Restated Credit Agreement but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower. Each of
the obligations guaranteed as set forth in this Section 2.1 is hereinafter
referred to severally as a "Guaranteed Obligation" and collectively as the
"Guaranteed Obligations".
Section 2.2 Guarantee Absolute. This Guarantee is a guarantee of
payment and not of collection, is in no way conditioned or contingent upon any
attempt to collect from or proceed against the Borrower, any other guarantors or
sureties, any other person or entity or
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<PAGE> 6
any collateral security, or upon any other event, contingency or circumstance
whatsoever and shall be binding upon and against the Company without regard to
the validity, regularity or enforceability of the Amended and Restated Credit
Agreement or any other instrument or agreement. The Company guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the term of the
Amended and Restated Credit Agreement and the documentation evidencing the
Secured Hedging Obligations, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The obligations of the
Company hereunder are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against the Company to enforce
this Agreement, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. If for
any reason whatsoever the Borrower shall fail or be unable duly, punctually and
fully to pay the Guaranteed Obligations or any part thereof as and when the same
shall become payable in accordance with the terms of the Amended and Restated
Credit Agreement, the Company, immediately upon demand, will pay or cause to be
paid the Guaranteed Obligations or such part thereof.
Section 2.3 Subordination. Until payment in full of all sums due to the
Agent and the Lenders under, or in connection with such party's rights relating
to, the Amended and Restated Credit Agreement and the Secured Hedging
Obligations and all other instruments, documents and agreements contemplated
therein and performance of all other obligations thereunder, the Company hereby
covenants and agrees with the Agent and the Lenders that:
(a) the Company shall and does hereby subordinate, to the obligations
of the Borrower to the Agent and the Lenders, all present and future
indebtedness due to the Company from (and shall cause to be subordinated to the
obligations of the Company to the Agent and the Lenders hereunder all present
and future indebtedness due from the Company to) the Borrower; and
(b) the Company shall deliver to the Agent and the Lenders, and shall
cause the Borrower to deliver to the Agent and the Lenders, such agreements and
other evidence of such subordination as the Agent or the Lenders reasonably may
request from time to time.
SECTION 3. GRANT OF SECURITY.
Section 3.1 Pledged Collateral.
(a) The Company, to secure its punctual payment and performance
hereunder in respect of the Guaranteed Obligations hereby pledges, assigns and
transfers unto the Agent, and does hereby grant to the Agent, for the benefit of
the Lenders, a continuing security interest of first priority in, all of the
right, title and interest of the Company in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) all cash,
accounts, deposits, securities and insurance policies now or at any time
hereafter in the possession or under
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<PAGE> 7
control of the Company or its respective bailees and any interest therein, (ii)
each and every Receivable, (iii) all Contract Rights arising under all
Contracts, and all equity and debt securities and other interests in any and all
Subsidiaries (other than Unrestricted Subsidiaries), (iv) all Inventory, (v) all
Equipment, (vi) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of the Company symbolized by
the Marks, (vii) all Patents and Copyrights, and all reissues, renewals or
extensions thereof, (viii) all computer programs and all intellectual property
rights therein and all other proprietary information, (ix) (A) the indebtedness
of the Company's Subsidiaries to the Company; (B) all Intercompany Notes listed
on Schedule A (as it may, from time to time, be supplemented in accordance with
the terms hereof) and all promissory notes which are pledged to the Agent; and
(C) all shares of capital stock described in Schedule A (as it may, from time to
time, be supplemented in accordance with the terms hereof) and all other shares
of capital stock or other equity interests, (x) all books and records, customer
lists, ledger cards, credit files, print-outs, and other materials and records
pertaining to any of the foregoing, whether now owned or hereafter acquired,
(xi) all other Goods, General Intangibles, investment property (as defined in
Article 9 of the UCC), Chattel Paper, Documents and Instruments, (xiii) all
other personal property of the Company, whether now owned or hereafter acquired,
(xiv) all documents of title evidencing or issued with respect to any of the
foregoing, and (xv) all Proceeds and products of any and all of the foregoing
(collectively, the "Pledged Collateral").
(b) The Pledged Collateral secures the payment of all obligations of
every kind and character now or hereafter existing (whether matured or
unmatured, contingent or liquidated) of the Company under Section 2 with respect
to the Guaranteed Obligations and under each other provision of this Agreement
(in each case as this Agreement hereafter may be amended, supplemented or
otherwise modified from time to time), whether for principal, interest, premium,
fees, expenses, reimbursement, indemnification or otherwise.
(c) The Intercompany Notes and the certificates representing the
Pledged Stock listed on Schedule A shall be delivered to the Agent
contemporaneously herewith together with appropriate undated note powers and
stock powers duly executed in blank. Neither the Agent nor any Lender shall be
obligated to preserve or protect any rights with respect to the Intercompany
Notes or the Pledged Stock or to receive or give any notice with respect thereto
whether or not the Agent or any Lender is deemed to have knowledge of such
matters.
(d) The assignments and security interests under this Agreement granted
to the Agent shall not relieve the Company from the performance of any term,
covenant, condition or agreement on the Company's part to be performed or
observed under or in respect of the Pledged Collateral or from any liability to
any Person under or in respect of any of such Pledged Collateral or impose any
obligation on the Agent to perform or observe any such term, covenant, condition
or agreement on the Company's part to be so performed or observed or impose any
liability on the Agent for any act or omission on the part of the Company
relative thereto or for any breach of any representation or warranty on the part
of the Company contained in this Agreement or any other Loan Document, or in
respect of the Pledged Collateral or made in
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<PAGE> 8
connection herewith or therewith. The obligations of the Company contained in
this paragraph shall survive the termination of this Agreement and the discharge
of the Company's other obligations hereunder.
SECTION 4. OBLIGATIONS UNCONDITIONAL.
The obligations of the Company set forth in this Agreement and all
rights of the Agent and the Lenders shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deferment, reduction or diminution
of any obligation or defense of any kind or nature (other than full,
indefeasible and timely payment of the Guaranteed Obligations) based upon any
claim the Company or any other party may have against the Agent, the Lenders,
the Borrower, any of their Affiliates, or any other party, shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether or not
the Agent, the Lenders, or the Company shall have any knowledge or notice
thereof), including without limitation:
(a) any compromise, settlement, release, accord and satisfaction,
termination, modification, amendment, waiver, consent or other change, addition,
deletion or supplement of or to, or any forbearance or indulgence with respect
to, any or all of the obligations, duties, covenants or agreements under the
Amended and Restated Credit Agreement or the Secured Hedging Obligations, or any
other instrument or agreement whatsoever (whether or not referred to in the
Amended and Restated Credit Agreement or applicable to any of the parties to the
Amended and Restated Credit Agreement), or any assignment or transfer of any
interest in any of the foregoing, or any furnishing, acceptance, substitution or
exchange of, any release of or failure to protect, perfect or to continue
perfected, or any other action or inaction in respect of, any direct or indirect
security for or guarantee with respect to the Guaranteed Obligations or any part
thereof (including, without limitation, the Pledged Collateral);
(b) any failure, omission or delay on the part of the Agent or the
Lenders or any party claiming by, through or under any of the foregoing to
conform or comply with any term of any instrument or agreement referred to in
subsection (a) above, or to exercise any right, remedy or power thereunder,
including, but not limited to, the failure to give notice to the Company of the
occurrence of any Event of Default;
(c) any renewal, refinancing or refunding of the Guaranteed Obligations
in whole or in part or extension of the time for payment of any Guaranteed
Obligation or for the payment of any other amount payable under the Amended and
Restated Credit Agreement or any Secured Hedging Obligation or of the time for
performance of any other obligations, covenants or agreements under or arising
out of the Amended and Restated Credit Agreement, any Secured Hedging Obligation
or any other instrument or agreement or the extension or the renewal of any of
the foregoing;
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<PAGE> 9
(d) any voluntary or involuntary liquidation, dissolution, winding-up,
sale or other disposition of all or substantially all the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of the debts of, or other similar events or proceedings affecting,
the Borrower or any of its assets or of any other party, or any action taken by
any trustee or receiver or by any court in any such proceeding, or any
allegation of invalidity of this Guarantee in any such proceeding;
(e) to the extent permitted by law, any release or discharge by
operation of law of the Borrower, or any other party from the performance or
observance of any obligation, covenant or agreement contained in the Amended and
Restated Credit Agreement, any documentation evidencing the Secured Hedging
Obligations or any other instrument or agreement;
(f) any merger or consolidation of the Borrower into or with any entity
or any sale, lease or transfer of any of the assets of the Borrower to any other
party, or any change in the name, objects or governing documents of the Borrower
or otherwise in the Company's relationship to the Borrower;
(g) any impossibility or illegality of performance on the part of the
Borrower of its obligations under the Amended and Restated Credit Agreement or
the Secured Hedging Obligations;
(h) any lack of validity or enforceability of any provisions of the
Amended and Restated Credit Agreement, the documentation for the Secured Hedging
Obligations or any other Loan Document; or
(i) any other occurrence or circumstance whatsoever, whether similar or
dissimilar to the foregoing, and any other circumstance which might otherwise
constitute a legal or equitable defense or discharge of the liabilities of a
Company or surety or which might otherwise limit recourse against the Pledged
Collateral.
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Effective upon the occurrence and during the continuance of an
Event of Default, the Company hereby irrevocably constitutes and appoints the
Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of
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<PAGE> 10
attorney), and, without limiting the generality of the foregoing, hereby gives
the Agent in its sole discretion the power and right, on behalf of the Company,
without notice to or assent by the Company, to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due and to become due under any Pledged
Collateral and, in the name of the Company or its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Pledged Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting
any and all such monies due under any Pledged Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Agent for the purpose of collecting any and all such moneys due under
any Pledged Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof and acknowledges that this power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Pledged Collateral and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither the Agent nor any of its agents,
representatives or designees shall be responsible to the Company for any act or
failure to act, except for any act involving their gross negligence or willful
misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior to an
Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or (ii) to control decisions regarding
the disposal or other management of hazardous substances generated, used or
handled by the Company or any of its Affiliates.
SECTION 6. WAIVERS.
(a) The Company hereby irrevocably waives promptness, diligence, notice
of acceptance, nonpayment, nonperformance, dishonor or protest and any other
notice with respect to any of the Guaranteed Obligations and this Agreement and
any other circumstance which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or which might otherwise
limit the obligations of the Company under this Agreement. The Company hereby
irrevocably waives any requirement that the Agent or the
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<PAGE> 11
Lenders protect, secure, perfect or insure any Lien on the Pledged Collateral or
exhaust any right or take any action against the Borrower, or any other Person
or mitigate the damages resulting from default by the Borrower under the Amended
and Restated Credit Agreement or any Secured Hedging Obligations, or by the
Company under this Agreement.
(b) The Company hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim based upon, arising out of, or relating
to, this Agreement, the transactions contemplated by the Amended and Restated
Credit Agreement or the Secured Hedging Obligations or the actions of the Agent
and the Lenders in the negotiation, administration, performance or enforcement
thereof. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. The
Company acknowledges that this waiver is a material inducement to the Agent and
the Lenders to enter into a business relationship with the Company and its
Subsidiaries and Affiliates and that the Agent and the Lenders have each already
relied on this waiver in entering into this Agreement and the Loan Documents and
that each will continue to rely on this waiver in their related future dealings.
The Company further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
(c) The Company hereby irrevocably waives, until the end of the term of
this Agreement as set forth in Section 12.9, any claim or other rights that it
may now or hereafter acquire against the Borrower or any other guarantor of the
obligations of the Borrower that arise from the existence, payment, performance
or enforcement of the Guaranteed Obligations, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Agent
or the Lenders against the Borrower or any other guarantor or any collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Borrower or any other guarantor directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right. If any amount shall be paid to the
Company in violation of the preceding sentence at any time prior to the payment
in full in cash of the Guaranteed Obligations, such amount shall be held in
trust for the benefit of the Agent and the Lenders and shall forthwith be paid
to the Agent to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of this Agreement and the
Amended and Restated Credit Agreement or to be held as Pledged
-10-
<PAGE> 12
Collateral for any Guaranteed Obligations thereafter arising. The Company
acknowledges it will derive substantial economic benefits from the financing
arrangements contemplated by the Amended and Restated Credit Agreement and the
Secured Hedging Obligations and that the waiver set forth in this subsection (c)
is knowingly made in contemplation of such benefits.
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.; REINSTATEMENT. The
obligations of the Company under this Agreement shall continue to be effective,
or be automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Agent or the Lenders (as a preference,
fraudulent conveyance or otherwise) upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any other person
or entity or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to the Borrower, or
any other party, or any substantial part of its property, or otherwise, all as
though such payments had not been made. If an Event of Default shall at any time
have occurred and be continuing or shall exist and declaration of default or
acceleration under or with respect to the Amended and Restated Credit Agreement
or the Secured Hedging Obligations, or any Guaranteed Obligation shall at such
time be prevented by reason of the pendency against the Borrower or any other
Person or entity of a case or proceeding under a bankruptcy or insolvency law,
the Company agrees that, for purposes of this Agreement and its obligations
hereunder, the Amended and Restated Credit Agreement, the Secured Hedging
Obligations and such Guaranteed Obligation shall be deemed to have been declared
in default or accelerated with the same effect as if the Amended and Restated
Credit Agreement, the Secured Hedging Obligations and such Guaranteed Obligation
had been declared in default and accelerated in accordance with their respective
terms and the Company shall forthwith pay the amounts specified to be paid
thereunder in accordance with their respective terms and all other Guaranteed
Obligations without further notice or demand.
SECTION 8. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants to the Agent and the Lenders as follows:
Section 8.1 Location. The chief place of business and chief executive
office of the Company is located at the address first specified above for the
Company.
Section 8.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Guaranteed Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
-11-
<PAGE> 13
SECTION 9. COVENANTS. The Company hereby covenants and agrees that on
and after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 9.1 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent and the Lenders at least 90 days' prior
written notice thereof of its intention to so change and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary,
or reasonably requested by the Agent and the Lenders, to amend such financing or
continuation statement so that it is not misleading.
Section 9.2 Amendment of Organization Documents. The Company shall not
amend its [Limited Partnership Agreement] in a manner that affects adversely the
Agent or the Lenders.
Section 9.3 Further Assurances.
(a) From time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action, that may be necessary or desirable, or that the Agent or the
Lenders reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent or the Lenders to exercise and enforce their rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, the Company will execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent or the Lenders may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent or the Lenders to file one
or more financing or continuation statements, and assignments thereof and
amendments thereto, relating to all or any part of the Pledged Collateral
without the signature of the Company where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Pledged Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) The Company will furnish to the Agent and the Lenders from time to
time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent, the Lenders or the Company reasonably may request, all in reasonable
detail.
-12-
<PAGE> 14
(d) If the Company shall acquire in any manner any additional
Intercompany Notes, the Company shall forthwith (and without the necessity for
any request or demand by the Agent) deliver such Intercompany Notes to the Agent
in the same manner as described in Section 1.1(c), together with a supplement to
Schedule A reflecting the addition of such additional Intercompany Notes,
whereupon such additional Intercompany Notes shall be deemed to be pledged
hereunder for all purposes hereunder. If the Company shall at any time acquire
any additional shares of the capital stock of any class of Pledged Stock,
whether such acquisition shall be by purchase, exchange, reclassification,
dividend, or otherwise, or acquire any new shares of capital stock of any newly
formed or acquired Subsidiary (as defined under and to the extent permitted by
the Amended and Restated Credit Agreement), the Company shall forthwith (and
without the necessity for any request or demand by the Agent) deliver such
shares to the Agent in the same manner as described in Section 1.1(c), together
with a supplement to Schedule A reflecting the addition of such additional
shares of stock, whereupon such additional shares of stock shall be deemed to be
Pledged Stock for all purposes hereunder. The Company will hold in trust for the
Agent upon receipt and immediately thereafter deliver to the Agent any
instrument evidencing or constituting Pledged Collateral (except, so long as no
Event of Default has occurred and is continuing, ordinary cash dividends, if
any, paid with respect to the Pledged Stock and payments in respect of the
Intercompany Notes, in each case as permitted by the Amended and Restated Credit
Agreement).
SECTION 10. EVENTS OF DEFAULT; REMEDIES.
Section 10.1 Events of Default Defined. If any Event of Default shall
occur and be continuing (for any reason whatsoever and whether it shall be
voluntary or involuntary or by operation of law or otherwise), then (i) all
payments received by the Company under or in connection with any of the Pledged
Collateral shall be held by the Company in trust for the Agent and the Lenders,
shall be segregated from other funds of the Company and shall forthwith upon
receipt by the Company be turned over to the Agent for the ratable benefit of
the Lenders in the same form as received by the Company (duly endorsed by the
Company to the Agent, if required); (ii) any and all such payments so received
by the Lenders (whether from the Company or otherwise) will be applied by the
Lenders against their Guaranteed Obligations; and (iii) any amount remaining
after payment in full of all of the Guaranteed Obligations shall be paid over to
the Company.
Section 10.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the Agent
and the Lenders may exercise in addition to all other rights and remedies
granted to the Agent and the Lenders in this Agreement, and under any other
instrument or agreement securing, evidencing or relating to the Guaranteed
Obligations, all rights and remedies of a secured party under the UCC as
applicable to the Pledged Collateral and all the rights granted to the Agent and
the Lenders. Without limiting the generality of the foregoing, the Company
expressly agrees that in any such event the Agent and the Lenders, without
demand of performance or other
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<PAGE> 15
demand, advertisement or notice of any kind (except the notice, specified below
of time and place of public or private sale) to or upon the Company or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith assume, collect, receive, appropriate and
realize upon the Pledged Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Pledged Collateral (or contract to do so), or any
part thereof, in one or more parcels at a public or private sale or sales, at
any exchange broker's board or at its offices or elsewhere at such prices as the
Agent may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Agent and the Lenders shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of said
Pledged Collateral so sold, free of any right or equity of redemption, which
equity of redemption the Company hereby releases, and in lieu of payment of such
actual purchase price may set-off the amount of such purchase price against the
Guaranteed Obligations then owing to such purchaser. The Company further agrees,
at the Agent's request, to assemble the Pledged Collateral and make it available
to the Agent at places which the Agent shall reasonably select, whether at the
Company's premises or elsewhere. The Agent and the Lenders shall retain the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safe keeping or otherwise of any or
all of the Pledged Collateral or in any way relating to the rights of the Agent
and the Lenders hereunder, including reasonable attorneys' fees and legal
expenses, for application to the payment in whole or in part of the Guaranteed
Obligations, and only after so retaining such net proceeds and after the payment
by the Agent and the Lenders of any other amount required by any provision of
law, including Section 9-504(1)(c) of the UCC, need the Agent and the Lenders
account for the surplus, if any, to the Company. To the extent permitted by
applicable law, the Company waives all claims, damages and demands against the
Agent and the Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, except to the extent that such claims, damages and demands
arise out of the willful misconduct or gross negligence of the Agent or the
Lenders.
(b) The Company also agrees to pay all costs of the Agent and the
Lenders, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Guaranteed Obligations and the enforcement and
protection of any of the rights of the Agent and the Lenders hereunder. All
costs and expenses incurred by each of the Agent and the Lenders with respect to
the enforcement, collection and protection of the Agent's and the Lenders'
interest in the Pledged Collateral shall be additional Guaranteed Obligations of
the Company to the Agent and the Lenders payable on demand, and secured by the
Pledged Collateral.
(c) Any notice required to be given by the Agent of a sale, lease or
other disposition or other intended action by it with respect to any of the
Pledged Collateral which is deposited in the United States mails, postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the
-14-
<PAGE> 16
Company of any such action. The net proceeds realized by the Agent and the
Lenders upon any such sale or other disposition, after deduction for the expense
of retaking, holding, preparing for sale, selling or the like and the reasonable
attorneys' fees and legal expenses incurred by the Agent and the Lenders in
connection therewith, shall be applied as provided herein toward satisfaction of
the Guaranteed Obligations. The Agent and the Lenders shall account to the
Company for any surplus realized upon such sale or other disposition. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect the Agent's and the Lenders'
security interest in the Pledged Collateral until the Guaranteed Obligations are
fully paid. The Company agrees that the Agent and the Lenders have no obligation
to preserve their rights to the Pledged Collateral against any other parties.
The Agent and the Lenders shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect
of Pledged Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Lenders be deemed to assume any
responsibility for, or obligation or duty with respect to, any part or all of
the Pledged Collateral, of any nature or kind whatsoever, or any matter or
proceedings arising out of or relating thereto. The Agent and the Lenders shall
not be required to take any action of any kind to collect or protect any
interest in the Pledged Collateral, including, but not limited to, any action
necessary to preserve the rights of the Agent and the Lenders, and the Company
against prior parties to any of the Pledged Collateral. The Agent and the
Lenders shall not be liable or responsible in any way for the safe keeping, care
or custody of any of the Pledged Collateral if the Pledged Collateral is
accorded the same treatment and level of care as their own property, for any
loss or damages thereto, for any diminution in the value thereof, for any act or
default of any agent or bailee of the Agent, the Lenders, the Company or of any
carrier, forwarding agency or other person whomsoever or for the collection of
any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or willful misconduct. The
Company hereby releases the Agent and the Lenders from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement
or the Guaranteed Obligations and any actions taken or omitted to be taken by
the Agent and the Lenders with respect thereto, and the Company hereby agrees to
hold the Agent and the Lenders harmless from and with respect to any and all
such claims, causes of action and demands. The Company hereby releases the Agent
and the Lenders from any claims, causes of action and demands arising under 42
U.S.C. Section 9607 or 9613 or similar provisions of state or local law.
Section 10.4 Remedies Cumulative. No remedy conferred upon the Agent
and the Lenders is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
-15-
<PAGE> 17
Section 10.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and the Lenders and no delay or failure in exercising any
rights hereunder in respect thereof shall operate as a waiver of any of the
rights of the Agent and the Lenders.
SECTION 11. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and shall
not be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by all the Lenders,
shall (a) limit the liability of the Company hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Lenders required to take
any action hereunder.
No failure on the part of the Agent or the Lenders to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other, or
further exercise thereof or the exercise of any other right.
SECTION 12. MISCELLANEOUS.
Section 12.1 Expenses. The Company will pay the Agent and the Lenders
for any and all sums, costs and expenses which the Agent or the Lenders may pay
or incur by reason of defending, protecting or enforcing the security interest
herein granted or the priority hereof, enforcing payment of the Guaranteed
Obligations, discharging any Lien or claim against the Pledged Collateral or any
part thereof or, if the Company fails to perform or comply with any of its
agreements herein, performing or complying with such terms. Such sums, costs and
expenses shall include, without limitation, all court costs, collection charges,
travel and reasonable attorneys' fees (including fees and expenses incident to
the enforcement of payment of any obligations of the Company by any action or
participation in, or connection with, a case or proceeding under Chapters 7, 11
or 13 of the Bankruptcy Code). All sums, costs and expenses of the Agent and the
Lenders payable by the Company pursuant to this Agreement shall be payable by
the Company to the Agent and the Lenders on demand and shall constitute
Guaranteed Obligations secured by the Pledged Collateral.
Section 12.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agent and the Lenders or on their behalf and (b) survive the execution and
delivery of this Agreement and of the Notes, and shall continue in effect so
long as any Note or Obligation is outstanding and thereafter as provided in
Sections 10 and 12.1.
-16-
<PAGE> 18
Section 12.3 Successors and Assigns; Transfers of the Notes. This
Agreement shall bind and inure to the benefit of, and be enforceable by, the
Company, the Agent, the Lenders, and their respective permitted successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes. The
Company may not assign its rights and obligations under this Agreement, except
pursuant to a reorganization permitted under the Amended and Restated Credit
Agreement. The Lenders may transfer the Notes (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state and federal securities laws and the
requirements of Section 9 of the Amended and Restated Credit Agreement.
