<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-Q
|X| QUARTERLY REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1999
-------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 (I.R.S. Employer
of incorporation or organization) Identification No.)
4024 Industrial Road Las Vegas, Nevada 89103
- --------------------------------------------------------------------------------
(Address of principal executive office) (ZIP CODE)
(702) 650-0080
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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
----- -----
<PAGE> 2
HORSESHOE GAMING, L. L. C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
QUARTER ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
INDEX PAGE
- ----- ----
<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements:
Horseshoe Gaming, L. L. C. and Subsidiaries:
Consolidated Condensed Balance Sheets
at March 31, 1999 and December 31, 1998...................................... 3
Consolidated Condensed Statements of Operations
for the three months ended March 31, 1999 and 1998........................... 4
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1999 and 1998........................... 5
Notes to Consolidated Condensed Financial Statements.............................. 6
Robinson Property Group, L.P.:
Condensed Balance Sheets
at March 31, 1999 and December 31, 1998...................................... 8
Condensed Statements of Operations
for the three months ended March 31, 1999 and 1998........................... 9
Condensed Statements of Cash Flows
for the three months ended March 31, 1999 and 1998........................... 10
Notes to Condensed Financial Statements........................................... 11
New Gaming Capital Partnership and Subsidiary:
Consolidated Condensed Balance Sheets
at March 31, 1999 and December 31, 1998...................................... 12
Consolidated Condensed Statements of Operations
for the three months ended March 31, 1999 and 1998........................... 13
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1999 and 1998........................... 14
Notes to Consolidated Condensed Financial Statements.............................. 15
ITEM 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................... 16
PART II OTHER INFORMATION
ITEM 6 Exhibits and reports on Form 8-K............................................. 20
SIGNATURES ............................................................................. 24
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 47,437 $ 84,151
Accounts receivable, net 8,839 9,653
Inventories 2,437 3,548
Prepaid expenses and other 8,899 4,484
--------- ---------
Total current assets 67,612 101,836
--------- ---------
Property and Equipment:
Land 16,174 16,093
Buildings, boat, barge and improvements 340,791 333,071
Furniture, fixtures and equipment 85,731 83,360
Less: accumulated depreciation (69,305) (61,330)
--------- ---------
373,391 371,194
Construction in progress 33 4,113
--------- ---------
Net property and equipment 373,424 375,307
--------- ---------
Other Assets:
Goodwill, net 35,938 36,124
Assets held for resale 12,000 12,000
Other 37,016 35,181
--------- ---------
$ 525,990 $ 560,448
========= =========
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ -- $ 1,174
Accounts payable 7,683 8,252
Accrued expenses and other 45,896 40,599
--------- ---------
Total current liabilities 53,579 50,025
Long-term Debt, less current maturities 372,678 387,544
Minority Interest (2,253) (1,965)
Commitments and Contingencies
Redeemable Ownership Interests 54,941 53,693
Members' Equity 47,045 71,151
--------- ---------
$ 525,990 $ 560,448
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
3
<PAGE> 4
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
Revenues:
Casino $ 112,698 $ 106,840
Food and beverage 12,995 11,082
Hotel 8,762 8,283
Retail and other 3,135 2,091
--------- ---------
137,590 128,296
Promotional allowances (17,398) (14,390)
--------- ---------
Net revenues 120,192 113,906
--------- ---------
Expenses:
Casino 60,651 60,548
Food and beverage 4,403 4,179
Hotel 2,570 2,884
Retail and other 2,515 1,584
General and administrative 12,613 13,505
Development 64 181
Preopening -- 653
Depreciation and amortization 8,585 7,947
--------- ---------
Total expenses 91,401 91,481
--------- ---------
Operating Profit Before Corporate Expenses 28,791 22,425
Corporate expenses 2,213 3,114
--------- ---------
Operating Income 26,578 19,311
Other Income (Expense):
Interest expense (10,260) (9,729)
Interest income 572 477
Other, net (9) (110)
Minority interest in loss (income)
of subsidiaries (312) 24
--------- ---------
Net Income $ 16,569 $ 9,973
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
4
<PAGE> 5
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Cash provided by operating activities:
Net income $ 16,569 $ 9,973
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 8,585 7,947
Amortization of debt discount, deferred
finance charges and other 676 670
Provision for doubtful accounts 810 2,500
Minority interest in income (loss) of subsidiary 312 (24)
Increase in redeemable ownership interests 575 1,345
Net change in assets and liabilities 335 (16,965)
-------- --------
Net cash provided by operating activities 27,862 5,446
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (6,090) (25,448)
Proceeds from sale of property and equipment -- 194
Increase (decrease) in construction payables 763 (19,202)
Increase in other long-term assets (3,072) (2,684)
-------- --------
Net cash used in investing activities (8,399) (47,140)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt -- 45,000
Payments on long-term debt (16,175) (1,675)
Capital distributions (5,576) (4,383)
Warrant repurchase (34,426) --
-------- --------
Net cash used in financing activities (56,177) 38,942
-------- --------
Net change in cash and cash equivalents (36,714) (2,752)
Cash and cash equivalents, beginning of period 84,151 48,710
-------- --------
Cash and cash equivalents, end of period $ 47,437 $ 45,958
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
5
<PAGE> 6
HORSESHOE GAMING, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Introduction:
The accompanying unaudited Consolidated Condensed Financial Statements of
Horseshoe Gaming, L.L.C., a Delaware limited liability company (the "Company")
and its subsidiaries have been prepared in accordance with the instructions to
Form 10-Q, and therefore do not include all information and disclosures
necessary for complete financial statements in conformity with generally
accepted accounting principles. The consolidated condensed balance sheet at
December 31, 1998 was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.