Section 12.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
(a) if to the Company:
c/o Horseshoe Gaming, Inc.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Paul Alanis
Telephone: (702) 650-0080
Telecopy: (702) 650-0081
with a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: Jim Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
(b) if to the Agent or the Lenders, at their respective addresses as
set forth in the Amended and Restated Credit Agreement or at such other address
as shall be provided to the Borrower in accordance to the terms of the Amended
and Restated Credit Agreement.
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<PAGE> 19
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 12.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
Section 12.6 Governing Law. This Agreement and the Notes, the Letters
of Credit, the Secured Hedging Obligations and (unless otherwise provided) all
amendments, supplements, waivers and consents relating hereto or thereto shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.
Section 12.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Agreement or any course of conduct, course of
dealing, statements or actions of the Company, the Agent or the Lenders related
thereto, the Company hereby submits and consents to the jurisdiction of the
courts of the State of New York and of the United States District Court for the
Southern District of New York, and the Company agrees that any such action, suit
or proceeding may be brought by the Agent or the Lenders in the Supreme Court of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York, and the service of process may be made
upon the Company by mailing a copy of the summons and any complaint to the
Company by registered mail, at the address specified in Section 12.4. The
Company hereby waives and agrees not to assert, by way of motion or otherwise,
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of the above-named courts, that the action is brought in an
inconvenient forum or that the venue of the action is improper. The Agent and
the Lenders, nevertheless, may serve, process or commence any such action, suit
or proceeding in such other jurisdiction(s), and in such other manner as may be
permitted by applicable law. The methods of service of process specified in this
paragraph may be used in the alternative or together as the Agent and the
Lenders may see fit.
Section 12.8 Headings. The headings in this Agreement are for
convenience only and shall not be construed as a part of this Agreement.
Section 12.9 Term of Agreement. This Agreement and all agreements of
the Company contained herein shall continue in full force and effect and shall
not be discharged until such time as the Guaranteed Obligations shall be
indefeasibly paid or performed in full
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<PAGE> 20
and all of the agreements of (a) the Borrower under the Amended and Restated
Credit Agreement and the Secured Hedging Obligations and (b) the Company
hereunder shall be fully paid or performed; provided, certain provisions of this
Agreement shall survive such termination as expressly set forth herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed delivered as of the date first above written.
NEW GAMING CAPITAL PARTNERSHIP
A NEVADA LIMITED PARTNERSHIP
By: HORSESHOE GP, INC.,
its general partner
By: ________________________________
Name: Walter J. Haybert
Title: Treasurer
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<PAGE> 21
SCHEDULE A
Pledged Stock
General and Limited Partner Interests in Horseshoe Entertainment
(uncertificated).
Intercompany Notes
None.
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. TERMS AND DEFINITIONS.................................................................................2
Section 1.1 Definitions...............................................................................2
Section 1.2 Additional Terms..........................................................................4
Section 1.3 Action by the Agent or the Lenders........................................................4
SECTION 2. GUARANTEE.............................................................................................4
Section 2.1 Guaranteed Obligations....................................................................4
Section 2.2 Guarantee Absolute........................................................................4
Section 2.3 Subordination.............................................................................5
SECTION 3. GRANT OF SECURITY.....................................................................................5
Section 3.1 Pledged Collateral........................................................................5
SECTION 4. OBLIGATIONS UNCONDITIONAL.............................................................................7
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.......................................................................8
SECTION 6. WAIVERS...............................................................................................9
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.; REINSTATEMENT...............................................11
SECTION 8. REPRESENTATIONS OF THE COMPANY.......................................................................11
Section 8.1 Location.................................................................................11
Section 8.2 Security Interest........................................................................11
SECTION 9. COVENANTS............................................................................................11
Section 9.1 Continuous Perfection....................................................................12
Section 9.2 Amendment of Organization Documents......................................................12
Section 9.3 Further Assurances.......................................................................12
SECTION 10. EVENTS OF DEFAULT; REMEDIES.........................................................................13
Section 10.1 Events of Default Defined................................................................13
Section 10.2 Remedies.................................................................................13
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect of Pledged Collateral.........15
Section 10.4 Remedies Cumulative......................................................................15
Section 10.5 Remedies Not Waived......................................................................15
</TABLE>
-i-
<PAGE> 23
<TABLE>
<CAPTION>
<S> <C>
SECTION 11. AMENDMENT AND WAIVER.............................................................................16
SECTION 12. MISCELLANEOUS....................................................................................16
Section 12.1 Expenses...............................................................................16
Section 12.2 Reliance on and Survival of Representations............................................16
Section 12.3 Successors and Assigns; Transfers of the Notes.........................................16
Section 12.4 Notices................................................................................17
Section 12.5 Severability...........................................................................17
Section 12.6 Governing Law..........................................................................18
Section 12.7 Forum and Jurisdiction.................................................................18
Section 12.8 Headings...............................................................................18
Section 12.9 Term of Agreement......................................................................18
</TABLE>
-ii-
<PAGE> 1
EXHIBIT 4.58
================================================================================
GUARANTEE AND SECURITY AGREEMENT
Dated as of November 12, 1997
From
HORSESHOE VENTURES, L.L.C.,
A Delaware Limited Liability Company,
as Guarantor
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
and
CERTAIN COMMERCIAL
LENDING INSTITUTIONS
as Lenders
================================================================================
<PAGE> 2
GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT dated as of November 12, 1997
(this "Guarantee" or this "Agreement"), is made by HORSESHOE VENTURES, L.L.C., a
Delaware limited liability company with an office located at 4024 Industrial
Road, Las Vegas, Nevada 89103 (the "Company"), in favor of the Lenders (as
herein defined) and Canadian Imperial Bank of Commerce ("CIBC"), in its capacity
as agent for the Lenders (in such capacity, the "Agent").
R E C I T A L S:
WHEREAS, on October 10, 1995, Horseshoe Gaming, L.L.C., a Delaware
limited liability company (the "Borrower") authorized the issuance of up to
$150,000,000 of its Senior Secured Credit Facility Notes due September 30, 1999
pursuant to a Senior Secured Credit Facility Note Purchase Agreement dated as of
October 10, 1995, between the Borrower and the Purchasers named therein (the
"Note Purchasers"), as amended prior to the date hereof (as so amended, the
"Senior Secured Credit Facility Note Purchase Agreement");
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Note Purchaser and CIBC, the remaining Note Purchaser
assigned to CIBC all of the rights, duties and obligations of the Note
Purchasers in connection with the Senior Secured Credit Facility Note Purchase
Agreement and the security documents and other documents executed in connection
therewith;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Company, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;
WHEREAS, the Company directly owns an 80% ownership interest in the
Guarantor;
WHEREAS, the Company will derive substantial economic benefit from the
availability of credit to the Borrower pursuant to the Amended and Restated
Credit Agreement; and
WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders and the
Agent that the Company execute this Agreement on the terms, and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders and the Agent, including the extension of availability of credit
to the Borrower and for other good
<PAGE> 3
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged by the Company, the Company hereby agrees as follows:
SECTION 1. TERMS AND DEFINITIONS.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Chattel Paper" has the meaning provided in the UCC.
"Contract Rights" means all rights of the Company (including, without
limitation, all rights to payment) under each Contract.
"Contracts" means all contracts between the Company and one or more
additional parties.
"Copyrights" means any copyright registered with the United States
Copyright Office, as well as any application for a United States copyright
registration made with the United States Copyright Office.
"Documents" has the meaning provided in the UCC.
"Equipment" means any "equipment," as such term is defined in the UCC
and, in any event, shall include, but shall not be limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"General Intangibles" has the meaning provided in the UCC and in any
event includes all claims, rights, powers, privileges, authority, options,
security interests, liens and remedies under any partnership agreement to which
the Company is a party or with respect to any partnership of which the Company
is a partner.
"Goods" has the meaning provided in the UCC.
"Instrument" has the meaning provided in Article 9 of the UCC.
"Intercompany Notes" means a promissory note evidencing indebtedness of
a Subsidiary of the Company to the Company.
"Inventory" means merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing,
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<PAGE> 4
packaging or shipping same; in all stages of production--from raw materials
through work-in-process to finished goods--and all products and proceeds of
whatever sort and wherever located and any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Agent, and shall
specifically include all "inventory" as such term is defined in the UCC.
"Marks" means any trademarks and service marks registered in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any political subdivision thereof any
application for such trademarks and service marks, as well as any unregistered
marks used in the United States and trade dress, logos, designs, trade names,
company names, business names, fictitious business names and other business
identifiers used in the United States.
"Patents" means any patent registered with the United States Patent and
Trademark Office, as well as any application for a United States patent
registration made with the United States Patent and Trademark Office.
"Pledged Stock" means the shares of capital stock described in Schedule
A hereto, as it may, from time to time, be supplemented in accordance with the
terms of the Agreement.
"Proceeds" shall mean all "proceeds", as such term is defined in the
UCC and, in any event, shall mean and include, but not be limited to (i) any and
all proceeds of any insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the Pledged Collateral (as
defined in Section 3), (ii) any and all payments (in any form whatsoever) made
or due and payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Collateral by any governmental authority, bureau or agency
(or any Person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.
"Receivables" means any "account" as such term is defined in the UCC,
and, in any event, shall include, but shall not be limited to, all rights to
payment for goods sold or leased or services performed, whether now in existence
or arising from time to time hereafter, including, without limitation, such
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held to secure the
foregoing; (ii) all right, title and interest in and to any goods, the sale of
which gave rise thereto; (iii) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing; (iv) all powers of attorney for the execution
of any evidence of indebtedness or security or other writing in connection
therewith; (v) all books, records, ledger cards, and invoices relating thereto;
(vi) all evidences of the filing of financing statements and other statements
and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from
filing or other registration officers; (vii) all credit information reports and
memoranda relating thereto; and (viii) all other writings related in any way to
the foregoing.
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<PAGE> 5
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Amended and Restated Credit Agreement.
Section 1.3 Action by the Agent or the Lenders. Whenever any action is
required or permitted to be taken by the Agent or the Lenders, except for such
action which is expressly provided herein to be taken by an individual Lender or
by all the Lenders, such action, including, without limitation, in connection
with the exercise of any remedy granted herein, shall be taken by the Agent,
acting at the direction of Majority Lenders or the Required Lenders, as provided
in the Amended and Restated Credit Agreement.
SECTION 2. GUARANTEE.
Section 2.1 Guaranteed Obligations. The Company, jointly and severally
with any other guarantors, hereby absolutely, unconditionally and irrevocably
guarantees to the Agent and the Lenders on a continuing basis the full, complete
and punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of any and all sums due from, and any and all Obligations of the
Borrower to the Agent and the Lenders now or hereafter existing under the Notes,
the Letters of Credit, the Secured Hedging Obligations and the Amended and
Restated Credit Agreement, without regard to the Borrower's use of the proceeds
of the Loans, the Letters of Credit or the Secured Hedging Obligations, whether
for principal, premium, interest, fees, costs, expenses or otherwise, including,
without prejudice to the generality of the foregoing, the prompt payment of the
Notes and payment of interest and premium thereon at the times and in the manner
specified in the Notes and the Amended and Restated Credit Agreement, prompt
payment of amounts owing pursuant to the issuance of the Letters of Credit,
prompt payment of the Secured Hedging Obligations at the times and in the manner
specified in the documentation therefor and the payment of any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent and the
Lenders in enforcing any rights under the Notes, the Letters of Credit, the
Secured Hedging Obligations, the Amended and Restated Credit Agreement and this
Agreement. Without limiting the generality of the foregoing, the Company's
liability shall extend to all amounts that would be owed by the Borrower to the
Agent and the Lenders under the Amended and Restated Credit Agreement but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower. Each of
the obligations guaranteed as set forth in this Section 2.1 is hereinafter
referred to severally as a "Guaranteed Obligation" and collectively as the
"Guaranteed Obligations".
Section 2.2 Guarantee Absolute. This Guarantee is a guarantee of
payment and not of collection, is in no way conditioned or contingent upon any
attempt to collect from or proceed against the Borrower, any other guarantors or
sureties, any other person or entity or
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<PAGE> 6
any collateral security, or upon any other event, contingency or circumstance
whatsoever and shall be binding upon and against the Company without regard to
the validity, regularity or enforceability of the Amended and Restated Credit
Agreement or any other instrument or agreement. The Company guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the term of the
Amended and Restated Credit Agreement and the documentation evidencing the
Secured Hedging Obligations, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Lenders with respect thereto. The obligations of the
Company hereunder are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against the Company to enforce
this Agreement, irrespective of whether any action is brought against the
Borrower or whether the Borrower is joined in any such action or actions. If for
any reason whatsoever the Borrower shall fail or be unable duly, punctually and
fully to pay the Guaranteed Obligations or any part thereof as and when the same
shall become payable in accordance with the terms of the Amended and Restated
Credit Agreement, the Company, immediately upon demand, will pay or cause to be
paid the Guaranteed Obligations or such part thereof.
Section 2.3 Subordination. Until payment in full of all sums due to the
Agent and the Lenders under, or in connection with such party's rights relating
to, the Amended and Restated Credit Agreement and the Secured Hedging
Obligations and all other instruments, documents and agreements contemplated
therein and performance of all other obligations thereunder, the Company hereby
covenants and agrees with the Agent and the Lenders that:
(a) the Company shall and does hereby subordinate, to the obligations
of the Borrower to the Agent and the Lenders, all present and future
indebtedness due to the Company from (and shall cause to be subordinated to the
obligations of the Company to the Agent and the Lenders hereunder all present
and future indebtedness due from the Company to) the Borrower; and
(b) the Company shall deliver to the Agent and the Lenders, and shall
cause the Borrower to deliver to the Agent and the Lenders, such agreements and
other evidence of such subordination as the Agent or the Lenders reasonably may
request from time to time.
SECTION 3. GRANT OF SECURITY.
Section 3.1 Pledged Collateral.
(a) The Company, to secure its punctual payment and performance
hereunder in respect of the Guaranteed Obligations hereby pledges, assigns and
transfers unto the Agent, and does hereby grant to the Agent, for the benefit of
the Lenders, a continuing security interest of first priority in, all of the
right, title and interest of the Company in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) all cash,
accounts, deposits, securities and insurance policies now or at any time
hereafter in the possession or under
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<PAGE> 7
control of the Company or its respective bailees and any interest therein, (ii)
each and every Receivable, (iii) all Contract Rights arising under all
Contracts, and all equity and debt securities and other interests in any and all
Subsidiaries (other than Unrestricted Subsidiaries), (iv) all Inventory, (v) all
Equipment, (vi) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of the Company symbolized by
the Marks, (vii) all Patents and Copyrights, and all reissues, renewals or
extensions thereof, (viii) all computer programs and all intellectual property
rights therein and all other proprietary information, (ix) (A) the indebtedness
of the Company's Subsidiaries to the Company; (B) all Intercompany Notes listed
on Schedule A (as it may, from time to time, be supplemented in accordance with
the terms hereof) and all promissory notes which are pledged to the Agent; and
(C) all shares of capital stock described in Schedule A (as it may, from time to
time, be supplemented in accordance with the terms hereof) and all other shares
of capital stock or other equity interests, (x) all books and records, customer
lists, ledger cards, credit files, print-outs, and other materials and records
pertaining to any of the foregoing, whether now owned or hereafter acquired,
(xi) all other Goods, General Intangibles, investment property (as defined in
Article 9 of the UCC), Chattel Paper, Documents and Instruments, (xiii) all
other personal property of the Company, whether now owned or hereafter acquired,
(xiv) all documents of title evidencing or issued with respect to any of the
foregoing, and (xv) all Proceeds and products of any and all of the foregoing
(collectively, the "Pledged Collateral").
(b) The Pledged Collateral secures the payment of all obligations of
every kind and character now or hereafter existing (whether matured or
unmatured, contingent or liquidated) of the Company under Section 2 with respect
to the Guaranteed Obligations and under each other provision of this Agreement
(in each case as this Agreement hereafter may be amended, supplemented or
otherwise modified from time to time), whether for principal, interest, premium,
fees, expenses, reimbursement, indemnification or otherwise.
(c) The Intercompany Notes and the certificates representing the
Pledged Stock listed on Schedule A shall be delivered to the Agent
contemporaneously herewith together with appropriate undated note powers and
stock powers duly executed in blank. Neither the Agent nor any Lender shall be
obligated to preserve or protect any rights with respect to the Intercompany
Notes or the Pledged Stock or to receive or give any notice with respect thereto
whether or not the Agent or any Lender is deemed to have knowledge of such
matters.
(d) The assignments and security interests under this Agreement granted
to the Agent shall not relieve the Company from the performance of any term,
covenant, condition or agreement on the Company's part to be performed or
observed under or in respect of the Pledged Collateral or from any liability to
any Person under or in respect of any of such Pledged Collateral or impose any
obligation on the Agent to perform or observe any such term, covenant, condition
or agreement on the Company's part to be so performed or observed or impose any
liability on the Agent for any act or omission on the part of the Company
relative thereto or for any breach of any representation or warranty on the part
of the Company contained in this Agreement or any other Loan Document, or in
respect of the Pledged Collateral or made in
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<PAGE> 8
connection herewith or therewith. The obligations of the Company contained in
this paragraph shall survive the termination of this Agreement and the discharge
of the Company's other obligations hereunder.
SECTION 4. OBLIGATIONS UNCONDITIONAL.
The obligations of the Company set forth in this Agreement and all
rights of the Agent and the Lenders shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deferment, reduction or diminution
of any obligation or defense of any kind or nature (other than full,
indefeasible and timely payment of the Guaranteed Obligations) based upon any
claim the Company or any other party may have against the Agent, the Lenders,
the Borrower, any of their Affiliates, or any other party, shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether or not
the Agent, the Lenders, or the Company shall have any knowledge or notice
thereof), including without limitation:
(a) any compromise, settlement, release, accord and satisfaction,
termination, modification, amendment, waiver, consent or other change, addition,
deletion or supplement of or to, or any forbearance or indulgence with respect
to, any or all of the obligations, duties, covenants or agreements under the
Amended and Restated Credit Agreement or the Secured Hedging Obligations, or any
other instrument or agreement whatsoever (whether or not referred to in the
Amended and Restated Credit Agreement or applicable to any of the parties to the
Amended and Restated Credit Agreement), or any assignment or transfer of any
interest in any of the foregoing, or any furnishing, acceptance, substitution or
exchange of, any release of or failure to protect, perfect or to continue
perfected, or any other action or inaction in respect of, any direct or indirect
security for or guarantee with respect to the Guaranteed Obligations or any part
thereof (including, without limitation, the Pledged Collateral);
(b) any failure, omission or delay on the part of the Agent or the
Lenders or any party claiming by, through or under any of the foregoing to
conform or comply with any term of any instrument or agreement referred to in
subsection (a) above, or to exercise any right, remedy or power thereunder,
including, but not limited to, the failure to give notice to the Company of the
occurrence of any Event of Default;
(c) any renewal, refinancing or refunding of the Guaranteed Obligations
in whole or in part or extension of the time for payment of any Guaranteed
Obligation or for the payment of any other amount payable under the Amended and
Restated Credit Agreement or any Secured Hedging Obligation or of the time for
performance of any other obligations, covenants or agreements under or arising
out of the Amended and Restated Credit Agreement, any Secured Hedging Obligation
or any other instrument or agreement or the extension or the renewal of any of
the foregoing;
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<PAGE> 9
(d) any voluntary or involuntary liquidation, dissolution, winding-up,
sale or other disposition of all or substantially all the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of the debts of, or other similar events or proceedings affecting,
the Borrower or any of its assets or of any other party, or any action taken by
any trustee or receiver or by any court in any such proceeding, or any
allegation of invalidity of this Guarantee in any such proceeding;
(e) to the extent permitted by law, any release or discharge by
operation of law of the Borrower, or any other party from the performance or
observance of any obligation, covenant or agreement contained in the Amended and
Restated Credit Agreement, any documentation evidencing the Secured Hedging
Obligations or any other instrument or agreement;
(f) any merger or consolidation of the Borrower into or with any entity
or any sale, lease or transfer of any of the assets of the Borrower to any other
party, or any change in the name, objects or governing documents of the Borrower
or otherwise in the Company's relationship to the Borrower;
(g) any impossibility or illegality of performance on the part of the
Borrower of its obligations under the Amended and Restated Credit Agreement or
the Secured Hedging Obligations;
(h) any lack of validity or enforceability of any provisions of the
Amended and Restated Credit Agreement, the documentation for the Secured Hedging
Obligations or any other Loan Document; or
(i) any other occurrence or circumstance whatsoever, whether similar or
dissimilar to the foregoing, and any other circumstance which might otherwise
constitute a legal or equitable defense or discharge of the liabilities of a
Company or surety or which might otherwise limit recourse against the Pledged
Collateral.
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Effective upon the occurrence and during the continuance of an
Event of Default, the Company hereby irrevocably constitutes and appoints the
Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of
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attorney), and, without limiting the generality of the foregoing, hereby gives
the Agent in its sole discretion the power and right, on behalf of the Company,
without notice to or assent by the Company, to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due and to become due under any Pledged
Collateral and, in the name of the Company or its own name or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Pledged Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting
any and all such monies due under any Pledged Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Agent for the purpose of collecting any and all such moneys due under
any Pledged Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof and acknowledges that this power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Pledged Collateral and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither the Agent nor any of its agents,
representatives or designees shall be responsible to the Company for any act or
failure to act, except for any act involving their gross negligence or willful
misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior to an
Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or (ii) to control decisions regarding
the disposal or other management of hazardous substances generated, used or
handled by the Company or any of its Affiliates.
SECTION 6. WAIVERS.
(a) The Company hereby irrevocably waives promptness, diligence, notice
of acceptance, nonpayment, nonperformance, dishonor or protest and any other
notice with respect to any of the Guaranteed Obligations and this Agreement and
any other circumstance which might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or which might otherwise
limit the obligations of the Company under this Agreement. The Company hereby
irrevocably waives any requirement that the Agent or the
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Lenders protect, secure, perfect or insure any Lien on the Pledged Collateral or
exhaust any right or take any action against the Borrower, or any other Person
or mitigate the damages resulting from default by the Borrower under the Amended
and Restated Credit Agreement or any Secured Hedging Obligations, or by the
Company under this Agreement.
(b) The Company hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim based upon, arising out of, or relating
to, this Agreement, the transactions contemplated by the Amended and Restated
Credit Agreement or the Secured Hedging Obligations or the actions of the Agent
and the Lenders in the negotiation, administration, performance or enforcement
thereof. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. The
Company acknowledges that this waiver is a material inducement to the Agent and
the Lenders to enter into a business relationship with the Company and its
Subsidiaries and Affiliates and that the Agent and the Lenders have each already
relied on this waiver in entering into this Agreement and the Loan Documents and
that each will continue to rely on this waiver in their related future dealings.
The Company further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
(c) The Company hereby irrevocably waives, until the end of the term of
this Agreement as set forth in Section 12.9, any claim or other rights that it
may now or hereafter acquire against the Borrower or any other guarantor of the
obligations of the Borrower that arise from the existence, payment, performance
or enforcement of the Guaranteed Obligations, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the Agent
or the Lenders against the Borrower or any other guarantor or any collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Borrower or any other guarantor directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right. If any amount shall be paid to the
Company in violation of the preceding sentence at any time prior to the payment
in full in cash of the Guaranteed Obligations, such amount shall be held in
trust for the benefit of the Agent and the Lenders and shall forthwith be paid
to the Agent to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of this Agreement and the
Amended and Restated Credit Agreement or to be held as Pledged
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Collateral for any Guaranteed Obligations thereafter arising. The Company
acknowledges it will derive substantial economic benefits from the financing
arrangements contemplated by the Amended and Restated Credit Agreement and the
Secured Hedging Obligations and that the waiver set forth in this subsection (c)
is knowingly made in contemplation of such benefits.
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.; REINSTATEMENT. The
obligations of the Company under this Agreement shall continue to be effective,
or be automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the Agent or the Lenders (as a preference,
fraudulent conveyance or otherwise) upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any other person
or entity or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to the Borrower, or
any other party, or any substantial part of its property, or otherwise, all as
though such payments had not been made. If an Event of Default shall at any time
have occurred and be continuing or shall exist and declaration of default or
acceleration under or with respect to the Amended and Restated Credit Agreement
or the Secured Hedging Obligations, or any Guaranteed Obligation shall at such
time be prevented by reason of the pendency against the Borrower or any other
Person or entity of a case or proceeding under a bankruptcy or insolvency law,
the Company agrees that, for purposes of this Agreement and its obligations
hereunder, the Amended and Restated Credit Agreement, the Secured Hedging
Obligations and such Guaranteed Obligation shall be deemed to have been declared
in default or accelerated with the same effect as if the Amended and Restated
Credit Agreement, the Secured Hedging Obligations and such Guaranteed Obligation
had been declared in default and accelerated in accordance with their respective
terms and the Company shall forthwith pay the amounts specified to be paid
thereunder in accordance with their respective terms and all other Guaranteed
Obligations without further notice or demand.
SECTION 8. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants to the Agent and the Lenders as follows:
Section 8.1 Location. The chief place of business and chief executive
office of the Company is located at the address first specified above for the
Company.
Section 8.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Guaranteed Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
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SECTION 9. COVENANTS. The Company hereby covenants and agrees that on
and after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 9.1 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent and the Lenders at least 90 days' prior
written notice thereof of its intention to so change and shall have taken all
action (or made arrangements to take such action substantially simultaneously
with such change if it is impossible to take such action in advance) necessary,
or reasonably requested by the Agent and the Lenders, to amend such financing or
continuation statement so that it is not misleading.
Section 9.2 Amendment of Organization Documents. The Company shall not
amend its [Limited Partnership Agreement] in a manner that affects adversely the
Agent or the Lenders.
Section 9.3 Further Assurances.
(a) From time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action, that may be necessary or desirable, or that the Agent or the
Lenders reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent or the Lenders to exercise and enforce their rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, the Company will execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent or the Lenders may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) The Company hereby authorizes the Agent or the Lenders to file one
or more financing or continuation statements, and assignments thereof and
amendments thereto, relating to all or any part of the Pledged Collateral
without the signature of the Company where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Pledged Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) The Company will furnish to the Agent and the Lenders from time to
time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent, the Lenders or the Company reasonably may request, all in reasonable
detail.
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<PAGE> 14
(d) If the Company shall acquire in any manner any additional
Intercompany Notes, the Company shall forthwith (and without the necessity for
any request or demand by the Agent) deliver such Intercompany Notes to the Agent
in the same manner as described in Section 1.1(c), together with a supplement to
Schedule A reflecting the addition of such additional Intercompany Notes,
whereupon such additional Intercompany Notes shall be deemed to be pledged
hereunder for all purposes hereunder. If the Company shall at any time acquire
any additional shares of the capital stock of any class of Pledged Stock,
whether such acquisition shall be by purchase, exchange, reclassification,
dividend, or otherwise, or acquire any new shares of capital stock of any newly
formed or acquired Subsidiary (as defined under and to the extent permitted by
the Amended and Restated Credit Agreement), the Company shall forthwith (and
without the necessity for any request or demand by the Agent) deliver such
shares to the Agent in the same manner as described in Section 1.1(c), together
with a supplement to Schedule A reflecting the addition of such additional
shares of stock, whereupon such additional shares of stock shall be deemed to be
Pledged Stock for all purposes hereunder. The Company will hold in trust for the
Agent upon receipt and immediately thereafter deliver to the Agent any
instrument evidencing or constituting Pledged Collateral (except, so long as no
Event of Default has occurred and is continuing, ordinary cash dividends, if
any, paid with respect to the Pledged Stock and payments in respect of the
Intercompany Notes, in each case as permitted by the Amended and Restated Credit
Agreement).
SECTION 10. EVENTS OF DEFAULT; REMEDIES.
Section 10.1 Events of Default Defined. If any Event of Default shall
occur and be continuing (for any reason whatsoever and whether it shall be
voluntary or involuntary or by operation of law or otherwise), then (i) all
payments received by the Company under or in connection with any of the Pledged
Collateral shall be held by the Company in trust for the Agent and the Lenders,
shall be segregated from other funds of the Company and shall forthwith upon
receipt by the Company be turned over to the Agent for the ratable benefit of
the Lenders in the same form as received by the Company (duly endorsed by the
Company to the Agent, if required); (ii) any and all such payments so received
by the Lenders (whether from the Company or otherwise) will be applied by the
Lenders against their Guaranteed Obligations; and (iii) any amount remaining
after payment in full of all of the Guaranteed Obligations shall be paid over to
the Company.
Section 10.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the Agent
and the Lenders may exercise in addition to all other rights and remedies
granted to the Agent and the Lenders in this Agreement, and under any other
instrument or agreement securing, evidencing or relating to the Guaranteed
Obligations, all rights and remedies of a secured party under the UCC as
applicable to the Pledged Collateral and all the rights granted to the Agent and
the Lenders. Without limiting the generality of the foregoing, the Company
expressly agrees that in any such event the Agent and the Lenders, without
demand of performance or other
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<PAGE> 15
demand, advertisement or notice of any kind (except the notice, specified below
of time and place of public or private sale) to or upon the Company or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith assume, collect, receive, appropriate and
realize upon the Pledged Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Pledged Collateral (or contract to do so), or any
part thereof, in one or more parcels at a public or private sale or sales, at
any exchange broker's board or at its offices or elsewhere at such prices as the
Agent may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Agent and the Lenders shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of said
Pledged Collateral so sold, free of any right or equity of redemption, which
equity of redemption the Company hereby releases, and in lieu of payment of such
actual purchase price may set-off the amount of such purchase price against the
Guaranteed Obligations then owing to such purchaser. The Company further agrees,
at the Agent's request, to assemble the Pledged Collateral and make it available
to the Agent at places which the Agent shall reasonably select, whether at the
Company's premises or elsewhere. The Agent and the Lenders shall retain the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safe keeping or otherwise of any or
all of the Pledged Collateral or in any way relating to the rights of the Agent
and the Lenders hereunder, including reasonable attorneys' fees and legal
expenses, for application to the payment in whole or in part of the Guaranteed
Obligations, and only after so retaining such net proceeds and after the payment
by the Agent and the Lenders of any other amount required by any provision of
law, including Section 9-504(1)(c) of the UCC, need the Agent and the Lenders
account for the surplus, if any, to the Company. To the extent permitted by
applicable law, the Company waives all claims, damages and demands against the
Agent and the Lenders arising out of the repossession, retention or sale of the
Pledged Collateral, except to the extent that such claims, damages and demands
arise out of the willful misconduct or gross negligence of the Agent or the
Lenders.
(b) The Company also agrees to pay all costs of the Agent and the
Lenders, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Guaranteed Obligations and the enforcement and
protection of any of the rights of the Agent and the Lenders hereunder. All
costs and expenses incurred by each of the Agent and the Lenders with respect to
the enforcement, collection and protection of the Agent's and the Lenders'
interest in the Pledged Collateral shall be additional Guaranteed Obligations of
the Company to the Agent and the Lenders payable on demand, and secured by the
Pledged Collateral.
(c) Any notice required to be given by the Agent of a sale, lease or
other disposition or other intended action by it with respect to any of the
Pledged Collateral which is deposited in the United States mails, postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the
-14-
<PAGE> 16
Company of any such action. The net proceeds realized by the Agent and the
Lenders upon any such sale or other disposition, after deduction for the expense
of retaking, holding, preparing for sale, selling or the like and the reasonable
attorneys' fees and legal expenses incurred by the Agent and the Lenders in
connection therewith, shall be applied as provided herein toward satisfaction of
the Guaranteed Obligations. The Agent and the Lenders shall account to the
Company for any surplus realized upon such sale or other disposition. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect the Agent's and the Lenders'
security interest in the Pledged Collateral until the Guaranteed Obligations are
fully paid. The Company agrees that the Agent and the Lenders have no obligation
to preserve their rights to the Pledged Collateral against any other parties.
The Agent and the Lenders shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect
of Pledged Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Lenders be deemed to assume any
responsibility for, or obligation or duty with respect to, any part or all of
the Pledged Collateral, of any nature or kind whatsoever, or any matter or
proceedings arising out of or relating thereto. The Agent and the Lenders shall
not be required to take any action of any kind to collect or protect any
interest in the Pledged Collateral, including, but not limited to, any action
necessary to preserve the rights of the Agent and the Lenders, and the Company
against prior parties to any of the Pledged Collateral. The Agent and the
Lenders shall not be liable or responsible in any way for the safe keeping, care
or custody of any of the Pledged Collateral if the Pledged Collateral is
accorded the same treatment and level of care as their own property, for any
loss or damages thereto, for any diminution in the value thereof, for any act or
default of any agent or bailee of the Agent, the Lenders, the Company or of any
carrier, forwarding agency or other person whomsoever or for the collection of
any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or willful misconduct. The
Company hereby releases the Agent and the Lenders from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement
or the Guaranteed Obligations and any actions taken or omitted to be taken by
the Agent and the Lenders with respect thereto, and the Company hereby agrees to
hold the Agent and the Lenders harmless from and with respect to any and all
such claims, causes of action and demands. The Company hereby releases the Agent
and the Lenders from any claims, causes of action and demands arising under 42
U.S.C. Section 9607 or 9613 or similar provisions of state or local law.
Section 10.4 Remedies Cumulative. No remedy conferred upon the Agent
and the Lenders is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
-15-
<PAGE> 17
Section 10.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and the Lenders and no delay or failure in exercising any
rights hereunder in respect thereof shall operate as a waiver of any of the
rights of the Agent and the Lenders.
SECTION 11. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and shall
not be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by all the Lenders,
shall (a) limit the liability of the Company hereunder, (b) postpone any date
fixed for payment hereunder or (c) change the number of Lenders required to take
any action hereunder.
No failure on the part of the Agent or the Lenders to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other, or
further exercise thereof or the exercise of any other right.
SECTION 12. MISCELLANEOUS.
Section 12.1 Expenses. The Company will pay the Agent and the Lenders
for any and all sums, costs and expenses which the Agent or the Lenders may pay
or incur by reason of defending, protecting or enforcing the security interest
herein granted or the priority hereof, enforcing payment of the Guaranteed
Obligations, discharging any Lien or claim against the Pledged Collateral or any
part thereof or, if the Company fails to perform or comply with any of its
agreements herein, performing or complying with such terms. Such sums, costs and
expenses shall include, without limitation, all court costs, collection charges,
travel and reasonable attorneys' fees (including fees and expenses incident to
the enforcement of payment of any obligations of the Company by any action or
participation in, or connection with, a case or proceeding under Chapters 7, 11
or 13 of the Bankruptcy Code). All sums, costs and expenses of the Agent and the
Lenders payable by the Company pursuant to this Agreement shall be payable by
the Company to the Agent and the Lenders on demand and shall constitute
Guaranteed Obligations secured by the Pledged Collateral.
Section 12.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agent and the Lenders or on their behalf and (b) survive the execution and
delivery of this Agreement and of the Notes, and shall continue in effect so
long as any Note or Obligation is outstanding and thereafter as provided in
Sections 10 and 12.1.
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<PAGE> 18
Section 12.3 Successors and Assigns; Transfers of the Notes. This
Agreement shall bind and inure to the benefit of, and be enforceable by, the
Company, the Agent, the Lenders, and their respective permitted successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes. The
Company may not assign its rights and obligations under this Agreement, except
pursuant to a reorganization permitted under the Amended and Restated Credit
Agreement. The Lenders may transfer the Notes (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state and federal securities laws and the
requirements of Section 9 of the Amended and Restated Credit Agreement.
Section 12.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
(a) if to the Company:
c/o Horseshoe Gaming, Inc.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Paul Alanis
Telephone: (702) 650-0080
Telecopy: (702) 650-0081
with a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: Jim Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
(b) if to the Agent or the Lenders, at their respective addresses as
set forth in the Amended and Restated Credit Agreement or at such other address
as shall be provided to the Borrower in accordance to the terms of the Amended
and Restated Credit Agreement.
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<PAGE> 19
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 12.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
Section 12.6 Governing Law. This Agreement and the Notes, the Letters
of Credit, the Secured Hedging Obligations and (unless otherwise provided) all
amendments, supplements, waivers and consents relating hereto or thereto shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.
Section 12.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Agreement or any course of conduct, course of
dealing, statements or actions of the Company, the Agent or the Lenders related
thereto, the Company hereby submits and consents to the jurisdiction of the
courts of the State of New York and of the United States District Court for the
Southern District of New York, and the Company agrees that any such action, suit
or proceeding may be brought by the Agent or the Lenders in the Supreme Court of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York, and the service of process may be made
upon the Company by mailing a copy of the summons and any complaint to the
Company by registered mail, at the address specified in Section 12.4. The
Company hereby waives and agrees not to assert, by way of motion or otherwise,
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of the above-named courts, that the action is brought in an
inconvenient forum or that the venue of the action is improper. The Agent and
the Lenders, nevertheless, may serve, process or commence any such action, suit
or proceeding in such other jurisdiction(s), and in such other manner as may be
permitted by applicable law. The methods of service of process specified in this
paragraph may be used in the alternative or together as the Agent and the
Lenders may see fit.
Section 12.8 Headings. The headings in this Agreement are for
convenience only and shall not be construed as a part of this Agreement.
Section 12.9 Term of Agreement. This Agreement and all agreements of
the Company contained herein shall continue in full force and effect and shall
not be discharged until such time as the Guaranteed Obligations shall be
indefeasibly paid or performed in full
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<PAGE> 20
and all of the agreements of (a) the Borrower under the Amended and Restated
Credit Agreement and the Secured Hedging Obligations and (b) the Company
hereunder shall be fully paid or performed; provided, certain provisions of this
Agreement shall survive such termination as expressly set forth herein.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed delivered as of the date first above written.
HORSESHOE VENTURES, L.L.C.
By: HORSESHOE GAMING, L.L.C.
its manger
By: HORSESHOE GAMING, INC.,
its manger
By: ___________________________
Name: Walter J. Haybert
Title: Treasurer
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<PAGE> 21
SCHEDULE A
Pledged Stock
None.
Intercompany Notes
None.
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. TERMS AND DEFINITIONS..........................................................................2
Section 1.1 Definitions............................................................................2
Section 1.2 Additional Terms.......................................................................4
Section 1.3 Action by the Agent or the Lenders.....................................................4
SECTION 2. GUARANTEE......................................................................................4
Section 2.1 Guaranteed Obligations.................................................................4
Section 2.2 Guarantee Absolute.....................................................................5
Section 2.3 Subordination..........................................................................5
SECTION 3. GRANT OF SECURITY..............................................................................6
Section 3.1 Pledged Collateral.....................................................................6
SECTION 4. OBLIGATIONS UNCONDITIONAL......................................................................7
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT................................................................8
SECTION 6. WAIVERS........................................................................................9
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.;
REINSTATEMENT.................................................................................11
SECTION 8. REPRESENTATIONS OF THE COMPANY................................................................11
Section 8.1 Location..............................................................................11
Section 8.2 Security Interest.....................................................................11
SECTION 9. COVENANTS.....................................................................................12
Section 9.1 Continuous Perfection.................................................................12
Section 9.2 Amendment of Organization Documents...................................................12
Section 9.3 Further Assurances....................................................................12
SECTION 10. EVENTS OF DEFAULT; REMEDIES...................................................................13
Section 10.1 Events of Default Defined.............................................................13
Section 10.2 Remedies..............................................................................13
Section 10.3 Limitation on the Agent's and the Lenders' Duty in Respect of
Pledged Collateral....................................................................15
Section 10.4 Remedies Cumulative...................................................................16
Section 10.5 Remedies Not Waived...................................................................16
</TABLE>
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<PAGE> 23
<TABLE>
<S> <C>
SECTION 11. AMENDMENT AND WAIVER..........................................................................16
SECTION 12. MISCELLANEOUS.................................................................................16
Section 12.1 Expenses..............................................................................16
Section 12.2 Reliance on and Survival of Representations...........................................16
Section 12.3 Successors and Assigns; Transfers of the Notes........................................17
Section 12.4 Notices...............................................................................17
Section 12.5 Severability..........................................................................18
Section 12.6 Governing Law.........................................................................18
Section 12.7 Forum and Jurisdiction................................................................18
Section 12.8 Headings..............................................................................18
Section 12.9 Term of Agreement.....................................................................19
</TABLE>
-ii-
<PAGE> 1
EXHIBIT 4.59
AMENDED AND RESTATED NOTE ASSIGNMENT
THIS AMENDED AND RESTATED NOTE ASSIGNMENT dated as of November 12, 1997
(this "Assignment" or this "Agreement"), is made by Horseshoe Gaming, L.L.C., a
Delaware limited liability company (the "Company"), in favor of Canadian
Imperial Bank of Commerce ("CIBC"), as agent (the "Agent") for the ratable
benefit of the Lenders (as herein after defined) and United States Trust Company
of New York (the "Collateral Agent"), for the ratable benefit of the Senior
Noteholders (as defined herein).
R E C I T A L S:
WHEREAS, the Company has authorized the issuance of up to $150,000,000
of its Senior Secured Credit Facility Notes due September 30, 1999 pursuant to a
Amended and Restated Credit Agreement dated as of October 10, 1995, as amended
prior to the date hereof, among the Company, Robinson Property Group Limited
Partnership, a Mississippi limited partnership, as guarantor ("RPG"), and Debis
Financial Services, Inc. and other financial institutions (collectively the
"Note Purchasers" and individually, a "Note Purchaser") (as so amended, the
"Senior Secured Credit Facility Note Purchase Agreement");
WHEREAS, the Company has (a) issued $150,000,000 aggregate principal
amount of 12.75% Senior Notes due September 30, 2000 (the "Senior Notes"), and
(b) issued $150,000,000 aggregate principal amount of Senior Notes, pursuant to
the Senior Note Purchase Agreement (the "Senior Note Purchase Agreement") dated
as of October 10, 1995, among the Company, RPG, as guarantor, and the purchasers
named therein;
WHEREAS, the Company, RPG and U.S. Trust Company of California, N.A.,
as trustee, have executed an indenture dated as of October 10, 1995 (the
"Indenture"), relating to the Senior Notes;
WHEREAS, the Company has loaned up to $82,000,000 to HE (the "HE
Intercompany Senior Loan") for the purpose of refinancing existing indebtedness
and expanding the existing facilities of the Horseshoe Bossier City Casino which
is 100% owned by HE, and in order to evidence the HE Intercompany Senior Loan,
HE has issued to the Company its promissory notes (the "HE Intercompany Senior
Notes");
WHEREAS, the Company has loaned up to $74,500,000 to RPG (the "RPG
Intercompany Senior Loan") for the purpose of refinancing existing indebtedness
and expanding the existing facilities of the Horseshoe Tunica Casino which is
100% owned by RPG, and in order to evidence the RPG Intercompany Senior Loan,
RPG has issued to the Company its promissory notes (the "RPG Intercompany Senior
Notes");
1
<PAGE> 2
WHEREAS, the Company may finance its current or future Subsidiaries by
lending money to such Subsidiaries;
WHEREAS, pursuant to a Note Assignment dated as of October 10, 1995
(the "Original Note Assignment"), the obligations of the Company under the
Senior Secured Credit Facility Note Purchase Agreement and the Indenture were
secured by, among other collateral, the intercompany notes, together with the
collateral and related documents that secure such notes, issued or to be issued
in connection with the loans described in the immediately preceding three
recitals;
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof between the remaining Note Purchaser and the Agent, the remaining Note
Purchaser assigned to the Agent all of the rights, duties and obligations of the
Note Purchasers in connection with the Senior Secured Credit Facility Note
Purchase Agreement and the documents executed in connection therewith;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Company, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;
WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders, CIBC
and the Agent, including the extension of availability of credit to the Company,
that the Company amend and restate its obligations under the Original Note
Assignment on the terms, and subject to the conditions set forth herein, it
being understood that in so doing the Company expressly disclaims any interest
to effect a novation or extinguishment or discharge of the Original Note
Assignment as a result of entering into this Agreement and the other documents
contemplated herein;
NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders, CIBC and the Agent, including the extension of availability of
credit to the Company and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged by the Company, the Company hereby
amends and restates the Original Note Assignment in its entirety as follows:
SECTION 1. TERMS AND DEFINITIONS.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
2
<PAGE> 3
(a) "Proceeds" shall mean all "proceeds", as such term is defined in
the UCC and, in any event, shall mean and include, but not be limited to, (i)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to the Company from time to time with respect to any of the Assigned Collateral
(as defined in Section 2), (ii) any and all payments (in any form whatsoever)
made or due and payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Assigned Collateral by any governmental authority, body, bureau or
agency (or any Person acting under color of governmental authority) and (iii)
any and all other amounts from time to time paid or payable under or in
connection with any of the Assigned Collateral.
(b) "Senior Noteholders" shall mean the holders of the Senior Notes.
(c) "UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Amended and Restated Credit Agreement.
SECTION 2. ASSIGNMENT.
Section 2.1 Assigned Collateral.
(a) The Company hereby assigns, conveys, pledges, hypothecates and
transfers to the Agent, for the ratable benefit of the Lenders, and the
Collateral Agent, for the ratable benefit of the Senior Noteholders and hereby
grants to the Agent, for the ratable benefit of the Lenders, and the Collateral
Agent, for the ratable benefit of the Senior Noteholders an irrevocable and
unconditional security interest in, the following (collectively, the "Assigned
Collateral"):
(i) the HE Intercompany Senior Notes and all distributions of
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of the HE Intercompany
Senior Notes and all collateral and related documents and filings
assigned to the Agent, for the ratable benefit of the Lenders, and the
Collateral Agent, for the ratable benefit of the Senior Noteholders, to
secure the same;
(ii) the RPG Intercompany Senior Notes and all distributions
of cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of the RPG Intercompany
Senior Notes and all collateral and related documents and filings
assigned to the Agent, for the ratable benefit of the Lenders and the
Collateral Agent, for the ratable benefit of the Senior Noteholders, to
secure the same;
3
<PAGE> 4
(iii) the intercompany senior note or notes to be issued upon
the making of a loan to any other Subsidiary or Subsidiaries (the "New
Subsidiary Intercompany Senior Notes") and all distributions of cash,
instruments and other payments from time to time received, receivable
or otherwise distributed in respect of any New Subsidiary Intercompany
Senior Notes and all collateral and related documents and filings
assigned to the Agent, for the ratable benefit of the Lenders and the
Collateral Agent, for the ratable benefit of the Senior Noteholders to
secure the same;
(iv) all Proceeds of any and all of the foregoing Assigned
Collateral.
(b) The Assigned Collateral secures the payment of all obligations (the
"Secured Obligations") of every kind and character now or hereafter existing
(whether matured or unmatured, contingent or liquidated) of the Company under
(i) the Amended and Restated Credit Agreement, (ii) the Secured Hedging
Obligations, (iii) the Indenture and (iv) this Agreement (as such agreements
hereafter may be amended, supplemented or otherwise modified from time to time)
including, without limitation, the Notes, whether for principal, interest,
premium, fees, expenses, reimbursement, indemnification or otherwise, the Senior
Notes, whether for principal, interest, premium, fees, expenses, reimbursement,
indemnification or otherwise, and the Letters of Credit.
Section 2.2 Exercise of Rights. So long as no Event of Default shall
have occurred and be continuing, the Company shall be entitled to exercise its
rights as the payee under the HE Intercompany Senior Notes, the RPG Intercompany
Senior Notes and any New Subsidiary Intercompany Senior Notes and to exercise
any and all rights pertaining to the Assigned Collateral for any purpose not
inconsistent with the terms of this Agreement, including using any distributions
received in respect of the HE Intercompany Senior Notes, the RPG Intercompany
Senior Notes and any New Subsidiary Intercompany Senior Notes to make payments
on the Notes, the Secured Hedging Obligations, the Letters of Credit and the
Senior Notes; provided, the Company shall not exercise any such right if such
action could have a Material Adverse Effect. Subject to the provisions of
Section 11, upon the occurrence and during the continuance of an Event of
Default, subject to the applicable Gaming Laws, at the option of the Agent, or
the Collateral Agent, all rights of the Company to exercise or refrain from
exercising its rights as the payee under the HE Intercompany Senior Notes, the
RPG Intercompany Senior Notes and any New Subsidiary Intercompany Senior Notes,
without any demand or notice of any kind, shall cease and all such rights shall
thereupon become vested in the Agent, for the ratable benefit of the Lenders,
and the Collateral Agent, for the ratable benefit of the Senior Noteholders, who
shall thereafter have the sole right to exercise or refrain from exercising the
rights of the Company as the payee under the HE Intercompany Senior Notes, the
RPG Intercompany Senior Notes and any New Subsidiary Intercompany Senior Notes
and to require any distributions in respect of the HE Intercompany Senior Notes,
the RPG Intercompany Senior Notes and any New Subsidiary Intercompany Senior
Notes be paid directly to the Agent.
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SECTION 3. SECURITY INTEREST ABSOLUTE. All rights of the Agent, the
Lenders, the Collateral Agent and the Senior Noteholders and security interests
hereunder, and all obligations of the Company hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of the
Amended and Restated Credit Agreement, the Senior Note Purchase Agreement, the
Indenture or any other Loan Document or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Secured
Obligations, or any other amendment or waiver of any term of, or any consent to
any departure from any requirement of, the Amended and Restated Credit
Agreement, the Senior Note Purchase Agreement, the Indenture or any other Loan
Document thereto;
(c) any exchange, release or non-perfection of any Lien on any other
collateral for, or any release or amendment or waiver of any term of any
guaranty of, or consent to departure from any requirement of any guaranty of,
all or any of the Secured Obligations;
(d) any failure on the part of the Agent, the Collateral Agent or the
Senior Noteholders to give notice of any kind, mitigate the damages resulting
from the default by the Company under the Amended and Restated Credit Agreement,
the Senior Note Purchase Agreement, the Indenture or this Assignment or protect,
secure, perfect and insure any lien on the Assigned Collateral; or
(e) any other circumstance which might otherwise constitute a defense
available to, or a discharge or release of, a borrower or a pledgor or otherwise
limit the obligations of the Company under this Assignment.
SECTION 4. DELIVERY OF ASSIGNED COLLATERAL. Subject to the terms of the
Intercreditor Agreement, all instruments representing or evidencing the Assigned
Collateral including, without limitation, the HE Intercompany Senior Notes, the
RPG Intercompany Senior Notes, have been or will be delivered to a
representative of the Agent who shall hold all such instruments on behalf of all
of the Lenders and the Senior Noteholders. Subject to the terms of the
Intercreditor Agreement, upon payment in full of the obligations of the Company
due under the Amended and Restated Credit Agreement, the Company shall cause all
such instruments to be delivered to the Collateral Agent and the Collateral
Agent shall hold all such instruments on behalf of the Senior Noteholders
pursuant hereto. All instruments representing or evidencing Assigned Collateral
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Agent and the Collateral Agent. Subject to the
provisions in Section 11, after the occurrence of an Event of Default, the Agent
and the Collateral Agent shall have the right, at any time in their discretion
and without notice to the Company, to transfer to or to register in the name of
the Agent, or its nominee, any or all of the Assigned
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Collateral. In addition, subject to the provisions in Section 11, the Agent, the
Lenders, the Collateral Agent and the Senior Noteholders shall have the right at
any time after the occurrence of an Event of Default to exchange instruments
representing or evidencing Assigned Collateral for instruments of smaller or
larger denominations. The Agent shall determine who should hold the HE
Intercompany Senior Notes, the RPG Intercompany Senior Notes and any New
Subsidiary Intercompany Senior Notes as secured party on behalf of all of the
Lenders.
SECTION 5. APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Subject to the provisions in Section 11, effective upon the
occurrence and during the continuance of an Event of Default, the Company hereby
irrevocably constitutes and appoints the Agent and the Collateral Agent, their
agents, representatives and designees, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Company and in the name of the Company or in their
own names, from time to time in the Agent's or the Collateral Agent's, whichever
applicable, discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement (except, without limiting the generality of the
foregoing, that neither the Agent or the Collateral Agent shall ratify any of
their own actions pursuant to this power of attorney) and, without limiting the
generality of the foregoing, hereby gives the Agent or the Collateral Agent,
whichever applicable, in their or its sole discretion the power and right, on
behalf of the Company, without notice to or assent by the Company, to do the
following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all monies due and to become due under any
Assigned Collateral and, in the name of the Company or their own names
or otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
monies due under any Assigned Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent and the Collateral Agent for
the purpose of collecting any and all such monies due under any
Assigned Collateral whenever payable and to file any claim or to take
any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent or the Collateral Agent,
whichever applicable, for the purpose of collecting any and all such
moneys due under any Assigned Collateral whenever payable;
(ii) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Assigned Collateral; and
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(iii) to exercise any and all rights granted to the Company
under the HE Intercompany Senior Notes, the RPG Intercompany Senior
Notes and any New Subsidiary Intercompany Senior Notes.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof and acknowledges that this power of attorney
is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent and the Collateral Agent
hereunder are solely to protect the Agent's, the Lenders, the Collateral Agent's
and the Senior Noteholders' interests in the Assigned Collateral and shall not
impose any duty upon the Agent, the Collateral Agent or the Lenders to exercise
any such powers. The Agent and the Collateral Agent shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers and none of the Agent, the Collateral Agent nor any of their agents,
representatives or designees shall be responsible to the Company for any act or
failure to act, except for any act involving its gross negligence or willful
misconduct.
(c) Nothing in this Agreement shall authorize the Agent, the Lenders,
the Collateral Agent or the Senior Noteholders prior to an Event of Default (i)
to participate in the management of or to operate any facility owned or operated
by the Company or any of its Affiliates or (ii) to control decisions regarding
the disposal or other management of hazardous substances generated, used or
handled by the Company or any of its Affiliates.
SECTION 6. WAIVERS. The Company hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim based upon, arising out
of, or relating to, this Assignment, the transactions contemplated by the
Amended and Restated Credit Agreement, the Senior Note Purchase Agreement, the
Indenture or the actions of the Agent or the Lenders in the negotiation,
administration, performance or enforcement thereof. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. The Company acknowledges that this waiver
is a material inducement to the Lenders and the Senior Noteholders to enter into
a business relationship with the Company and its Affiliates and that the Lenders
and the Senior Noteholders have already relied on this waiver in entering into
this Agreement and the Loan Documents and will continue to rely on this waiver
in their related future dealings. The Company further warrants and represents
that it has reviewed this waiver with its legal counsel, and that it knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR
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ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
SECTION 7. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants to the Agent, for the ratable benefit of the Lenders,
and the Collateral Agent, for the ratable benefit of the Senior Noteholders as
follows:
Section 7.1 No Liens. The Company is the legal and beneficial owner of
the Assigned Collateral free and clear of any Lien, except for (i) the security
interest created by this Agreement. No effective security agreement, financing
statement or other instrument similar in effect covering all or any part of the
Assigned Collateral is on file in any recording office, except such as may have
been filed (i) in favor of the Agent, for the ratable benefit of the Lenders, or
the Collateral Agent, for the ratable benefit of the Senior Noteholders relating
to this Agreement. The Company has no trade names.
Section 7.2 Security Interest. This Agreement and the pledge and
delivery of the Assigned Collateral pursuant hereto constitute a valid and
continuing Lien on the Assigned Collateral and create a valid and perfected
first priority security interest in the Assigned Collateral in favor of the
Agent, for the ratable benefit of the Lenders and the Collateral Agent, for the
ratable benefit of the Senior Noteholders, subject to the terms of the
Intercreditor Agreement, securing the payment of the Secured Obligations, and
all filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken.
SECTION 8. COVENANTS. The Company covenants and agrees that on and
after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 8.1 Limitation on Liens. The Company shall not, directly or
indirectly, create, receive, assume or permit to exist or otherwise cause or
permit to become in effect any Lien upon or with respect to the Assigned
Collateral, other than the Liens granted to the Agent, for the ratable benefit
of the Lenders and the Collateral Agent, for the ratable benefit of the Senior
Noteholders, pursuant to this Assignment or pursuant to the Amended and Restated
Credit Agreement or pursuant to the Senior Note Purchase Agreement.
Section 8.2 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402 (7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent at least 90 days' prior written notice of
its intention to so change and shall have taken all action (or made arrangements
to take such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary, or reasonably requested by
the Agent or
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the Collateral Agent, to amend such financing or continuation statement so that
it is not misleading.
Section 8.3 New Intercompany Senior Notes. The New Subsidiary
Intercompany Senior Notes shall be in substantially the form of the HE
Intercompany Senior Notes (if not a wholly-owned subsidiary of the Company) and
the RPG Intercompany Senior Notes (if a wholly-owned subsidiary).
Section 8.4 Amendments to Intercompany Senior Loan Notes. The Company
shall not amend the HE Intercompany Senior Note, the RPG Intercompany Senior
Note or any New Subsidiary Intercompany Senior Note without the consent of the
Agent.
Section 8.5 Further Assurances.
(a) From time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action, that may be necessary or desirable, or that the Agent or the
Collateral Agent reasonably may request, in order to perfect and protect any
pledge, assignment or security interest granted or purported to be granted
hereby or to enable the Agent or the Collateral Agent to exercise and enforce
their or its rights and remedies hereunder with respect to any Assigned
Collateral. Without limiting the generality of the foregoing, the Company will
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Agent or the Collateral Agent may request, in order to
perfect and preserve the pledge, assignment and security interest granted or
purported to be granted hereby.
(b) The Company hereby authorizes the Agent and the Collateral Agent to
file one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Assigned Collateral without the signature of
the Company where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Assigned Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law.
(c) The Company will furnish to the Agent and the Collateral Agent from
time to time statements and schedules further identifying and describing the
Assigned Collateral and such other reports in connection with the Assigned
Collateral as the Agent reasonably may request, all in reasonable detail.
SECTION 9. EVENTS OF DEFAULT; REMEDIES.
Section 9.1 Event of Default. If any Event of Default shall occur and
be continuing (for any reason whatsoever and whether it shall be voluntary or
involuntary or by operation of law or otherwise), then (subject to the
Intercreditor Agreement) (a) all payments received by
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<PAGE> 10
the Company under or in connection with any of the Assigned Collateral shall be
held by the Company in trust for the Agent, shall be segregated from other funds
of the Company and shall forthwith upon receipt by the Company be turned over to
the Agent for the ratable benefit of the Lenders in the same form as received by
the Company (duly endorsed by the Company to the Agent, if required); (b) any
and all such payments so received by the Agent (whether from the Company or
otherwise) will be applied by the Agent against the Secured Obligations; and (c)
any amount remaining after payment in full of all the Secured Obligations shall
be paid over to the Company.
Section 9.2 Remedies.
(a) Subject to the terms of the Intercreditor Agreement, if any Event
of Default shall occur and be continuing, the Agent and the Collateral Agent may
exercise in addition to all other rights and remedies granted to them in this
Agreement, the Amended and Restated Credit Agreement, the Indenture and any
other instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, the Company expressly agrees that in
any such event the Agent, for the ratable benefit of the Lenders, or the
Collateral Agent, for the ratable benefit of the Senior Noteholders, without
demand of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or private sale)
to or upon the Company or any other Person (all and each of which demands,
advertisements and/or notices are hereby expressly waived), may (subject to the
terms of the Intercreditor Agreement), forthwith assume, collect, receive,
appropriate and realize upon the Assigned Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to purchase,
or sell or otherwise dispose of and deliver said Assigned Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange broker's board or at its offices or
elsewhere at such prices as the Agent or the Collateral Agent may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Agent or the Collateral Agent shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of said Assigned Collateral so sold,
free of any right or equity of redemption, which equity of redemption the
Company hereby releases, and in lieu of payment of such actual purchase price
may set-off the amount of such purchase price against the Secured Obligations
then owing. Subject to the terms of the Intercreditor Agreement, the Company
further agrees, at the Agent's or the Collateral Agent's request, to assemble
the Assigned Collateral and make it available to the Agent at places which the
Agent shall reasonably select, whether at the Company's premises or elsewhere.
Subject to the terms of the Intercreditor Agreement, the Agent or the Collateral
Agent shall retain the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safe keeping
or otherwise of any or all of the Assigned Collateral or in any way relating to
the rights of the Agent or the Collateral Agent hereunder, including reasonable
attorneys' fees and legal expenses, for application to the payment in whole or
in part of the Secured
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Obligations, the Company remaining liable for any deficiency remaining unpaid
after such application, and only after so retaining such net proceeds and after
the payment by the Agent or the Collateral Agent of any other amount required by
any provision of law, including Section 9-504(1)(c) of the UCC, need the Agent
or the Collateral Agent account for the surplus, if any, to the Company. To the
extent permitted by applicable law, the Company waives all claims, damages and
demands against the Agent arising out of the repossession, retention or sale of
the Assigned Collateral, except to the extent that such claims, damages and
demands arise out of the willful misconduct or gross negligence of the Agent,
the Lenders, the Collateral Agent, or the Senior Noteholders. Notwithstanding
the foregoing, if a default or event of default shall not have occurred and be
continuing under the (i) HE Intercompany Senior Notes, then neither the Agent,
the Lenders, the Collateral Agent, or the Senior Noteholders may proceed against
the assets of HE or sue HE, or (ii) under any New Subsidiary Intercompany Senior
Notes in respect of a New Subsidiary which is not wholly-owned by the Company,
then the Agent, the Lenders the Collateral Agent, or the Senior Noteholders may
not proceed against the assets of such New Subsidiary or sue such New
Subsidiary.
(b) The Company recognizes that the Agent or the Collateral Agent, as
applicable, may be unable to effect a public sale of all or any part of the
Assigned Collateral consisting of securities by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such securities for their
own account, for investment and not with a view to the distribution or resale
thereof. The Company understands and agrees that a private sale so made may be
at prices and other terms less favorable than if such securities were sold at
public sales, and that the Agent and the Collateral Agent have no obligation to
delay sale of any such securities for the period of time necessary to permit the
issuer of such securities, even if such issuer would agree, to register such
securities for public sale under the Securities Act of 1933, as amended. The
Company agrees to private sales made under the foregoing circumstances which
sales shall be deemed to have been made in a commercially reasonable manner.
(c) The Company also agrees to pay all costs of the Agent, the Lenders,
the Collateral Agent and the Senior Noteholders, including reasonable attorneys'
fees, incurred with respect to the collection of any of the Secured Obligations
and the enforcement and protection of any of the rights of the Agent, the
Lenders, the Collateral Agent and the Senior Noteholders, hereunder. All costs
and expenses incurred by the Agent, the Lenders, the Collateral Agent and the
Senior Noteholders, with respect to the enforcement, collection and protection
of the Agent, the Lenders, the Collateral Agent's and the Senior Noteholders'
interest in the Assigned Collateral shall be additional Secured Obligations of
the Company to the Agent, the Lenders, the Collateral Agent and the Senior
Noteholders, payable on demand, and secured by the Assigned Collateral.
(d) Any notice required to be given by the Agent, the Lenders, the
Collateral Agent or the Senior Noteholders, of a sale, lease or other
disposition or other intended action by them
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with respect to any of the Assigned Collateral which is deposited in the United
States mails, postage prepaid and duly addressed to the Company, at least 10
days prior to such proposed action, shall constitute fair and reasonable notice
to the Company of any such action. Subject to the provisions of Section 11, the
net proceeds realized by the Agent, the Lenders, the Collateral Agent and the
Senior Noteholders, upon any such sale or other disposition, after deduction for
the expense of retaking, holding, preparing for sale, selling or the like and
the reasonable attorneys' fees and legal expenses incurred by the Agent, the
Lenders, the Collateral Agent and the Senior Noteholders, in connection
therewith, shall be applied as provided herein toward satisfaction of the
Secured Obligations. The Agent shall account to the Company for any surplus
realized upon such sale or other disposition, and the Company shall remain
liable for any deficiency, the Company also being liable for the reasonable fees
of any attorneys employed by the Agent and the Collateral Agent, to collect such
deficiency. The commencement of any action, legal or equitable, or the rendering
of any judgment or decree for any deficiency shall not affect the security
interest granted hereunder in the Assigned Collateral until the Secured
Obligations are fully paid. The Company agrees that neither the Agent or the
Collateral Agent have an obligation to preserve rights to the Assigned
Collateral against any other parties. Neither the Agent or the Collateral Agent
shall be obligated to make any sale of Assigned Collateral regardless of notice
of sale having been given. The Agent and the Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
Section 9.3 Limitation on the Agent's and the Collateral Agent's Duty
in Respect of Assigned Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Collateral Agent be deemed to
assume any responsibility for, or obligation or duty with respect to, any part
or all of the Assigned Collateral, of any nature or kind whatsoever, or any
matter or proceedings arising out of or relating thereto. Neither the Agent or
the Collateral Agent shall be required to take any action of any kind to collect
or protect any interest in the Assigned Collateral, including, but not limited
to, any action necessary to preserve the rights of the Agent and the Collateral
Agent against prior parties to any of the Assigned Collateral. Neither the Agent
or the Collateral Agent shall be liable or responsible in any way for the safe
keeping, care or custody of any of the Assigned Collateral if the Assigned
Collateral is accorded the same treatment and level of care as their own
property, for any loss or damages thereto, for any diminution in the value
thereof, for any act or default of any agent or bailee of the Agent or of any
carrier, forwarding agency or other person whomsoever or for the collection of
any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or wilful misconduct; however,
the same shall be at the Company's sole risk at all times. The Company hereby
releases the Agent, the Lenders, the Collateral Agent, and the Senior
Noteholders from any claims, causes of action and demands at any time arising
out of or with respect to this Agreement or the Secured Obligations and any
actions taken or omitted to be taken by the Agent or the Collateral Agent with
respect thereto, and the Company hereby agrees to hold the Agent, the Lenders,
the Collateral Agent and the Senior Noteholders, harmless from and with
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respect to any and all such claims, causes of action and demands. The Company
hereby releases the Agent, the Lenders, the Collateral Agent and the Senior
Noteholders, from any claims, causes of action and demands arising under 42
U.S.C. Section 9607 or 9613 or similar provisions of state or local law.
Section 9.4 Remedies Cumulative. No remedy conferred upon the Agent,
the Lenders, the Collateral Agent, or the Senior Note Purchasers is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise.
Section 9.5 Remedies Not Waived. No course of dealing between the
Company and the Agent, the Lenders, the Collateral Agent, or the Senior
Noteholders and no delay or failure in exercising any rights hereunder in
respect thereof shall operate as a waiver of any of the rights of the Agent, the
Lenders, the Collateral Agent, or the Senior Noteholders.
SECTION 10. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Majority Lenders, and the holders of the aggregate principal
amount of the Senior Notes then outstanding as would be required to amend or
waive such provision if it were included in the Indenture and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given and shall not be deemed to waive any other breach
hereunder; provided, however, that no amendment, waiver or consent, unless in
writing and signed by all the Lenders, and the holders of the aggregate
principal amount of the Senior Notes then outstanding as would be required to
amend or waive such provision if it were included in the Indenture shall (a)
limit the liability of the Company hereunder, (b) postpone any date fixed for
payment hereunder or (c) change the number of Lenders or Senior Noteholders
required to take any action hereunder.
No failure on the part of the Agent to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 11. INTERCREDITOR AGREEMENT. Notwithstanding any provision
herein to the contrary, this Assignment, all extensions, renewals, amendments
and modifications hereto and the Lien and security interested created hereunder
shall be subject to the terms of the Intercreditor Agreement, pursuant to which
the Agent and the Collateral Agent agree with each other, but not for the
benefit of the Company or any third parties to exercise any of its rights or
remedies hereunder only in accordance with the terms of the Intercreditor
Agreement.
SECTION 12. MISCELLANEOUS.
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Section 12.1 Expenses. The Company will pay the Agent and the
Collateral Agent for any and all sums, costs and expenses which the Agent and
the Collateral Agent may pay or incur by reason of defending, protecting or
enforcing the security interest herein granted or the priority hereof, enforcing
payment of the Secured Obligations, discharging any Lien or claim against the
Assigned Collateral or any part thereof or, if the Company fails to perform or
comply with any of its agreements herein, performing or complying with such
terms. Such sums, costs and expenses shall include, without limitation, all
court costs, collection charges, travel and reasonable attorneys' fees
(including fees and expenses incident to the enforcement of payment of any
obligations of the Company by any action or participation in, or connection
with, a case or proceeding under Chapters 7, 11 or 13 of the Bankruptcy Code).
All sums, costs and expenses of the Agent and the Collateral Agent payable by
the Company pursuant to this Agreement shall be payable by the Company to the
Agent and the Collateral Agent on demand and shall constitute Secured
Obligations secured by the Assigned Collateral.
Section 12.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent, the Lenders,
the Collateral Agent and the Senior Noteholders, notwithstanding any
investigation heretofore or hereafter made by the Agent, the Lenders, the
Collateral Agent and the Senior Noteholders or on their behalf and (b) survive
the execution and delivery of this Agreement, of the Notes, the Letters of
Credit, the Secured Hedging Obligations and the Senior Notes, and shall continue
in effect so long as any Note, Letter of Credit, Secured Hedging Obligation or
Senior Note is outstanding and thereafter as provided in Sections 9 and 11.1.
Section 12.3 Successors and Assigns, Transfers of the Senior Secured
Credit Facility Notes. This Agreement shall bind and inure to the benefit of,
and be enforceable by, the Company, the Agent, the Lenders, the Collateral Agent
and Senior Noteholders and their successors and assigns, and, in addition, shall
inure to the benefit of, and be enforceable by, each Person who shall from time
to time be a holder of any of the Notes, Letters of Credit, Secured Hedging
Obligations or Senior Notes. The Company may not assign its rights and
obligations under this Agreement except as permitted under the Amended and
Restated Credit Agreement, the Senior Note Purchase Agreement or the Indenture.
The Lenders may transfer the Notes (and any portion thereof) and the Senior
Noteholders may transfer the Senior Notes at any time without the consent of the
Company, subject to compliance with all applicable Gaming Laws and state and
federal securities laws and the requirements of the Amended and Restated Credit
Agreement and the Indenture, respectively.
Section 12.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
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(a) if to the Agent, at its address as set forth in the Amended and
Restated Credit Agreement or at such other address as shall be set forth in the
note register of the Company, and
(b) if to the Collateral Agent:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
Telephone: (212) 852-1629
Telecopy: (212) 852-1625
(c) if to the Company:
HORSESHOE GAMING, L.L.C.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Jack Binion
President
Telephone: (702) 650-0080
Telecopy: (702) ________
With a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive, Suite 1500
Costa Mesa, California 92626
Attention: James Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 12.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
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<PAGE> 16
Section 12.6 Governing Law. This Agreement, the Amended and Restated
Credit Agreement, the Senior Note Purchase Agreement and the Indenture and
(unless otherwise provided) all amendments, supplements, waivers and consents
relating hereto or thereto shall be governed by, and construed in accordance
with, the internal laws of the State of New York.
Section 12.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Assignment or any course of conduct, course of
dealing, statements or actions of the Company or the Agent related thereto, the
Company hereby submits and consents to the jurisdiction of the courts of the
State of New York and of the United States District Court for the Southern
District of New York, and the Company agrees that any such action, suit or
proceeding may be brought by the Agent, the Lenders, the Collateral Agent, or
the Senior Noteholders in the Supreme Court of the State of New York, New York
County, or in the United States District Court for the Southern District of New
York, and the service of process may be made upon the Company by mailing a copy
of the summons and any complaint to the Company by registered mail, at the
address specified in Section 11.4. The Company hereby waives and agrees not to
assert, by way of motion or otherwise, in any action, suit or proceeding, any
claim that it is not personally subject to the jurisdiction of the above-named
courts, that the action is brought in an inconvenient forum or that the venue of
the action is improper. The Agent, the Lenders, the Collateral Agent, or the
Senior Noteholders (subject to the terms of the Intercreditor Agreement),
nevertheless, may serve, process or commence any such action, suit or proceeding
in such other jurisdiction(s), and in such other manner as may be permitted by
applicable law. The methods of service of process specified in this paragraph
may be used in the alternative or together as the Agent may see fit.
Section 12.8 Headings. The headings in this Assignment are for
convenience only and shall not be construed as a part of this Assignment.
Section 12.9 Term of Agreement. This Assignment and all agreements of
the Company contained herein shall continue in full force and effect and shall
not be discharged until such time as the Secured Obligations shall be
indefeasibly paid or performed in full and all of the agreements of the Company
under the Amended and Restated Credit Agreement, the Secured Hedging
Obligations, the Senior Note Purchase Agreement and the Indenture and hereunder
shall be fully paid or performed; provided, certain provisions of this
Assignment shall survive such termination as expressly set forth herein.
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<PAGE> 17
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered as of the date first above written.
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming, Inc.,
its manager
By:__________________________
Name: Walter J. Haybert
Title: Treasurer
ACKNOWLEDGED AND ACCEPTED
THIS 12TH DAY OF NOVEMBER, 1997
HORSESHOE ENTERTAINMENT, A
LOUISIANA LIMITED PARTNERSHIP
By: NEW GAMING CAPITAL PARTNERSHIP,
A NEVADA LIMITED PARTNERSHIP,
its general partner
By: HORSESHOE GP, INC.,
its general partner
By:__________________________
Name: Walter J. Haybert
Title: Treasurer
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
By: HORSESHOE GP, INC.,
its general partner
By:___________________________________
Name: Walter J. Haybert
Title: Treasurer
17
<PAGE> 18
HORSESHOE GP, INC.
By:____________________________________________
Name: Walter J. Haybert
Title: Treasurer
HORSESHOE VENTURES, L.L.C.
By: HORSESHOE GAMING, L.L.C.,
its manager
By: HORSESHOE GAMING, INC.,
its manager
By:__________________________
Name: Walter J. Haybert
Title: Treasurer
18
<PAGE> 1
EXHIBIT 4.60
AMENDED AND RESTATED
PLEDGE AGREEMENT
Dated as of November 12, 1997
From
HORSESHOE GAMING, L.L.C.
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
AS AGENT
For
CERTAIN COMMERCIAL LENDING INSTITUTIONS
<PAGE> 2
AMENDED AND RESTATED PLEDGE AGREEMENT
This Amended and Restated Pledge Agreement dated as of November 12,
1997 (this "Pledge" or this "Agreement"), is made by Horseshoe Gaming, L.L.C., a
Delaware limited liability company (the "Company"), in favor of Canadian
Imperial Bank of Commerce, as agent for the Lenders (as hereinafter defined)
(herein, in such capacity, called the "Agent").
R E C I T A L S:
WHEREAS, pursuant to a Senior Secured Credit Facility Note Purchase
Agreement dated as of October 10, 1995, as amended prior to the date hereof (as
so amended, the "Note Purchase Agreement") among the Company, Robinson Property
Group Limited Partnership, a Mississippi limited partnership ("RPG") and Debis
Financial Services, Inc., Yewdale Holdings Limited and Hanwa American Corp (the
"Noteholders"), each of the Noteholders has purchased one or more of the Senior
Secured Credit Facility Notes due October 10, 1999 issued by the Company;
WHEREAS, the Company owns a 99% limited partner interest in New Gaming
Capital Partnership, a Nevada limited partnership ("NGCP"), the General Partner
of Horseshoe Entertainment, a Louisiana Limited Partnership ("HE") with a
partnership interest therein of 89%;
WHEREAS, the Company owns a 99% limited partner interest in Robinson
Property Group Limited Partnership, a Mississippi limited partnership ("RGP");
WHEREAS, the Company owns 100% of the outstanding capital stock (the
"HGP Stock") of Horseshoe GP, Inc. a Nevada corporation ("HGP");
WHEREAS, HGP owns a 1% general partnership interest in each of NGCP and
RPG;
WHEREAS, the Company owns 80% of the membership interests of Horseshoe
Ventures, L.L.C., a Delaware limited liability company ("Horseshoe Ventures");
WHEREAS, pursuant to a Pledge Agreement dated October 10, 1995 (the
"Original Pledge Agreement"), the obligations of the Company under the Note
Purchase Agreement were secured by, among other collateral, the Company's
interests in entities described in the previous six recitals;
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Noteholder and the Agent, the remaining Noteholder
assigned to the Agent all of the rights, duties and obligations of the
Noteholders in connection with the Note Purchase Agreement and security
documents described therein, including the Original Pledge Agreement;
<PAGE> 3
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
dated as of the date hereof (the "Credit Facility Agreement"), the Company, the
Agent, certain commercial lending institutions (the "Lenders") and CIBC
Oppenheimer Corp. will amend and restate their respective obligations under the
Note Purchase Agreement;
WHEREAS, as a condition precedent to the initial borrowing under the
Credit Facility Agreement, the Company has agreed to amend and restate its
obligations under the Original Pledge Agreement, it being the express intention
of the Company not to effect a novation or extinguishment or discharge of the
Original Pledge Agreement as a result of executing this agreement and the other
documents contemplated herein;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged by the Company, the Company hereby amends and restates the Original
Pledge Agreement in its entirety to read as follows:
SECTION 1. Terms and Definitions.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
(a) "Proceeds" shall mean all "proceeds", as such term is
defined in the UCC and, in any event, shall mean and include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the company from time to time with respect to any of the Pledged
Collateral (as defined in Section 2), (ii) any all payments (in any form
whatsoever) made or due and payable to the Company from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Pledged Collateral by any governmental
authority, body, bureau or agency (or any Person acting under color of
governmental authority) and (iii) any and all other amounts form time to time
paid or payable under or in connection with any of the Pledged Collateral.
(b) "UCC" shall mean the Uniform Commercial Code as in effect
in the State of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Credit Facility Agreement.
SECTION 2. Grant of Security.
Section 2.1 Pledged Collateral.
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<PAGE> 4
(a) The Company hereby assigns, conveys, pledges, hypothecates
and transfers to the Agent, for the ratable benefit of the Lenders, and hereby
grants to the Agent, for the ratable benefit of the Lenders, an irrevocable and
unconditional security interest in, the following (collectively, the "Pledged
Collateral"):
(i) the entire equity interest of the Company in each
of (A) HGP, (B) NGCP, (C) RPG, (D) Horseshoe Ventures and (E) (1) its
Subsidiaries and (2) all other Persons (other than an Unrestricted Subsidiary),
the Capital of which is owned or acquired by the Company after the date hereof
(such entities described in clauses (E)(1) and (2) being referred to herein as
the "New Persons," unless excluded pursuant to the following proviso); provided,
however, that the Company shall not be required to pledge its Capital of any
Person described in clause (E)(2) if prohibited by applicable law and, if so
prohibited, such Capital shall not be pledged to any other Person (collectively,
the "Pledged Interest"), together with the certificates, if any, representing
the Pledged Interest, and all distributions of cash instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Interests and all
collateral and related documents and filings pledged to the Agent to secure the
same, except (x) until the occurrence of an Event of Default, distributions not
in violation of the Credit Facility Agreement may be made in respect of the
Pledged Interests to the Company and (y) until the occurrence of a Non-Tax
Distribution Event, for Permitted Tax Distributions;
(ii) all additional interests in each of HGP, NGCP,
RPG, Horseshoe Ventures and each new Person from time to time acquired by the
Company and in any manner, together with the certificates, if any, representing
such additional interests, and all distributions of cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such interests and all collateral
and related documents and filings pledged to the Agent to secure the same except
(x) until the occurrence of an Event of Default, distributions not in violation
of the Credit Facility Agreement may be made in respect of such additional
interests to the Company and (y) until the occurrence of a Non-Tax Distribution
Event, for Permitted Tax Distributions; and
(iii) all Proceeds of any and all of the foregoing
Pledged Collateral.
(b) The Pledged Collateral secures the payment of all
obligations (the "Secured Obligations") of every kind and character now or
hereafter existing (whether matured or unmatured, contingent or liquidated) of
the Company under (i) the Credit Facility Agreement, (ii) this Agreement and
(iii) the hedging agreements of the Company to the extent such obligations are
permitted to be secured under Section 7.2.2(k) of the Credit Facility Agreement
(the "Hedging Obligations") (as such agreements hereafter may be amended,
supplemented or otherwise modified from time to time) including, without
limitation, the Notes and Letters of Credit, whether for principal, interest
(including any interest or other amounts accruing after the filing of a petition
with respect to, or the commencement of, any proceeding under the bankruptcy
code, whether or not a claim for post-petition interest or such other amount is
3
<PAGE> 5
allowed in such proceeding), premium, fees, expenses, reimbursement,
indemnification or otherwise.
(c) Notwithstanding anything contained herein to the contrary,
the Company is solely pledging hereunder to the Agent its rights as a partner of
NGCP and RPG, its rights as a member of and Horseshoe Ventures, its rights as a
stockholder of HGP and its right as a partner, member, stockholder or any equity
interest holder of each New Person and not its obligations, and the Agent shall
not be obligated, because of this Agreement, to assume any of the Company's
obligations as a partner of NGCP or RPG, as a member of Horseshoe Ventures, as a
stockholder of HGP or as a partner or member of any new Person including,
without limitation, any obligation to make capital contributions to NGCP, RPG,
Horseshoe Ventures or any New Person as its general partner.
(d) It is the intention of the Company under this Agreement
that its obligations be secured by all equity interests, and any distributions
(except (i) until the occurrence of an Event of Default, distributions not in
violation of the Credit Facility Agreement and (ii) until the occurrence of a
Non-Tax Distribution Event, for Permitted Tax Distributions) in connection
therewith or Proceeds thereof, of the Company in NGCP, RPG, HGP, Horseshoe
Ventures and each New Person, in any form from time to time acquired by the
Company in any manner, including, without limitation, pursuant to a merger or
consolidation permitted under the Credit Facility Agreement or any transaction.
The Company shall take any and all action necessary or desirable to perfect and
protect the security interest of the Agent in such substituted and additional
Pledged Collateral including, without limitation, the filing of financing
statements or amendments thereto or the delivery upon receipt thereof to the
Agent of any and all certificates or instruments representing or evidencing such
substituted and additional Pledged Collateral in suitable form for transfer by
delivery, or accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to the Agent. The provisions of
this Agreement shall be construed in accordance with this intention.
Section 2.2 Exercise of Rights. So long as no Event of Default shall
have occurred and be continuing, the Company shall be entitled to exercise its
rights as a limited partner of NGCP and RPG, as a member of Horseshoe Ventures,
as a stockholder of HGP and as a partner, member, stockholder or other equity
interest holder of any New Person and to exercise any and all rights pertaining
to the Pledged Collateral for any purpose not inconsistent with the terms of
this Agreement; provided, the Company shall not exercise any such right if such
action could have a Material Adverse Effect. Upon the occurrence and during the
continuance of an Event of Default, subject to the applicable Gaming Laws, at
the option of the Agent, without any demand or notice of any kind, (a) all
rights of the Company to exercise or refrain from exercising its rights as a
limited partner of NGCP and RPG, as a member of Horseshoe Ventures, as a
stockholder of HGP and as a partner, member, stockholder or other equity
interest holder of any New Person shall cease and all such rights shall
thereupon become vested in the Agent who shall thereafter have the sole right to
exercise or refrain form exercising such rights, (b) the Agent or its designees
may control and direct the Company in its exercise of its rights as a limited
partner
4
<PAGE> 6
of NGCP and RPG, as a member of Horseshoe Ventures, as a stockholder of HGP and
as a partner, member, stockholder or other equity interest holder of any New
Person or (c) the Agent may grant the Company's rights as a limited partner of
NGCP and RPG, as a member of Horseshoe Ventures, as a stockholder of HGP and as
a partner, member, stockholder or other equity interest holder of any New Person
to any Person to exercise such rights on behalf of the Agent in addition to
exercising any other remedy granted to it in Section 9.2.
SECTION 3. Security Interest Absolute. All rights of the Agent and
security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of
the Credit Facility Agreement or any other Loan Document or any other agreement
or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, any increase in the amount of, all or any of the Secured
Obligations, or any other amendments or waiver of any term of, or any consent to
any departure from any requirement of, the Credit Facility Agreement or any
other Loan Document;
(c) any exchange, release or non-perfection of Lien on any
other collateral for, any release or amendment or waiver of any terms of any
guaranty of, or consent to departure from any requirements of any guaranty of,
all or any of the Secured Obligations;
(d) any failure on the part of the Agent to give notice of any
kind, mitigate the damages resulting from the default by the Company under the
Credit Facility Agreement or this Pledge or protect, secure, perfect and insure
any lien on the Pledged Collateral; or
(e) any other circumstance which might otherwise constitute a
defense available to, or a discharge or release of, a borrower or a pledgor or
otherwise limit the obligations of the Company under this Pledge.
SECTION 4. Delivery of Pledged Collateral. All instruments representing
or evidencing the Pledged Collateral including, without limitation, the
certificate or certificates representing HGP Stock have been, or will be,
delivered to the Agent. All instruments representing or evidencing Pledged
Collateral shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Agent. After the occurrence of an
Event of Default, the Agent shall have the right, at any time in its discretion
and without notice to the Company, to transfer to or to register in the name of
the Agent, or any of its nominees, any or all of the Pledged Collateral. In
addition, the Agent shall have the right at any time after the occurrence of an
Event of Default to exchange instruments representing or evidencing Pledged
Collateral for instruments of smaller or larger denominations.
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<PAGE> 7
SECTION 5. Appointment as Attorney-in-Fact.
(a) Effective upon the occurrence and during the continuance
of an Event of Default, the Company hereby irrevocably constitutes and appoints
the Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time at the Agent's direction, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of attorney) and,
without limiting the generality of the foregoing, hereby gives the Agent in its
sole discretion the power and right, on behalf of the Company, without notice to
or assent by the Company, to do the following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all monies due or to become due under any
Pledged Collateral and, in the name of the Company or its own name or otherwise,
to take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of monies due under any Pledged
Collateral and to file any claim or to take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the Agent for the
purpose of collecting any and all such monies due under any Pledged Collateral
whenever payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the Agent for
the purpose of collecting any and all such monies due under any Pledged
Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Company hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof and acknowledges that this
power of attorney is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to
protect the Agent's interests in the Pledged Collateral and shall not impose any
duty upon the Agent to exercise any such powers. The Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers and neither the Agent nor any of its agents, representatives or designees
shall be responsible to the Company for any act or failure to act, except for
any act involving its gross negligence or willful misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior
to an Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or any of its Affiliates or (ii) to
control decisions regarding the disposal or other
6
<PAGE> 8
management of hazardous substances generated, used or handled by the Company or
any of its Affiliates.
SECTION 6. Waivers. The Company hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim based upon, arising out
of, or relating to, this Pledge, the transactions contemplated by the Credit
Facility Agreement or the actions of the Agent in the negotiation,
administration, performance or enforcement thereof. The scope of this waiver is
intended to be all-encompassing of any and all actions that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. The Company acknowledges that this waiver
is a material inducement to the Agent to enter into a business relationship with
the Company and its Affiliates and that the Agent has already relied on this
waiver in entering into this Agreement and the Loan Documents and will continue
to rely on this waiver in its related future dealings. The Company further
warrants and represents that it has reviewed this waiver with its legal counsel,
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO
THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
SECTION 7. Representations of the Company. The Company hereby
represents and warrants to the Agent as follows:
Section 7.1 No Liens. The Company is the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, except for (i) the security
interest created by this Agreement and (ii) the second lien on the Pledged
Collateral granted by the Company to the holders of the senior notes issued
pursuant to the Senior Note Indenture pursuant to the HG Second Pledge
Agreement, executed and delivered as of October 10, 1995, by the Company (the
"HG Second Pledge Agreement"). No effective security agreement, financing
statement or other instrument similar in effect covering all or any part of the
Pledged Collateral is on file in any recording office, except such as may have
been filed (i) in favor of the Agent relating to this Agreement or (ii) in favor
of the holders of the senior notes relating to the HG Second Pledge Agreement.
The Company has no trade names.
Section 7.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
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<PAGE> 9
SECTION 8. Covenants. The Company covenants and agrees that on and
after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 8.1 Limitation on Liens. The Company shall not, directly or
indirectly, create, receive, assume or permit to exist or otherwise cause or
permit to become in effect any Lien upon or with respect to the Pledged
Collateral, other than the Liens granted to the Agent pursuant to this Pledge or
pursuant to the Credit Facility Agreement and any Liens granted pursuant to the
HG Second Pledge Agreement.
Section 8.2 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent at least 90 days' prior written notice of
its intention to so change and shall have taken all action (or made arrangements
to take such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary, or reasonably requested by
the Agent, to amend such financing or continuation statement so that it is not
misleading.
Section 8.3 Further Assurances.
(a) From time to time, at the expense of the Company, the
Company will promptly execute and deliver all further instruments and documents
and take all further action, that may be necessary or desirable, or that the
Agent reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral. Without limiting the generality of the
foregoing, the Company will execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Agent may request, in order to perfect and
preserve the pledge, assignment and security interest granted or purported to be
granted hereby.
(b) The Company hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Pledged Collateral without the signature of the Company
where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering the Pledged Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) The Company will furnish to the Agent from time to time
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent reasonably may request, all in reasonable detail.
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SECTION 9. Events of Default; Remedies.
Section 9.1 Event of Default. If any Event of Default shall occur and
be continuing (for any reason whatsoever and whether it shall be voluntary or
involuntary or by operation of law or otherwise), then (a) all payments received
by the Company under or in connection with any of the Pledged Collateral shall
be held by the Company in trust for the Agent, shall be segregated from other
funds of the Company and shall forthwith upon receipt by the Company be turned
over to the Agent for the Noteholders' benefit in the same form as received by
the Company (duly endorsed by the Company to the Agent, if required); (b) any
and all such payments so received by the Agent (whether from the Company or
otherwise) will be applied by the Agent against the Secured Obligations; and (c)
any amount remaining after payment in full of all the Secured Obligations shall
be paid over to the Company.
Section 9.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the
Agent may exercise in addition to all other rights and remedies granted to the
Agent in this Agreement, the Credit Facility Agreement and any other instrument
or agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, the Company expressly agrees that in any such event
the Agent, without demand of performance or other demand, advertisement or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon the Company or any other Person (all and each
of which demands, advertisements and/or notices are hereby expressly waived),
may forthwith assume, collect, receive, appropriate and realize upon the Pledged
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver
said Pledged Collateral (or contract to do so), or any part thereof, in one or
more parcels at a public or private sale or sales, at any exchange, broker's
board or at its offices or elsewhere at such prices as the Agent may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Agent shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of said Pledged Collateral so sold, free of any right or
equity of redemption, which equity of redemption the Company hereby releases,
and in lieu of payment of such actual purchase price may set-off the amount of
such purchase price against the Secured Obligations then owing. The Company
further agrees, at the Agent's request, to assemble the Pledged Collateral and
make it available to the Agent at places which the Agent shall reasonably
select, whether at the Company's premises or elsewhere. The Agent shall retain
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the cares, safe keeping or otherwise of
any or all of the Pledged Collateral or in any way relating to the rights of the
Agent hereunder, including reasonable attorneys' fees and legal expenses, for
application to the payment in whole or in part of the Secured Obligations, the
Company remaining liable for any deficiency remaining unpaid after such
application, and only after so retaining such net proceeds and after the payment
by the
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<PAGE> 11
Agent of any other amount required by any provision of law, including Section
9-504 (1)(c) of the UCC, need the Agent account for the surplus, if any, to the
Company. To the extent permitted by applicable law, the Company waives all
claims, damages and demands against the Agent arising out of the repossession,
retention or sale of the Pledged Collateral, except to the extent that such
claims, damages and demands arise out of the willful misconduct or gross
negligence of the Agent.
(b) The Company recognizes that the Agent may be unable to
effect a public sale of all or any part of the Pledged Collateral consisting of
securities by reason of certain prohibitions contained in the Securities Act of
1933, as amended, but may be compelled to resort to one or more private sales to
a restricted group of purchasers who will be obliged to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Company understands and
agrees that a private sale so made may be at prices and other terms less
favorable than if such securities were sold at public sales, and that the Agent
has no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities, even if such issuer would
agree, to register such securities for public sale under the Securities Act of
1993, amended. The Company agrees to private sales made under the foregoing
circumstances which sales shall be deemed to have been made in a commercially
reasonable manner.
(c) The Company also agrees to pay all costs of the Agent,
including reasonable attorneys' fees, incurred with respect to the collection of
any of the Secured Obligations and the enforcement and protection of any of the
rights of the Agent hereunder. All costs and expenses incurred by the Agent with
respect to the enforcement, collection and protection of the Agent's interest in
the Pledged Collateral shall be additional Secured Obligations of the Company to
the Agent, payable on demand, and secured by the Pledged Collateral.
(d) Any notice required to be given by the Agent of a sale,
lease or other disposition or other intended action by them with respect to any
of the Pledged Collateral which is deposited in the United States mails postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the Company of
any such action. The net proceeds realized by the Agent upon any such sale or
other disposition, after deduction for the expense of retaking, holding,
preparing for sale, selling or the like and the reasonable attorneys' fees and
legal expenses incurred by the Agent in connection therewith, shall be applied
as provided herein toward satisfaction of the Secured Obligations. The Agent
shall account to the Company for any surplus realized upon such sale or other
disposition, and the Company shall remain liable for any deficiency, the Company
also being liable for the reasonable fees of any attorneys employed by the Agent
to collect such deficiency. The commencement of any action, legal or equitable,
or the rendering of any judgment or decree for deficiency shall not affect the
Agent's security interest in the Pledged Collateral until the Secured
Obligations are fully paid. The Company agrees that the Agent have no obligation
to preserve rights to the Pledged Collateral against any other parties. The
Agent shall not be
10
<PAGE> 12
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
Section 9.3 Limitation on the Agent's Duty in Respect of Pledged
Collateral. Except as otherwise provided herein, under no circumstances
whatsoever shall the Agent be deemed to assume any responsibility for, or
obligation or duty with respect to, any part or all of the Pledged Collateral,
of any nature or kind whatsoever, or any matter or proceedings arising out of or
relating thereto. The Agent shall not be required to take any action of any kind
to collect or protect any interest in the Pledged Collateral, including, but not
limited to, any action necessary to preserve the rights of the Agent against
prior parties to any of the Pledged Collateral. The Agent shall not be liable or
responsible in any way for the safe keeping, care or custody of any of the
Pledged Collateral if the Pledged Collateral is accorded the same treatment and
level of care as its own property, for any loss or damages thereto, for any
diminution in the value thereof, for any act or default of any agent or bailee
of the Agent or of any carrier, forwarding agency or other person whomsoever or
for the collection of any proceeds, except to the extent that the selection of
such agent, bailee, carrier or other person involved gross negligence or wilful
misconduct, however, the same shall be at the Company's sole risk at all times.
The Company hereby releases the Agent from any claims, causes of action and
demands at any time arising out of or with respect to this Agreement or the
Secured Obligations and any actions given or omitted to be taken by the Agent
with respect thereto, and the Company hereby agrees to hold the Agent harmless
from and with respect to any and all such claims, causes of action and demands.
The Company hereby releases the Agent from any claims, causes of action and
demands arising under 42 U.S.C. Section 9607 or 9613 or similar provisions of
state or local law.
Section 9.4 Remedies Cumulative. No remedy conferred upon the Agent is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
Section 9.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and no delay or failure in exercising any rights hereunder
in respect thereof shall operate as a waiver of any of the rights of the Agent.
SECTION 10. Amendment and Waiver. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given and shall not
be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by the Agent shall
(a) limit the liability of the Company hereunder or (b) postpone any date fixed
for payment hereunder.
11
<PAGE> 13
No failure on the part of the Agent to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 11. Miscellaneous.
Section 11.1 Expense. The Company will pay the Agent for any and all
sums, costs and expenses which the Agent may pay or incur by reason of
defending, protecting or enforcing the security interest herein granted or the
priority hereof, enforcing payment of the Secured Obligations, discharging any
Lien or claim against the Pledged Collateral or any part thereof or, if the
Company fails to perform or comply with any of its agreements herein, performing
or complying with such terms. Such sums, costs and expenses shall include,
without limitation, all court costs, collection charges, travel and reasonable
attorneys' fees (including fees and expenses incident to the enforcement of
payment of any obligations of the Company by any action or participation in, or
connection with, a case or proceeding under Chapters 7, 11 or 13 of the
Bankruptcy Code). All sums, costs and expenses of the Agent payable by the
Company pursuant to this Agreement shall be payable by the Company to the Agent
on demand and shall constitute Secured Obligations secured by the Pledged
Collateral.
Section 11.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent,
notwithstanding any investigation heretofore or hereafter made by the Agent or
on its behalf and (b) survive the execution and delivery of this Agreement and
of the Notes, Letters of Credit and Hedging Obligations, and shall continue in
effect so long as any Note, Letter of Credit or Hedging Obligation is
outstanding and thereafter as provided in Sections 9 and 11.1.
Section 11.3 Successors and Assigns; Transfers of the Senior Secured
Credit Facility Notes. This Agreement shall bind and inure to the benefit of,
and be enforceable by, the Company and the Agent and their successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes or
Letters of Credit. The Company may not assign its rights and obligations under
this Agreement except as permitted under the Credit Facility Agreement. The
Agent may transfer Notes and Letters of Credit (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state and federal securities laws and the
requirements of Section 10.11 of the Credit Facility Agreement.
Section 11.4 Notice. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
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<PAGE> 14
(a) if to the Agent, at its address as set forth in
the Credit Facility Agreement or at such other address as shall be set
forth in the note register of the Company, and
(b) if to the Company:
HORSESHOE GAMING, L.L.C.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Paul Alanis
Telephone: (702) 650-0080
Telecopy: (702) 650-0081
With a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: James Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 11.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
Section 11.6 Governing Law. This Agreement and the Notes, Letters of
Credit and Hedging Obligations and (unless otherwise provided) all amendments,
supplements, waivers and consents relating hereto or thereto shall be governed
by, and construed in accordance with, the internal laws of the State of New
York.
13
<PAGE> 15
Section 11.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Pledge or any course of conduct, course of
dealing, statements or actions of the Company or the Agent related thereto, the
Company hereby submits and consents to the jurisdiction of the courts of the
State of New York and the United States District Court for the Southern District
of New York, and the Company agrees that any such action, suit or proceeding may
be brought by the Agent in the Supreme Court of the State of New York, New York
County, or in the United States District Court for the Southern District of New
York, and the service or process may be made upon the Company by mailing a copy
of the summons and any complaint to the Company by registered mail, at the
address specified in Section 11.4. The Company hereby waives and agrees not to
assert, by way of motion or otherwise, in any action, suit or proceeding, any
claim that is not personally subject to the jurisdiction of the above-named
courts, that the action is brought in an inconvenient forum or that the venue of
the action is improper. The Agent, nevertheless, may serve, process or commence
any such action, suit or proceeding in such other jurisdiction(s), and in such
other manner as may be permitted by applicable law. The methods of service of
process specified in this paragraph may be used in the alternative or together
as the Agent may see fit.
Section 11.8 Headings. The headings in this Pledge are for convenience
only and shall not be construed as a part of this Pledge.
Section 11.9 Term of Agreement. This Pledge and all agreements of the
Company contained herein shall continue in full force and effect and shall not
be discharged until such time as the Secured Obligations shall be indefeasibly
paid or performed in full and all of the agreements of the Company under the
Credit Facility Agreement and survive such termination as expressly set forth
herein.
14
<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered as of the date first above written.
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming, Inc., its manager
By: ___________________________________
Name: Walter J. Haybert
Title: Treasurer
ACKNOWLEDGED AND ACCEPTED
THIS 12th DAY OF NOVEMBER, 1997
HORSESHOE ENTERTAINMENT, A
LOUISIANA LIMITED PARTNERSHIP
By: NEW GAMING CAPITAL PARTNERSHIP
A NEVADA LIMITED PARTNERSHIP, its
general partner
By: HORSESHOE GP, INC.,
its general partner
By: ___________________________
Name: Walter J. Haybert
Title: Treasurer
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP,
A MISSISSIPPI LIMITED PARTNERSHIP
By: HORSESHOE, GP, INC.,
its general partner
By: ___________________________
Name: Walter J. Haybert
Title: Treasurer
15
<PAGE> 17
HORSESHOE GP, INC.
By: ___________________________
Name: Walter J. Haybert
Title: Treasurer
HORSESHOE VENTURES, L.L.C.
By: HORSESHOE GAMING, L.L.C.
its manger
By: HORSESHOE GAMING, INC.,
its manger
By: ___________________________
Name: Walter J. Haybert
Title: Treasurer
16
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. Terms and Definitions.................................................................................2
Section 1.1 Definitions ...........................................................................2
Section 1.2 Additional Terms ......................................................................2
SECTION 2. Grant of Security.....................................................................................2
Section 2.1 Pledged Collateral ....................................................................2
Section 2.2 Exercise of Rights ....................................................................4
SECTION 3. Security Interest Absolute............................................................................5
SECTION 4. Delivery of Pledged Collateral........................................................................5
SECTION 5. Appointment as Attorney-in-Fact.......................................................................5
SECTION 6. Waivers...............................................................................................7
SECTION 7. Representations of the Company........................................................................7
Section 7.1 No Liens .............................................................................7
Section 7.2 Security Interest .....................................................................7
SECTION 8. Covenants.............................................................................................7
Section 8.1 Limitation on Liens ...................................................................8
Section 8.2 Continuous Perfection .................................................................8
Section 8.3 Further Assurances ....................................................................8
SECTION 9. Events of Default; Remedies...........................................................................8
Section 9.1 Event of Default ......................................................................8
Section 9.2 Remedies ..............................................................................9
Section 9.3 Limitation on the Agent's Duty in Respect of Pledged Collateral ......................10
Section 9.4 Remedies Cumulative ..................................................................11
Section 9.5 Remedies Not Waived ..................................................................11
SECTION 10. Amendment and Waiver.................................................................................11
SECTION 11. Miscellaneous........................................................................................11
Section 11.1 Expense ..............................................................................11
Section 11.2 Reliance on and Survival of Representations ..........................................12
Section 11.3 Successors and Assigns; Transfers of the Senior Secured Credit
Facility Notes .......................................................................12
Section 11.4 Notice ...............................................................................12
</TABLE>
i
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 11.5 Severability .........................................................................13
Section 11.6 Governing Law.........................................................................13
Section 11.7 Forum and Jurisdiction ...............................................................13
Section 11.8 Headings .............................................................................14
Section 11.9 Term of Agreement ....................................................................14
</TABLE>
ii
<PAGE> 1
EXHIBIT 4.61
AMENDED AND RESTATED
PLEDGE AGREEMENT
Dated as of November 12, 1997
From
JBB GAMING INVESTMENTS, L.L.C.
in Favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
AS AGENT
For
CERTAIN COMMERCIAL LENDING INSTITUTIONS
<PAGE> 2
AMENDED AND RESTATED PLEDGE AGREEMENT
This Amended and Restated Pledge Agreement dated as of November 12,
1997 (this "Pledge" or this "Agreement"), is made by JBB Gaming Investments,
L.L.C., a Delaware limited liability company (the "Company"), in favor of
Canadian Imperial Bank of Commerce, as agent for the Lenders (as hereinafter
defined) (herein, in such capacity, called the "Agent").
R E C I T A L S:
WHEREAS, pursuant to a Senior Secured Credit Facility Note Purchase
Agreement dated as of October 10, 1995, as amended prior to the date hereof (as
so amended, the "Note Purchase Agreement") among the Horseshoe Gaming, L.L.C., a
Delaware limited liability company (the "Borrower"), Robinson Property Group
Limited Partnership, a Mississippi limited partnership ("RPG") and Debis
Financial Services, Inc., Yewdale Holdings Limited and Hanwa American Corp (the
"Noteholders"), each of the Noteholders has purchased one or more of the Senior
Secured Credit Facility Notes due October 10, 1999 issued by the Company;
WHEREAS, the Company owns 20% of the membership interests of Horseshoe
Ventures, L.L.C., a Delaware limited liability company ("Horseshoe Ventures");
WHEREAS, pursuant to a Pledge Agreement dated October 10, 1995 (the
"Original Pledge Agreement"), the obligations of the Borrower under the Note
Purchase Agreement were secured by, among other collateral, the Company's
interests in Horseshoe Ventures;
WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Noteholder and the Agent, the remaining Noteholder
assigned to the Agent all of the rights, duties and obligations of the
Noteholders in connection with the Note Purchase Agreement and security
documents described therein, including the Original Pledge Agreement;
WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
dated as of the date hereof (the "Credit Facility Agreement"), the Borrower, the
Agent, certain commercial lending institutions (the "Lenders") and CIBC
Oppenheimer Corp. will amend and restate their respective obligations under the
Note Purchase Agreement;
WHEREAS, as a condition precedent to the initial borrowing under the
Credit Facility Agreement, the Company has agreed to amend and restate its
obligations under the Original Pledge Agreement, it being the express intention
of the Company not to effect a novation or extinguishment or discharge of the
Original Pledge Agreement as a result of executing this agreement and the other
documents contemplated herein;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged by the Company, the Company hereby amends and restates the Original
Pledge Agreement in its entirety to read as follows:
<PAGE> 3
SECTION 1. Terms and Definitions.
Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
(a) "Proceeds" shall mean all "proceeds", as such term is
defined in the UCC and, in any event, shall mean and include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the company from time to time with respect to any of the Pledged
Collateral (as defined in Section 2), (ii) any all payments (in any form
whatsoever) made or due and payable to the Company from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Pledged Collateral by any governmental
authority, body, bureau or agency (or any Person acting under color of
governmental authority) and (iii) any and all other amounts form time to time
paid or payable under or in connection with any of the Pledged Collateral.
(b) "UCC" shall mean the Uniform Commercial Code as in effect
in the State of New York.
Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Credit Facility Agreement.
SECTION 2. Grant of Security.
Section 2.1 Pledged Collateral.
(a) The Company hereby assigns, conveys, pledges, hypothecates
and transfers to the Agent, for the ratable benefit of the Lenders, and hereby
grants to the Agent, for the ratable benefit of the Lenders, an irrevocable and
unconditional security interest in, the following (collectively, the "Pledged
Collateral"):
(i) the entire equity interest of the Company in
Horseshoe Ventures (the "Pledged Interest"), together with the certificates, if
any, representing the Pledged Interest, and all distributions of cash
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Interests and all collateral and related documents and filings pledged to the
Agent to secure the same, except (x) until the occurrence of an Event of
Default, distributions not in violation of the Credit Facility Agreement may be
made in respect of the Pledged Interests to the Company and (y) until the
occurrence of a Non-Tax Distribution Event, for Permitted Tax Distributions;
(ii) all additional interests in Horseshoe Ventures,
together with the certificates, if any, representing such additional interests,
and all distributions of cash,
2
<PAGE> 4
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
interests and all collateral and related documents and filings pledged to the
Agent to secure the same except (x) until the occurrence of an Event of Default,
distributions not in violation of the Credit Facility Agreement may be made in
respect of such additional interests to the Company and (y) until the occurrence
of a Non-Tax Distribution Event, for Permitted Tax Distributions; and
(iii) all Proceeds of any and all of the foregoing
Pledged Collateral.
(b) The Pledged Collateral secures the payment of all
obligations (the "Secured Obligations") of every kind and character now or
hereafter existing (whether matured or unmatured, contingent or liquidated) of
(i) the Borrower under the Credit Facility Agreement, (ii) the Company under
this Agreement and (iii) the hedging agreements of the Borrower to the extent
such obligations are permitted to be secured under Section 7.2.2(k) of the
Credit Facility Agreement (the "Hedging Obligations") (as such agreements
hereafter may be amended, supplemented or otherwise modified from time to time)
including, without limitation, the Notes and Letters of Credit, whether for
principal, interest (including any interest or other amounts accruing after the
filing of a petition with respect to, or the commencement of, any proceeding
under the bankruptcy code, whether or not a claim for post-petition interest or
such other amount is allowed in such proceeding), premium, fees, expenses,
reimbursement, indemnification or otherwise.
(c) Notwithstanding anything contained herein to the contrary,
the Company is solely pledging hereunder to the Agent its rights as a member of
Horseshoe Ventures, and not its obligations, and the Agent shall not be
obligated, because of this Agreement, to assume any of the Company's obligations
as a member of Horseshoe Ventures, including, without limitation, any obligation
to make capital contributions to Horseshoe Ventures.
(d) It is the intention of the Company under this Agreement
that its obligations be secured by all equity interests, and any distributions
(except (i) until the occurrence of an Event of Default, distributions not in
violation of the Credit Facility Agreement and (ii) until the occurrence of a
Non-Tax Distribution Event, for Permitted Tax Distributions) in connection
therewith or Proceeds thereof, of the Company in Horseshoe Ventures, in any form
from time to time acquired by the Company in any manner, including, without
limitation, pursuant to a merger or consolidation permitted under the Credit
Facility Agreement or any transaction. The Company shall take any and all action
necessary or desirable to perfect and protect the security interest of the Agent
in such substituted and additional Pledged Collateral including, without
limitation, the filing of financing statements or amendments thereto or the
delivery upon receipt thereof to the Agent of any and all certificates or
instruments representing or evidencing such substituted and additional Pledged
Collateral in suitable form for transfer by delivery, or accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Agent. The provisions of this Agreement shall be
construed in accordance with this intention.
3
<PAGE> 5
Section 2.2 Exercise of Rights. So long as no Event of Default shall
have occurred and be continuing, the Company shall be entitled to exercise its
rights as a member of Horseshoe Ventures and to exercise any and all rights
pertaining to the Pledged Collateral for any purpose not inconsistent with the
terms of this Agreement; provided, the Company shall not exercise any such right
if such action could have a Material Adverse Effect. Upon the occurrence and
during the continuance of an Event of Default, subject to the applicable Gaming
Laws, at the option of the Agent, without any demand or notice of any kind, (a)
all rights of the Company to exercise or refrain from exercising its rights as a
member of Horseshoe Ventures shall cease and all such rights shall thereupon
become vested in the Agent who shall thereafter have the sole right to exercise
or refrain form exercising such rights, (b) the Agent or its designees may
control and direct the Company in its exercise of its rights as a member of
Horseshoe Ventures or (c) the Agent may grant the Company's rights as a member
of Horseshoe Ventures to any Person to exercise such rights on behalf of the
Agent in addition to exercising any other remedy granted to it in Section 9.2.
SECTION 3. Security Interest Absolute. All rights of the Agent and
security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of
the Credit Facility Agreement or any other Loan Document or any other agreement
or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, any increase in the amount of, all or any of the Secured
Obligations, or any other amendments or waiver of any term of, or any consent to
any departure from any requirement of, the Credit Facility Agreement or any
other Loan Document;
(c) any exchange, release or non-perfection of Lien on any
other collateral for, any release or amendment or waiver of any terms of any
guaranty of, or consent to departure from any requirements of any guaranty of,
all or any of the Secured Obligations;
(d) any failure on the part of the Agent to give notice of any
kind, mitigate the damages resulting from the default by the Company under the
Credit Facility Agreement or this Pledge or protect, secure, perfect and insure
any lien on the Pledged Collateral; or
(e) any other circumstance which might otherwise constitute a
defense available to, or a discharge or release of, a borrower or a pledgor or
otherwise limit the obligations of the Company under this Pledge.
SECTION 4. Delivery of Pledged Collateral. All instruments representing
or evidencing Pledged Collateral shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent. After
the occurrence of an Event of Default, the Agent shall have the
4
<PAGE> 6
right, at any time in its discretion and without notice to the Company, to
transfer to or to register in the name of the Agent, or any of its nominees, any
or all of the Pledged Collateral. In addition, the Agent shall have the right at
any time after the occurrence of an Event of Default to exchange instruments
representing or evidencing Pledged Collateral for instruments of smaller or
larger denominations.
SECTION 5. Appointment as Attorney-in-Fact.
(a) Effective upon the occurrence and during the continuance
of an Event of Default, the Company hereby irrevocably constitutes and appoints
the Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time at the Agent's direction, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of attorney) and,
without limiting the generality of the foregoing, hereby gives the Agent in its
sole discretion the power and right, on behalf of the Company, without notice to
or assent by the Company, to do the following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all monies due or to become due under any
Pledged Collateral and, in the name of the Company or its own name or otherwise,
to take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of monies due under any Pledged
Collateral and to file any claim or to take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the Agent for the
purpose of collecting any and all such monies due under any Pledged Collateral
whenever payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the Agent for
the purpose of collecting any and all such monies due under any Pledged
Collateral whenever payable; and
(ii) to pay or discharge taxes, liens, security
interests or other encumbrances levied or placed on or threatened against the
Pledged Collateral.
The Company hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof and acknowledges that this
power of attorney is a power coupled with an interest and shall be irrevocable.
(b) The powers conferred on the Agent hereunder are solely to
protect the Agent's interests in the Pledged Collateral and shall not impose any
duty upon the Agent to exercise any such powers. The Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers and neither the Agent nor any of its agents,
5
<PAGE> 7
representatives or designees shall be responsible to the Company for any act or
failure to act, except for any act involving its gross negligence or willful
misconduct.
(c) Nothing in this Agreement shall authorize the Agent, prior
to an Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or any of its Affiliates or (ii) to
control decisions regarding the disposal or other management of hazardous
substances generated, used or handled by the Company or any of its Affiliates.
SECTION 6. Waivers. The Company hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim based upon, arising out
of, or relating to, this Pledge, the transactions contemplated by the Credit
Facility Agreement or the actions of the Agent in the negotiation,
administration, performance or enforcement thereof. The scope of this waiver is
intended to be all-encompassing of any and all actions that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. The Company acknowledges that this waiver
is a material inducement to the Agent to enter into a business relationship with
the Company and its Affiliates and that the Agent has already relied on this
waiver in entering into this Agreement and the Loan Documents and will continue
to rely on this waiver in its related future dealings. The Company further
warrants and represents that it has reviewed this waiver with its legal counsel,
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO
THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
SECTION 7. Representations of the Company. The Company hereby
represents and warrants to the Agent as follows:
Section 7.1 No Liens. The Company is the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, except for (i) the security
interest created by this Agreement and (ii) the second lien on the Pledged
Collateral granted by the Company to the holders of the senior notes issued
pursuant to the Senior Note Indenture pursuant to the Binion Partners Second
Pledge Agreement, executed and delivered as of October 10, 1995, by the Company
(the "Binion Partners Second Pledge Agreement"). No effective security
agreement, financing statement or other instrument similar in effect covering
all or any part of the Pledged Collateral is on file in any recording office,
except such as may have been filed (i) in favor of the Agent relating to this
Agreement or (ii) in favor of the holders of the senior notes relating to the
Binion Partners Second Pledge Agreement. The Company has no trade names.
6
<PAGE> 8
Section 7.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security interest
have been duly taken.
SECTION 8. Covenants. The Company covenants and agrees that on and
after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:
Section 8.1 Limitation on Liens. The Company shall not, directly or
indirectly, create, receive, assume or permit to exist or otherwise cause or
permit to become in effect any Lien upon or with respect to the Pledged
Collateral, other than the Liens granted to the Agent pursuant to this Pledge or
pursuant to the Credit Facility Agreement and any Liens granted pursuant to the
Binion Partners Second Pledge Agreement.
Section 8.2 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402 (7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent at least 90 days' prior written notice of
its intention to so change and shall have taken all action (or made arrangements
to take such action substantially simultaneously with such change if it is
impossible to take such action in advance) necessary, or reasonably requested by
the Agent, to amend such financing or continuation statement so that it is not
misleading.
Section 8.3 Further Assurances.
(a) From time to time, at the expense of the Company, the
Company will promptly execute and deliver all further instruments and documents
and take all further action, that may be necessary or desirable, or that the
Agent reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral. Without limiting the generality of the
foregoing, the Company will execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Agent may request, in order to perfect and
preserve the pledge, assignment and security interest granted or purported to be
granted hereby.
(b) The Company hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Pledged Collateral without the signature of the Company
where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering the Pledged Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
7
<PAGE> 9
(c) The Company will furnish to the Agent from time to time
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent reasonably may request, all in reasonable detail.
SECTION 9. Events of Default; Remedies.
Section 9.1 Event of Default. If any Event of Default shall occur and
be continuing (for any reason whatsoever and whether it shall be voluntary or
involuntary or by operation of law or otherwise), then (a) all payments received
by the Company under or in connection with any of the Pledged Collateral shall
be held by the Company in trust for the Agent, shall be segregated from other
funds of the Company and shall forthwith upon receipt by the Company be turned
over to the Agent for the Noteholders' benefit in the same form as received by
the Company (duly endorsed by the Company to the Agent, if required); (b) any
and all such payments so received by the Agent (whether from the Company or
otherwise) will be applied by the Agent against the Secured Obligations; and (c)
any amount remaining after payment in full of all the Secured Obligations shall
be paid over to the Company.
Section 9.2 Remedies.
(a) If any Event of Default shall occur and be continuing, the
Agent may exercise in addition to all other rights and remedies granted to the
Agent in this Agreement, the Credit Facility Agreement and any other instrument
or agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, the Company expressly agrees that in any such event
the Agent, without demand of performance or other demand, advertisement or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon the Company or any other Person (all and each
of which demands, advertisements and/or notices are hereby expressly waived),
may forthwith assume, collect, receive, appropriate and realize upon the Pledged
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver
said Pledged Collateral (or contract to do so), or any part thereof, in one or
more parcels at a public or private sale or sales, at any exchange, broker's
board or at its offices or elsewhere at such prices as the Agent may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Agent shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of said Pledged Collateral so sold, free of any right or
equity of redemption, which equity of redemption the Company hereby releases,
and in lieu of payment of such actual purchase price may set-off the amount of
such purchase price against the Secured Obligations then owing. The Company
further agrees, at the Agent's request, to assemble the Pledged Collateral and
make it available to the Agent at places which the Agent shall reasonably
select, whether at the Company's premises or elsewhere. The Agent shall retain
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind
8
<PAGE> 10
incurred therein or incidental to the cares, safe keeping or otherwise of any or
all of the Pledged Collateral or in any way relating to the rights of the Agent
hereunder, including reasonable attorneys' fees and legal expenses, for
application to the payment in whole or in part of the Secured Obligations, the
Company remaining liable for any deficiency remaining unpaid after such
application, and only after so retaining such net proceeds and after the payment
by the Agent of any other amount required by any provision of law, including
Section 9-504 (1)(c) of the UCC, need the Agent account for the surplus, if any,
to the Company. To the extent permitted by applicable law, the Company waives
all claims, damages and demands against the Agent arising out of the
repossession, retention or sale of the Pledged Collateral, except to the extent
that such claims, damages and demands arise out of the willful misconduct or
gross negligence of the Agent.
(b) The Company recognizes that the Agent may be unable to
effect a public sale of all or any part of the Pledged Collateral consisting of
securities by reason of certain prohibitions contained in the Securities Act of
1933, as amended, but may be compelled to resort to one or more private sales to
a restricted group of purchasers who will be obliged to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. The Company understands and
agrees that a private sale so made may be at prices and other terms less
favorable than if such securities were sold at public sales, and that the Agent
has no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities, even if such issuer would
agree, to register such securities for public sale under the Securities Act of
1993, amended. The Company agrees to private sales made under the foregoing
circumstances which sales shall be deemed to have been made in a commercially
reasonable manner.
(c) The Company also agrees to pay all costs of the Agent,
including reasonable attorneys' fees, incurred with respect to the collection of
any of the Secured Obligations and the enforcement and protection of any of the
rights of the Agent hereunder. All costs and expenses incurred by the Agent with
respect to the enforcement, collection and protection of the Agent's interest in
the Pledged Collateral shall be additional Secured Obligations of the Company to
the Agent, payable on demand, and secured by the Pledged Collateral.
(d) Any notice required to be given by the Agent of a sale,
lease or other disposition or other intended action by them with respect to any
of the Pledged Collateral which is deposited in the United States mails postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the Company of
any such action. The net proceeds realized by the Agent upon any such sale or
other disposition, after deduction for the expense of retaking, holding,
preparing for sale, selling or the like and the reasonable attorneys' fees and
legal expenses incurred by the Agent in connection therewith, shall be applied
as provided herein toward satisfaction of the Secured Obligations. The Agent
shall account to the Company for any surplus realized upon such sale or other
disposition, and the Company shall remain liable for any deficiency, the Company
also being
9
<PAGE> 11
liable for the reasonable fees of any attorneys employed by the Agent to collect
such deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for deficiency shall not affect the Agent's
security interest in the Pledged Collateral until the Secured Obligations are
fully paid. The Company agrees that the Agent have no obligation to preserve
rights to the Pledged Collateral against any other parties. The Agent shall not
be obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
Section 9.3 Limitation on the Agent's Duty in Respect of Pledged
Collateral. Except as otherwise provided herein, under no circumstances
whatsoever shall the Agent be deemed to assume any responsibility for, or
obligation or duty with respect to, any part or all of the Pledged Collateral,
of any nature or kind whatsoever, or any matter or proceedings arising out of or
relating thereto. The Agent shall not be required to take any action of any kind
to collect or protect any interest in the Pledged Collateral, including, but not
limited to, any action necessary to preserve the rights of the Agent against
prior parties to any of the Pledged Collateral. The Agent shall not be liable or
responsible in any way for the safe keeping, care or custody of any of the
Pledged Collateral if the Pledged Collateral is accorded the same treatment and
level of care as its own property, for any loss or damages thereto, for any
diminution in the value thereof, for any act or default of any agent or bailee
of the Agent or of any carrier, forwarding agency or other person whomsoever or
for the collection of any proceeds, except to the extent that the selection of
such agent, bailee, carrier or other person involved gross negligence or wilful
misconduct, however, the same shall be at the Company's sole risk at all times.
The Company hereby releases the Agent from any claims, causes of action and
demands at any time arising out of or with respect to this Agreement or the
Secured Obligations and any actions given or omitted to be taken by the Agent
with respect thereto, and the Company hereby agrees to hold the Agent harmless
from and with respect to any and all such claims, causes of action and demands.
The Company hereby releases the Agent from any claims, causes of action and
demands arising under 42 U.S.C. Section 9607 or 9613 or similar provisions of
state or local law.
Section 9.4 Remedies Cumulative. No remedy conferred upon the Agent is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
Section 9.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and no delay or failure in exercising any rights hereunder
in respect thereof shall operate as a waiver of any of the rights of the Agent.
SECTION 10. Amendment and Waiver. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by Agent, and then such waiver or
10
<PAGE> 12
consent shall be effective only in the specific instance and for the specific
purpose for which given and shall not be deemed to waive any other breach
hereunder; provided, however, that no amendment, waiver or consent, unless in
writing and signed by the Agent shall (a) limit the liability of the Company
hereunder or (b) postpone any date fixed for payment hereunder.
No failure on the part of the Agent to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 11. Miscellaneous.
Section 11.1 Expense. The Company will pay the Agent for any and all
sums, costs and expenses which the Agent may pay or incur by reason of
defending, protecting or enforcing the security interest herein granted or the
priority hereof, enforcing payment of the Secured Obligations, discharging any
Lien or claim against the Pledged Collateral or any part thereof or, if the
Company fails to perform or comply with any of its agreements herein, performing
or complying with such terms. Such sums, costs and expenses shall include,
without limitation, all court costs, collection charges, travel and reasonable
attorneys' fees (including fees and expenses incident to the enforcement of
payment of any obligations of the Company by any action or participation in, or
connection with, a case or proceeding under Chapters 7, 11 or 13 of the
Bankruptcy Code). All sums, costs and expenses of the Agent payable by the
Company pursuant to this Agreement shall be payable by the Company to the Agent
on demand and shall constitute Secured Obligations secured by the Pledged
Collateral.
Section 11.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent,
notwithstanding any investigation heretofore or hereafter made by the Agent or
on its behalf and (b) survive the execution and delivery of this Agreement and
of the Notes, Letters of Credit and Hedging Obligations, and shall continue in
effect so long as any Note, Letter of Credit or Hedging Obligation is
outstanding and thereafter as provided in Sections 9 and 11.1.
Section 11.3 Successors and Assigns; Transfers of the Senior Secured
Credit Facility Notes. This Agreement shall bind and inure to the benefit of,
and be enforceable by, the Company and the Agent and their successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes or
Letters of Credit. The Company may not assign its rights and obligations under
this Agreement except as permitted under the Credit Facility Agreement. The
Agent may transfer Notes and Letters of Credit (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state and federal securities laws and the
requirements of Section 10.11 of the Credit Facility Agreement.
11
<PAGE> 13
Section 11.4 Notice. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:
(a) if to the Agent, at its address as set forth in
the Credit Facility Agreement or at such other address as shall be set
forth in the note register of the Company, and
(b) if to the Company:
c/o HORSESHOE GAMING, L.L.C.
4024 Industrial Road
Las Vegas, Nevada 89103
Attention: Jack Binion
President
Telephone: (702) 650-0080
Telecopy: (702) 650-0081
With a copy to:
RIORDAN & MCKINZIE
695 Towne Center Drive
Suite 1500
Costa Mesa, California 92626
Attention: James Shnell, Esq.
Telephone: (714) 433-2616
Telecopy: (714) 699-5435
Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.
Section 11.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
To the fullest extent permitted by applicable law, the parties hereto hereby
waive any provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.
Section 11.6 Governing Law. This Agreement and the Notes, Letters of
Credit and Hedging Obligations and (unless otherwise provided) all amendments,
supplements, waivers and
12
<PAGE> 14
consents relating hereto or thereto shall be governed by, and construed in
accordance with, the internal laws of the State of New York.
Section 11.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Pledge or any course of conduct, course of
dealing, statements or actions of the Company or the Agent related thereto, the
Company hereby submits and consents to the jurisdiction of the courts of the
State of New York and the United States District Court for the Southern District
of New York, and the Company agrees that any such action, suit or proceeding may
be brought by the Agent in the Supreme Court of the State of New York, New York
County, or in the United States District Court for the Southern District of New
York, and the service or process may be made upon the Company by mailing a copy
of the summons and any complaint to the Company by registered mail, at the
address specified in Section 11.4. The Company hereby waives and agrees not to
assert, by way of motion or otherwise, in any action, suit or proceeding, any
claim that is not personally subject to the jurisdiction of the above-named
courts, that the action is brought in an inconvenient forum or that the venue of
the action is improper. The Agent, nevertheless, may serve, process or commence
any such action, suit or proceeding in such other jurisdiction(s), and in such
other manner as may be permitted by applicable law. The methods of service of
process specified in this paragraph may be used in the alternative or together
as the Agent may see fit.
Section 11.8 Headings. The headings in this Pledge are for convenience
only and shall not be construed as a part of this Pledge.
Section 11.9 Term of Agreement. This Pledge and all agreements of the
Company contained herein shall continue in full force and effect and shall not
be discharged until such time as the Secured Obligations shall be indefeasibly
paid or performed in full.
13
<PAGE> 15
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered as of the date first above written.
JBB GAMING INVESTMENTS, L.L.C.
By: _______________________________
Name: Jack B. Binion
ACKNOWLEDGED AND ACCEPTED
THIS 12th DAY OF NOVEMBER, 1997
HORSESHOE VENTURES, L.L.C.
By: HORSESHOE GAMING, L.L.C.
its manger
By: HORSESHOE GAMING, INC.,
its manger
By: ___________________________
Name: Walter J. Haybert
Title: Treasurer
14
<PAGE> 16
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. Terms and Definitions.................................................................................2
Section 1.1 Definitions ...........................................................................2
Section 1.2 Additional Terms ......................................................................2
SECTION 2. Grant of Security.....................................................................................2
Section 2.1 Pledged Collateral ....................................................................2
Section 2.2 Exercise of Rights ....................................................................4
SECTION 3. Security Interest Absolute............................................................................5
SECTION 4. Delivery of Pledged Collateral........................................................................5
SECTION 5. Appointment as Attorney-in-Fact.......................................................................5
SECTION 6. Waivers...............................................................................................7
SECTION 7. Representations of the Company........................................................................7
Section 7.1 No Liens .............................................................................7
Section 7.2 Security Interest .....................................................................7
SECTION 8. Covenants.............................................................................................7
Section 8.1 Limitation on Liens ...................................................................8
Section 8.2 Continuous Perfection .................................................................8
Section 8.3 Further Assurances ....................................................................8
SECTION 9. Events of Default; Remedies..........................................................................8
Section 9.1 Event of Default ......................................................................8
Section 9.2 Remedies ..............................................................................9
Section 9.3 Limitation on the Agent's Duty in Respect of Pledged Collateral ......................10
Section 9.4 Remedies Cumulative ..................................................................11
Section 9.5 Remedies Not Waived ..................................................................11
SECTION 10. Amendment and Waiver................................................................................11
SECTION 11. Miscellaneous.......................................................................................11
Section 11.1 Expense ..............................................................................11
Section 11.2 Reliance on and Survival of Representations ..........................................12
Section 11.3 Successors and Assigns; Transfers of the Senior Secured Credit
Facility Notes .......................................................................12
Section 11.4 Notice ...............................................................................12
</TABLE>
i
<PAGE> 17
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 11.5 Severability .........................................................................13
Section 11.6 Governing Law.........................................................................13
Section 11.7 Forum and Jurisdiction ...............................................................13
Section 11.8 Headings .............................................................................14
Section 11.9 Term of Agreement ....................................................................14
</TABLE>
ii
<PAGE> 1
EXHIBIT 4.62
================================================================================
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
Dated as of November 12, 1997
Among
CANADIAN IMPERIAL BANK OF COMMERCE, AS AGENT
FOR CERTAIN
COMMERCIAL LENDING INSTITUTIONS
As SENIOR LIENHOLDERS
And
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
As Trustee for the Holders of
Horseshoe Gaming, L.L.C. 12.75% Senior Notes Due 2000 and
Horseshoe Gaming, L.L.C. 12.75% Exchange Senior Notes Due 2000
And
UNITED STATES TRUST COMPANY OF NEW YORK, As Collateral Agent
AS JUNIOR LIENHOLDERS
================================================================================
<PAGE> 2
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
This AMENDED AND RESTATED INTERCREDITOR AGREEMENT is dated as of
November 12, 1997 between CANADIAN IMPERIAL BANK OF COMMERCE, as agent (in such
capacity, the "Agent") for the various financial institutions as are or may
become parties to the hereinafter described Amended and Restated Credit Facility
Agreement (each a "Senior Secured Lender" and together with the Agent, the
"Senior Lienholders") and U.S. TRUST COMPANY OF CALIFORNIA, N.A., as trustee for
the holders from time to time of Horseshoe Gaming, L.L.C. 12.75% Senior Notes
Due 2000 and Horseshoe Gaming, L.L.C. 12.75% Exchange Senior Notes Due 2000 (the
"Indenture Trustee") and UNITED STATES TRUST COMPANY OF NEW YORK, as Collateral
Agent (the "Collateral Agent" and together with the Indenture Trustee, the
"Junior Lienholders").
WITNESSETH:
WHEREAS, pursuant to a Senior Secured Credit Facility Note Purchase
Agreement dated as of October 10, 1995, as amended prior to the date hereof (as
so amended, the "Senior Secured Credit Facility Agreement") among DEBIS
FINANCIAL SERVICES, INC., YEWDALE HOLDINGS, LIMITED and HANWA AMERICAN CORP.
(collectively, the "Prior Senior Secured Lenders" and each, individually, a
"Prior Senior Secured Lender"), HORSESHOE GAMING, L.L.C. (the "Company") and
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP ("RPG"), each of the Prior Senior
Secured Lenders has purchased one or more of the Senior Secured Credit Facility
Notes due September 30, 1999 (each, a "Senior Secured Credit Facility Note")
issued by the Company;
WHEREAS, the Indenture Trustee is the trustee under an Indenture of
Trust dated as of October 10, 1995 (the "12.75% Senior Secured Notes Indenture")
among the Indenture Trustee, the Company and RPG, pursuant to which the Company
has issued its 12.75% Senior Notes Due 2000 and its 12.75% Exchange Senior Notes
Due 2000 (collectively, the "12.75% Senior Notes");
WHEREAS, pursuant to a Collateral Agency Agreement dated as of
October 10, 1995 among the Company, the purchasers of the 12.75% Senior Notes
and the Collateral Agent, the Collateral Agent has agreed to act as collateral
agent for the holders, from time to time, of the 12.75% Senior Notes;
WHEREAS, pursuant to a Pledge Agreement dated as of October 10, 1995
(the "Original HG First Pledge Agreement"), the Company has pledged and assigned
to the Prior Senior Secured Lenders, and granted the Prior Senior Secured
Lenders a security interest in, certain collateral including
<PAGE> 3
(i) the entire equity interest of the Company in each of HORSESHOE
GP, INC. ("HGP"), NEW GAMING CAPITAL PARTNERSHIP, ("NGCP"),
RPG, HORSESHOE CASINOS (INDIANA) L.L.C. ("HIND"), HORSESHOE
VENTURES L.L.C. ("Horseshoe Ventures") and each New Project
Subsidiary (as defined in the Senior Secured Credit Facility
Agreement) and certain distributions received by the Company
in respect of such interests;
(ii) additional interests in HGP, NGCP, RPG, HIND, Horseshoe
Ventures and each New Project Subsidiary from time to time
acquired by the Company and certain distributions received by
the Company in respect of such interests, and
(iii) proceeds of such collateral;
WHEREAS, pursuant to a Second Pledge Agreement dated as of October
10, 1995 (the "HG Second Pledge Agreement"), the Company has pledged and
assigned to the Junior Lienholders, and granted the Junior Lienholders a
security interest in, the same collateral conveyed by the Original HG First
Pledge Agreement, on a basis subordinate in priority to the pledge, assignment
and security interest in favor of the Prior Senior Secured Lenders pursuant to
the Original HG First Pledge Agreement;
WHEREAS, pursuant to a Guarantee and Pledge Agreement dated as of
October 10, 1995 (the "Original Binion Partners First Pledge Agreement"), JACK
BINION, B&O DEVELOPMENT LIMITED PARTNERSHIP ("B&O") and JBB GAMING INVESTMENTS,
L.L.C. ("JBB Gaming")(formerly known as Worldwide Gaming Investments, L.L.C.),
have assigned and pledged to the Prior Senior Secured Lenders and granted the
Prior Senior Secured Lenders a security interest in, certain collateral
including
(i) the entire equity interest of Jack Binion, B&O and JBB Gaming
(the "Binion Partners") in each of HIND, Horseshoe Ventures
and each New Project Subsidiary and certain distributions
received by the Binion Partners in respect of such interests;
(ii) additional interests in HIND, Horseshoe Ventures and each New
Project Subsidiary from time to time acquired by the Binion
Partners and certain distributions received by the Binion
Partners in respect of such interests, and
(iii) proceeds of such collateral;
WHEREAS, pursuant to a Second Pledge Agreement dated as of
-2-
<PAGE> 4
October 10, 1995 (the "Binion Partners Second Pledge Agreement"), the Binion
Partners have pledged and assigned to the Junior Lienholders, and granted the
Junior Lienholders a security interest in, the same collateral conveyed by the
Original Binion Partners First Pledge Agreement, on a basis subordinate in
priority to the pledge, assignment and security interest in favor of the Prior
Senior Secured Lenders pursuant to the Original Binion Partners First Pledge
Agreement;
WHEREAS, pursuant to a First Preferred Ship Mortgage dated as of
October 10, 1995 (the "Tunica County First Preferred Ship Mortgage"), RPG has
mortgaged the vessel named "Horseshoe Casino & Hotel, Tunica" and certain
related collateral to Chemical Trust Company of California (the "Vessel
Trustee"), as trustee for the Prior Senior Secured Lenders;
WHEREAS, pursuant to a Second Ship Mortgage dated as of October 10,
1995 (the "Tunica County Second Ship Mortgage"), RPG has mortgaged to the Junior
Lienholders the same collateral mortgaged pursuant to the Tunica County First
Preferred Ship Mortgage, on a basis subordinate in priority to the mortgage for
the benefit of the Prior Senior Secured Lenders pursuant to the Tunica County
First Preferred Ship Mortgage;
WHEREAS, pursuant to a Security Agreement and Financing Statement
dated as of October 10, 1995 (the "Tunica First Security Agreement"), RPG has
granted the Company a security interest in certain personal property described
therein, and pursuant to an assignment (the "Original Tunica First Security
Agreement Assignment") dated October 10, 1995, the Company has assigned the
Tunica First Security Agreement to the Prior Senior Secured Lenders;
WHEREAS, pursuant to a Security Agreement and Financing Statement
dated as of October 10, 1995 (the "Tunica Second Security Agreement"), RPG has
granted the Company and, pursuant to an assignment (the "Tunica Second Security
Agreement Assignment") the Company has assigned to the Junior Lienholders, a
security interest in the same personal property subject to the Tunica First
Security Agreement, on a basis subordinate in priority to the security interest
granted to the Company and assigned to the Prior Senior Secured Lenders pursuant
to the Tunica First Security Agreement and the Original Tunica First Security
Agreement Assignment;
WHEREAS, pursuant to a Deed of Trust, Security Agreement and
Assignment of Leases and Rents dated October 10, 1995 (the "Tunica County First
Deed of Trust"), RPG has mortgaged and assigned certain real property to the
Company and the Prior Senior Secured Lenders and granted the Company and the
Prior
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Senior Secured Lenders a security interest in certain personal property;
WHEREAS, pursuant to an Assignment of Deed of Trust (the "Original
Tunica County Assignment of First Deed of Trust"), the Company has assigned its
rights under the Tunica County First Deed of Trust to the Prior Senior Secured
Lenders;
WHEREAS, pursuant to a Second Deed of Trust, Security Agreement and
Assignment of Leases and Rents dated October 10, 1995 (the "Tunica County Second
Deed of Trust"), RPG has mortgaged and assigned to the Company and the Junior
Lienholders the same real property mortgaged and assigned pursuant to the Tunica
County First Deed of Trust, on a basis subordinate in priority to the mortgage
and assignment to the Prior Senior Secured Lenders pursuant to the Tunica County
First Deed of Trust, and has granted the Company and the Junior Lienholders a
security interest in the same personal property subject to the Tunica County
First Deed of Trust, on a basis subordinate in priority to the security interest
granted the Prior Senior Secured Lenders pursuant to the Tunica County First
Deed of Trust;
WHEREAS, pursuant to an Assignment of Second Deed of Trust, Security
Agreement and Assignment of Leases and Rents (the "Tunica County Assignment of
Second Deed of Trust"), the Company has assigned its rights under the Tunica
County Second Deed of Trust to the Junior Lienholders;
WHEREAS, pursuant to a Note Assignment dated as of October 10, 1995
(the "Original Note Assignment"), the Company has assigned to the Prior Senior
Secured Lenders and the Junior Lienholders
(ii) a promissory note (the "HE Intercompany Note") given to the
Company by HORSESHOE ENTERTAINMENT, L.P. ("HE") to evidence a
loan from the Company to HE,
(iii) a promissory note (the "RPG Intercompany Note") given to the
Company by RPG to evidence a loan from the Company to RPG,
(iv) a promissory note (the "HIND Intercompany Note") given by
HIND to evidence a loan made by the Company to HIND,
(v) promissory notes ("New Project Subsidiary Intercompany Senior
Notes") which may be given to the Company from time to time by
Horseshoe Ventures or by a Subsidiary or Subsidiaries of the
Company to evidence loans made by the Company to Horseshoe
Ventures or such Subsidiary or Subsidiaries, and
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<PAGE> 6
(vi) proceeds of such collateral;
WHEREAS, pursuant to an Assignment of Mortgage, Security Agreement
and Assignment of Leases and Rents dated October 2, 1995 (the "Original Bossier
City Mortgage Assignment"), the Company has assigned to the Prior Senior Secured
Lenders and the Junior Lienholders the Company's rights under a Mortgage,
Security Agreement and Assignment of Leases and Rents dated October 2, 1995 (the
"Bossier City Mortgage"), given by HE to the Company to secure, among other
things, the HE Intercompany Note;
WHEREAS, to secure its obligations under the HE Intercompany Note,
HE has, pursuant to a First Preferred Ship Mortgage dated as of October 10, 1995
(the "Bossier City First Preferred Ship Mortgage"), mortgaged a vessel known as
"Queen of the Red" and certain related collateral to the Company;
WHEREAS, pursuant to an Assignment of Preferred Ship Mortgage dated
as of October 10, 1995 (the "Original Bossier City First Preferred Ship Mortgage
Assignment"), the Company has assigned its rights under the Bossier City First
Preferred Ship Mortgage to the Vessel Trustee, for the benefit of the Prior
Senior Secured Lenders;
WHEREAS, to secure its obligations under the HE Intercompany Note,
HE has, pursuant to a Second Ship Mortgage dated as of October 10, 1995 (the
"Bossier City Second Ship Mortgage"), mortgaged to the Company the same
collateral mortgaged pursuant to the Bossier City First Preferred Ship Mortgage,
on a basis subordinate in priority to the Bossier City First Preferred Ship
Mortgage;
WHEREAS, pursuant to an Assignment of Second Ship Mortgage dated as
of October 10, 1995 (the "Bossier City Second Ship Mortgage Assignment"), the
Company has assigned its rights under the Bossier City Second Ship Mortgage to
the Junior Lienholders;
WHEREAS, pursuant to a Security Agreement and Financing Statement
dated as of October 10, 1995 (the "Bossier City First Security Agreement"), HE
has granted the Company a security interest in certain personal property
described therein, and pursuant to an assignment (the "Original Bossier City
First Security Agreement Assignment") dated October 10, 1995, the Company has
assigned the Bossier City First Security Agreement to the Prior Senior Secured
Lenders;
WHEREAS, pursuant to a Security Agreement and Financing Statement
dated as of October 10, 1995 (the "Bossier City Second Security Agreement"), HE
has granted the Company and, pursuant to
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an assignment (the "Bossier City Second Security Agreement Assignment") the
Company has assigned to the Junior Lienholders, a security interest in the same
personal property subject to the Bossier City First Security Agreement, on a
basis subordinate in priority to the security interest granted to the Company
and assigned to the Prior Senior Secured Lenders pursuant to the Bossier City
First Security Agreement and the Original Bossier City First Security Agreement
Assignment;
WHEREAS, pursuant to an Assignment dated November 12, 1997 (the
"Bossier City First Security Agreement Assignment"), the Prior Senior Secured
Lenders have assigned the Bossier City First Security Agreement to the Senior
Secured Lenders;
WHEREAS, pursuant to an Intercreditor Agreement dated as of October
10, 1995, executed by the Prior Senior Secured Lenders, the Vessel Trustee and
the Junior Lienholders (the "Intercreditor Agreement"), the Prior Senior Secured
Lenders, the Vessel Trustee and the Junior Lienholders have clarified and
established their respective rights and obligations in respect of the agreements
hereinabove described (the "Original Security Documents");
WHEREAS, pursuant to a letter agreement dated as of the date hereof
among the Prior Senior Secured Lenders and CIBC, the Prior Senior Secured
Lenders assigned to CIBC all of the rights, duties and obligations of the Prior
Senior Secured Lenders in connection with the Senior Secured Credit Facility
Agreement, the Original Security Documents and the Intercreditor Agreement;
WHEREAS, pursuant to a letter agreement dated as of the date hereof
between the Vessel Trustee and the Agent, the Vessel Trustee has assigned to the
Agent all of its rights, title and interest under and in connection with the
Tunica County First Preferred Ship Mortgage and the Bossier City First Preferred
Ship Mortgage;
WHEREAS, pursuant to an Assignment of Preferred Ship Mortgage dated
as of November 12, 1997 (the "1997 Tunica Vessel Assignment"), the Prior Senior
Secured Lenders have assigned their rights under the Tunica County First
Preferred Ship Mortgage to the Senior Secured Lenders;
WHEREAS, pursuant to an Amended and Restated Credit Facility
Agreement dated as of the date hereof (the "Amended and Restated Credit Facility
Agreement"), the Company, the Senior Secured Lenders, CIBC, as Agent for the
Senior Secured Lenders and CIBC Wood Gundy Securities Corp., as the Arranger,
have amended and restated their respective obligations under the Senior Secured
Credit Facility Agreement to, among other things, provide for the
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issuance of letters of credit for the account of the Company and, under certain
circumstances, increase the availability to the Company from $150,000,000 to a
maximum of $180,000,000;
WHEREAS, pursuant to an Amended and Restated Pledge Agreement dated
as of November 12, 1997 (the "HG First Pledge Agreement"), the Company and the
Agent have amended and restated the Original HG First Pledge Agreement in its
entirety;
WHEREAS, pursuant an Amended and Restated Guaranty and Pledge
Agreement dated as of November 12, 1997 (the "JBB First Pledge Agreement") JBB
Gaming has amended and restated its obligations under the Original Binion
Partners First Pledge Agreement in its entirety;
WHEREAS, pursuant to an Assignment dated as of November 12, 1997
(the "Tunica First Security Agreement Assignment"), the Prior Secured Lenders
assigned the Tunica First Security Agreement to the Senior Secured Lenders;
WHEREAS, pursuant to an Assignment of Deed of Trust dated as of
November 12, 1997 (the "Tunica County Assignment of First Deed of Trust"), the
Prior Senior Secured Lenders have assigned their rights under the Tunica County
First Deed of Trust to the Senior Secured Lenders;
WHEREAS, pursuant to an Amended and Restated Note Assignment dated
as of November 12, 1997, the Company, the Agent and the Indenture Trustee have
amended and restated the Original Note Assignment in its entirety;
WHEREAS, pursuant to an Assignment of Mortgage, Security Agreement
and Assignment of Leases and Rents dated November 12, 1997, the Prior Senior
Secured Lenders have assigned their rights under the Bossier City Mortgage to
the Senior Secured Lenders;
WHEREAS, pursuant to an Assignment of Preferred Ship Mortgage dated
as of November 12, 1997 (the "1997 Bossier Vessel Assignment"), the Prior Senior
Secured Lenders have assigned their rights under the Bossier City First
Preferred Ship Mortgage to the Senior Secured Lenders;
WHEREAS, the Senior Lienholders and the Junior Lienholders wish to
clarify and confirm their respective rights and obligations in respect of the HG
First Pledge Agreement, the HG Second Pledge Agreement, the JBB First Pledge
Agreement, the Binion Partners Second Pledge Agreement, the Tunica County First
Preferred Ship Mortgage, the Tunica County Second Ship Mortgage, the 1997 Tunica
Vessel Assignment, the Tunica First Security Agreement, the Original Tunica
First Security Agreement
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<PAGE> 9
Assignment, the Tunica Second Security Agreement, the Tunica Second Security
Agreement Assignment, the Tunica County First Deed of Trust, the Tunica County
Assignment of First Deed of Trust, the Tunica County Second Deed of Trust, the
Tunica County Assignment of Second Deed of Trust, the Note Assignment, the
Bossier City Mortgage, the Original Bossier City Mortgage Assignment, the
Bossier City First Preferred Ship Mortgage, the 1997 Bossier Vessel Assignment,
the Bossier City First Preferred Ship Mortgage Assignment, the Bossier City
Second Ship Mortgage, the Bossier City Second Ship Mortgage Assignment, the
Bossier City First Security Agreement, the Original Bossier City First Security
Agreement Assignment, the Bossier City Second Security Agreement, the Bossier
City Second Security Agreement Assignment, all financing statements filed in
respect of any of the foregoing and any other lien, assignment, pledge, mortgage
or security agreement securing the Obligations under the Amended and Restated
Credit Facility Agreement or the 12.75% Senior Notes, whether or not
specifically referred to in this Intercreditor Agreement (the "Security
Documents") and all collateral assigned, pledged or mortgaged pursuant to any
Security Document or in which a security interest is granted pursuant to any
Security Document, whether or not specifically referred to in this Intercreditor
Agreement and all proceeds thereof, including without limitation title insurance
proceeds, condemnation proceeds, casualty insurance proceeds and foreclosure
proceeds (the "Collateral");
WHEREAS, in order to clarify and confirm their respective rights and
obligations in respect of the Security Documents and the Collateral, the parties
hereto wish to amend and restate their respective rights and obligations under
the Intercreditor Agreement on the terms, and subject to the conditions set
forth herein;
NOW, THEREFORE, the Senior Lienholders and the Junior Lienholders
hereby amend and restate the Intercreditor Agreement in its entirety to read as
follows:
SECTION 1. Definitions. Capitalized terms used in this Amended and
Restated Intercreditor Agreement, including its preamble and recitals, which are
not defined herein shall have the meaning specified in the Amended and Restated
Credit Facility Agreement.
SECTION 2. Priority of Liens.
(a) Irrespective of the time, order or method of attachment or
perfection of any lien, pledge, mortgage, assignment or security interest in the
Collateral by the Prior Senior Secured Lenders, the Agent, the Senior
Lienholders and the Junior Lienholders or the time or order of filing or
recording of
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<PAGE> 10
financing statements or other liens, pledges, mortgages, assignments or security
interests pertaining to the Collateral and irrespective of anything contained in
any filing or agreement to which the Agent, any Senior Secured Lender, any
holder of a Note, either Junior Lienholder, any purchaser or holder of a 12.75%
Senior Note or the Company may now or hereafter be a party, the Senior
Lienholders and the Junior Lienholders agree that
(i) the lien, pledge, mortgage, assignment or security interest in
any Collateral in favor of the Senior Lienholders shall be
senior and prior to the lien, pledge, mortgage or assignment
of or security interest in such Collateral in favor of the
Junior Lienholders or any purchaser or holder of a 12.75%
Senior Note, and
(ii) the lien, pledge, mortgage or assignment of or security
interest in any Collateral in favor of the Junior Lienholders
or any purchaser or holder of a 12.75% Senior Note shall be
junior and subordinate to the lien, pledge, mortgage or
assignment of or security interest in such Collateral in favor
of the Senior Lienholders.
(b) one or more Security Agreements, including without limitation the
Note Assignment and the Bossier City Mortgage, may by their terms create or be
deemed to create a single lien, pledge, mortgage, assignment or security
interest in favor of both the Senior Lienholders and the Junior Lienholders.
Nevertheless, until payment in full of the Notes, the Letters of Credit, the
Secured Hedging Obligations and all other Obligations payable to the Senior
Lienholders pursuant to the Loan Documents, the Senior Lienholders, subject to
the terms and conditions of this Amended and Restated Intercreditor Agreement,
shall have the sole right, to the exclusion of the Junior Lienholders, to
possess, enforce, collect, receive and retain payments or recoveries in respect
of, and otherwise enjoy the benefits of any Security Agreement in favor of the
Senior Lienholders, whether or not such Security Agreement, by its terms, also
creates rights in favor of the Junior Lienholders, provided however, that the
Junior Lienholders shall nevertheless retain any right to receive notices and
information, and to approve or disapprove actions, waivers or amendments, to the
extent provided in any Security Document, and provided further, that the Junior
Lienholders shall nevertheless retain all rights under the 12.75% Senior Notes
and under the 12.75% Senior Secured Notes Indenture, including the right to
receive payments and to accelerate the obligations thereunder.
(c) For the avoidance of doubt, the Senior Lienholders and
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the Junior Lienholders agree that notwithstanding the fact that the Tunica
County First Deed of Trust, the Tunica County Assignment of First Deed of Trust,
the Tunica County Second Deed of Trust, the Tunica County Assignment of Second
Deed of Trust, the Tunica County First Preferred Ship Mortgage and the Tunica
County Second Ship Mortgage may all secure amounts payable under the RPG
Intercompany Note, the Tunica County First Deed of Trust, the Tunica County
Assignment of First Deed of Trust and the Tunica County First Preferred Ship
Mortgage shall secure, for the exclusive benefit of the Senior Lienholders,
amounts owing in respect of the RPG Intercompany Note, and the Tunica County
Second Deed of Trust, the Tunica County Assignment of Second Deed of Trust and
the Tunica County Second Ship Mortgage shall secure, for the exclusive benefit
of the Junior Lienholders, amounts owing in respect of the RPG Intercompany
Note.
SECTION 3. Possession of Collateral. The Senior Lienholders and the
Junior Lienholders designate the Agent to hold the HE Intercompany Note, the RPG
Intercompany Note, and any other negotiable instrument or other tangible
Collateral in which both the Senior Lienholders and the Junior Lienholders have
a security interest or which is pledged both to the Senior Lienholders and to
the Junior Lienholders. The Agent agrees to hold such Collateral on behalf of
the Senior Lienholders and the Junior Lienholders in accordance with this
Amended and Restated Intercreditor Agreement and any applicable Security
Document. Pursuant to the Amended and Restated Credit Facility Agreement, the
Majority Lenders (as defined in the Amended and Restated Credit Facility
Agreement) have the right from time to time to designate any other Senior
Secured Lender to hold Collateral on behalf of the Senior Lienholders. The
Junior Lienholders designate to hold any Collateral referred to in this section
3, any Senior Secured Lender so designated by the Senior Secured Lenders, and
each Senior Secured Lender agrees that if so designated, it shall hold such
Collateral on behalf of the Senior Lienholders and the Junior Lienholders in
accordance with this Amended and Restated Intercreditor Agreement and any
applicable Security Document.
SECTION 4. Notice of Events of Default. In the event that any Senior
Lienholder directly or indirectly gives to the Company, HE, RPG or any other
party obligated under any Security Document or directly or indirectly receives
from the Company, HE, RPG or any other party obligated under any Security
Document notice of an Event of Default (as defined in the Amended and Restated
Credit Facility Agreement), the Senior Lienholders shall cause a copy of such
notice to be delivered promptly to the Junior Lienholders. In the event that any
Junior Lienholder directly or indirectly gives to the Company, HE, RPG or any
other party obligated under any Security Document or directly or
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<PAGE> 12
indirectly receives from the Company, HE, RPG or any other party obligated under
any Security Document notice of an Event of Default (as defined in the 12.75%
Senior Secured Notes Indenture), the Junior Lienholders shall cause a copy of
such notice to be delivered promptly to the Senior Lienholders.
(a) Except as provided in section 5(b), following receipt of notice
of an Event of Default (as defined in the Amended and Restated Credit Facility
Agreement), the Junior Lienholders shall have the right, but not the obligation,
to cure such Event of Default, and the Senior Lienholders shall not exercise any
remedy under the Amended and Restated Credit Facility Agreement or the Security
Documents, until the expiration of the period specified in section 5(a)(i) or
section 5(a)(ii), to the extent applicable.
(i) If the Event of Default described in such notice can be
cured by the payment of money, the Junior Lienholders shall
have the right, but not the obligation, to cure such Event
of Default by the payment of money within fifteen (15) days
of the effective date of such notice.
(ii) If the Event of Default described in such notice cannot be
cured by the payment of money but can be cured by other
actions on the part of the Junior Lienholder, the Junior
Lienholder shall have the right, but not the obligation, to
cure such Event of Default within thirty (30) days of the
effective date of such notice; provided however, that in the
case of such an Event of Default which is susceptible to
cure but cannot be cured within thirty (30) days with the
exercise of reasonable diligence, so long as the Junior
Lienholders commence such cure within thirty (30) days and
thereafter diligently pursue such cure, the Junior
Lienholders shall have a total period of sixty (60) days
within which to cure such Event of Default.
(iii) If the Event of Default described in such notice is the
bankruptcy or insolvency of the Company or any Subsidiary,
or cannot be cured by the Junior Lienholders, either by the
payment of money or otherwise, then the Senior Lienholders
may proceed with any remedies available under the Amended
and Restated Credit Facility Agreement, the Security
Documents or applicable law, without allowing a cure period
for the Junior Lienholders.
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<PAGE> 13
(b) Notwithstanding the provisions of section 5(a), if the Senior
Lienholders determine in good faith that immediate action with respect to an
Event of Default is necessary to protect or preserve the value of any
Collateral, then the Senior Lienholders may immediately take such action as is
permitted by the Amended and Restated Credit Facility Agreement, the Security
Documents or applicable law, provided that
(i) they give the Junior Lienholders prior notice of such
action, and
(ii) if the Junior Lienholders thereafter cure such Event of
Default within the period otherwise allowable under section
5(a), the Senior Lienholders shall rescind actions
previously taken or take such further action as the Junior
Lienholders may reasonably request to restore the Junior
Lienholders and the Senior Lienholders to the positions they
would have been in had the Junior Lienholders been allowed
the cure period specified in section 5(a).
(c) With respect to any Event of Default, the Junior Lienholders
may, by written notice to the Senior Lienholders, waive the right to cure.
SECTION 6. Standstill Agreement.
(a) Notwithstanding any provision in the 12.75% Senior Secured Note
Indenture, any purchase agreement relating to the 12.75% Senior Notes or any
Security Document to the contrary, the Junior Lienholders agree that so long as
any portion of the Notes, the Letters of Credit, the Secured Hedging Obligations
or any other Obligations payable to the Senior Lienholders pursuant to the Loan
Documents is unpaid, the Junior Lienholders shall not exercise any remedy under
any Security Document unless an Event of Default (as defined in the Amended and
Restated Credit Facility Agreement) has occurred and has continued without being
cured for a period of one year, provided however, that the Junior Lienholders
shall nevertheless retain all rights under the 12.75% Senior Notes and under the
12.75% Senior Secured Notes Indenture, including the right to receive payments
and to accelerate the obligations thereunder.
(b) The one-year period referred to in section 6(a) shall commence
(1) when the cure period provided in section 5(a) expires, or (2) when the
Junior Lienholders give notice to the Senior Lienholders that they waive the
right to cure such default pursuant to section 5(c).
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(c) Nothing in this section 6 shall prevent the Junior Lienholders
from answering or joining any action brought by the Senior Lienholders for the
purpose of foreclosing upon, taking possession of, repossessing, or having a
receiver appointed with respect to any Collateral, so long as, except as
provided in this section 6, the Junior Lienholders do not seek foreclosure,
possession, repossession or the appointment of a receiver for Collateral other
than that which is the subject of the action by the Senior Lienholders.
SECTION 7. Transfer of Security Documents, Collateral and Excess
Proceeds.
(a) Upon payment in full of the Notes and all other Obligations
payable to the Senior Lienholders pursuant to the Loan Documents, the Senior
Lienholders shall promptly transfer to the Junior Lienholders, without recourse
and without representation or warranty, (i) all Collateral in the possession of
the Senior Lienholders in which the Junior Lienholders hold a security interest,
including without limitation the HE Intercompany Note, the RPG Intercompany Note
and any New Project Subsidiary Intercompany Senior Notes (to the extent that any
such note has not been fully paid), and (ii) all Security Documents in favor of
both the Senior Lienholders and the Junior Lienholders theretofore held by the
Senior Lienholders, including without limitation the Bossier City Mortgage (to
the extent that the HE Intercompany Note has not been fully paid), (iii) all
other instruments representing or evidencing the Collateral, together with
appropriate transfers or assignments in blank, and (iv) any proceeds of any
Collateral in excess of the amounts owing to the Senior Lienholders. In
addition, the Senior Lienholders shall promptly discharge or terminate all other
Security Documents not so transferred or assigned.
(b) In the event that any payment or amount which has been applied
to the Notes, the Letters of Credit, the Secured Hedging Obligations or any
other Obligations payable to the Senior Lienholders pursuant to the Loan
Documents is rescinded or must be returned on account of the insolvency of the
payor or otherwise so that the obligations under the Loan Documents are in
effect reinstated, then any transfer pursuant to section 7(a) shall be
rescinded, the Junior Lienholders shall forthwith return to the Senior
Lienholders any Security Documents, Collateral or proceeds transferred or
assigned to them pursuant to section 7(a), together with any proceeds or
collections in respect thereof, and all rights given to the Senior Lienholders
pursuant to the Security Documents and this Amended and Restated Intercreditor
Agreement shall again vest in the Senior Lienholders as though such payment or
application and such transfer or assignment had never been made.
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<PAGE> 15
SECTION 8. Debt Pari Passu. Nothing in this Amended and Restated
Intercreditor Agreement shall be deemed to subordinate in any way the rights of
payment that are due to the Junior Lienholders under the 12.75% Senior Notes or
the 12.75% Senior Secured Note Indenture to any rights of payment that are due
the Senior Lienholders under the Notes, the Letters of Credit, the Secured
Hedging Obligations or the Amended and Restated Credit Facility Agreement.
Except as provided in this Amended and Restated Intercreditor Agreement or the
Loan Documents with respect to lien priority and rights in respect of
Collateral, the 12.75% Senior Notes shall rank pari passu with the Notes, the
Letters of Credit and the Secured Hedging Obligations.
SECTION 9. Limitation on Subordination. Notwithstanding anything
contained in this Amended and Restated Intercreditor Agreement to the contrary,
the rights of the Junior Lienholders under the Security Documents are not
subject and subordinate to any modification, extension, renewal, increase or
replacement of the Loan Documents or (except as specifically provided in the
Loan Documents as of the date of this Amended and Restated Intercreditor
Agreement) the obligations secured thereunder as of the date of this Amended and
Restated Intercreditor Agreement.
SECTION 10. Notices. All notices under this Amended and Restated
Intercreditor Agreement shall be in writing (including by facsimile) and shall
be effective when received by the persons listed on Schedule A attached hereto
as persons entitled to receive notices on behalf of the Senior Lienholders or
the Junior Lienholders, as the case may be. The Senior Lienholders or the Junior
Lienholders may, by notice, deliver a superseding list of addressees. Time
periods which are specified in this Amended and Restated Intercreditor Agreement
as beginning upon the giving of notice shall begin when such notice becomes
effective.
SECTION 11. Severability. Any provision of this Amended and Restated
Intercreditor Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 12. Amendments, Waivers. No term or provision of this
Amended and Restated Intercreditor Agreement may be amended or waived orally,
but only by an instrument in writing signed by the party against whom
enforcement of the amendment or waiver is sought.
SECTION 13. Termination. This Amended and Restated
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Intercreditor Agreement shall terminate upon indefeasible payment in full of the
Notes, the Letters of Credit, the Secured Hedging Obligations and all other
Obligations payable to the Senior Lienholders pursuant to the Loan Documents,
and conveyance to the Junior Lienholders of the Security Documents and
Collateral required by section 7.
SECTION 14. Successors and Assigns; Transfer of Senior Obligations.
This Amended and Restated Intercreditor Agreement shall be binding upon, shall
inure to the benefit of, and shall be enforceable by the Senior Lienholders and
the Junior Lienholders, and their respective successors and assigns including
without limitation all holders of the Notes, the issuer of the Letter of Credit
and the Lender's party to Hedging Obligations and all holders of the 12.75%
Senior Notes.
SECTION 15. No Third Party Benefits. Nothing in this Amended and
Restated Intercreditor Agreement is intended to give the Company, the owner of
any Collateral or any other person not a party to this Amended and Restated
Intercreditor Agreement any right, remedy or claim under this Amended and
Restated Intercreditor Agreement or otherwise.
SECTION 16. Governing Law. This Amended and Restated Intercreditor
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York.
SECTION 17. Counterparts. This Amended and Restated Intercreditor
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall together constitute a single
agreement.
SECTION 18. NO JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW,
EACH PARTY TO THIS AMENDED AND RESTATED INTERCREDITOR AGREEMENT HEREBY
IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION RELATING TO THIS
AMENDED AND RESTATED INTERCREDITOR AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Amended
and Restated Intercreditor Agreement as of the day and year first above written.
CANADIAN IMPERIAL BANK OF COMMERCE,
as agent
By:
--------------------------------
Name: Paul J. Chakmak
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<PAGE> 17
Title: Managing Director
CIBC Oppenheimer Corp., AS AGENT
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U.S. TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
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<PAGE> 19
UNITED STATES TRUST COMPANY OF NEW
YORK, as Collateral Agent
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
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<PAGE> 20
Schedule A to
Amended and Restated Intercreditor Agreement
Notice Addresses
Senior Lienholders
1. Canadian Imperial Bank of Commerce,
as agent
425 Lexington Avenue
New York, New York 10017
Telephone: (212)
Facsimile: (212)
Junior Lienholders
1. U.S. Trust Company of California, N.A.
515 S. Flower Street
Los Angeles, California 90071-2291
Attention: Corporate Trust Department
Telephone:
Facsimile:
2. United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Telephone:
Facsimile:
<PAGE> 21
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions......................................................9
SECTION 2. Priority of Liens................................................9
SECTION 3. Possession of Collateral........................................10
SECTION 4. Notice of Events of Default.....................................11
SECTION 5. Junior Lienholders Right to cure................................11
SECTION 6. Standstill Agreement............................................12
SECTION 7. Transfer of Security Documents, Collateral
and Excess Proceeds.............................................13
SECTION 8. Debt Pari Passu.................................................14
SECTION 9. Limitation on Subordination.....................................14
SECTION 10. Notices ........................................................14
SECTION 11. Severability....................................................14
SECTION 12. Amendments, Waivers.............................................15
SECTION 13. Termination.....................................................15
SECTION 14. Successors and Assigns; Transfer of Senior
Obligations.....................................................15
SECTION 15. No Third Party Benefits.........................................15
SECTION 16. Governing Law...................................................15
SECTION 17. Counterparts....................................................15
SECTION 18. NO JURY TRIAL...................................................15
Schedule A: Notice Addresses
-i-
<PAGE> 1
EXHIBIT 21.1
HORSESHOE GAMING, L.L.C.
SUBSIDIARIES OF THE REGISTRANT
AS OF DECEMBER 31, 1997
SUBSIDIARY STATE OF INCORPORATION
Horseshoe GP, Inc. (1) Nevada
New Gaming Capital Partnership (2) Nevada
Horseshoe Entertainment L.P. Louisiana
Bossier City Land Corporation (3) Louisiana
Robinson Property Group, Limited Partnership Mississippi
Horseshoe Ventures (4) Nevada
Red Oak Insurance Company Ltd. (5) Barbados
(1) 100% owned by Horseshoe Gaming, L.L.C. and is the 1% General Partner of
both New Gaming Capital Partnership and Robinson Property Group Limited
Partnership.
(2) New Gaming Capital Partnership is the 89% General Partner and a 2.92%
Limited Partner of Horseshoe Entertainment L.P.
(3) Bossier City Land Corporation is 100% owned by Horseshoe Entertainment.
(4) Horseshoe Ventures is owned 50% by Horseshoe Gaming, L.L.C.
(5) Red Oak Insurance Company Ltd is owned 100% by Horseshoe Gaming, L.L.C.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 29,061
<SECURITIES> 19,649
<RECEIVABLES> 13,518<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 2,958
<CURRENT-ASSETS> 67,288
<PP&E> 427,246
<DEPRECIATION> 42,769
<TOTAL-ASSETS> 511,556
<CURRENT-LIABILITIES> 85,043
<BONDS> 313,275
0
0
<COMMON> 0
<OTHER-SE> 64,595
<TOTAL-LIABILITY-AND-EQUITY> 511,556
<SALES> 10,097<F2>
<TOTAL-REVENUES> 335,093
<CGS> 12,406
<TOTAL-COSTS> 195,677
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,792
<INCOME-PRETAX> 32,653
<INCOME-TAX> 0
<INCOME-CONTINUING> 32,653
<DISCONTINUED> 0
<EXTRAORDINARY> 5,243
<CHANGES> 0
<NET-INCOME> 27,410
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Notes and accounts receivable-trade are reported net of allowances for
doubtful accounts.
<F2>Net sales are reported net of promotional allowances applicable to tangible
items.
</FN>
</TABLE>