The results for the periods indicated are unaudited, but reflect all adjustments
(consisting only of normal recurring adjustments) which management considers
necessary for a fair presentation of operating results. Results of operations
for interim periods are not necessarily indicative of a full year of operations.
2. Contingencies:
The Company and its subsidiaries, during the normal course of operating its
business, become engaged in various litigation and other legal disputes. In the
opinion of the Company's management, the ultimate disposition of such disputes
will not have a material impact on the Company's operations.
On September 2, 1998, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") to acquire the operating subsidiaries of Empress
Entertainment, Inc. ("Empress") for an estimated $609 million, including
assumption of a portion of Empress' existing debt of approximately $150 million.
Empress owns two riverboat gaming operations: one in Hammond, Indiana and one in
Joliet, Illinois. The Company intends to fund the acquisition through new
borrowings (see Subsequent Events below). The transactions contemplated by the
Merger Agreement are subject to the approval of the Mississippi Gaming
Commission, the Louisiana Gaming Control Board, the Illinois Gaming Board and
the Indiana Gaming Commission. There can be no assurance that the Company will
be successful in obtaining such approvals or consummating the HGHC Notes
Offering (as defined below) or other financing to complete the Empress merger.
In addition, the Merger Agreement, including the amendment dated March 25, 1999,
provides that each party has the right to terminate the agreement under certain
circumstances, which in some instances would allow Empress to retain a $10
million down payment made by the Company towards the purchase price as well as
receive other consideration from the Company not to exceed $3 million.
3. Ownership Transaction:
On January 13, 1999, the Company repurchased outstanding warrants held by a
third party which entitled such third party to purchase approximately 6.99%
ownership in the Company from its largest shareholder, Horseshoe Gaming, Inc.
("HGI"), for an exercise price of $510,000. Upon acquisition, the Company
exercised the warrants and retired the membership units acquired from HGI. The
total cost of the warrants, including fees, expenses and the exercise price paid
to HGI was approximately $34.4 million, which was recorded as a reduction in
members' equity.
4. Subsequent Events:
On April 15, 1999, Horseshoe Gaming Holding Corp. ("HGHC") was formed by the
filing of a Certificate of Incorporation with the Delaware Secretary of State.
Certain members of the Company intend to contribute their membership interests
to HGHC such that, following such contribution, HGHC would own over 90% of the
aggregate ownership interests in the Company. Prior to the Empress merger, HGHC
intends to take all necessary action such that it will own 100% of the Company.
6
<PAGE> 7
To finance the Empress merger, in April 1999, HGHC received a commitment for a
new $375 million senior credit facility and commenced an offer to sell $600
million of senior subordinated notes (the "HGHC Notes") in a private placement
(the "HGHC Notes Offering"). The proceeds from the HGHC Notes Offering and the
new credit facility would also be used to repay debt of the Company and pay
related fees and expenses. The HGHC Notes will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements.
On April 20, 1999, the Company commenced an offer to purchase all of its 12 3/4%
senior notes due in 2000 ("Senior Notes") and a solicitation of consents from
holders of Senior Notes to amend certain of the covenants and other provisions
in the indenture governing the Senior Notes and the related security documents.
As of March 31, 1999, $128.6 million of Senior Notes were outstanding.
On April 21, 1999, the Company exercised an option, subject to regulatory
approval, to purchase an 8.08% limited partnership interest in Horseshoe
Entertainment, L.P. (the remaining interest not held by New Gaming Capital
Partnership, L.P., a wholly owned subsidiary of the Company) for total
consideration of up to $30.7 million, which includes payments for a non-compete
covenant, consents and the release of claims. The consideration for the
repurchase consisted of cash, payables to the former limited partners, and
offsets against the negative capital account balances of the former limited
partners and notes receivable from the former limited partners.
7
<PAGE> 8
ROBINSON PROPERTY GROUP, L.P.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 19,916 $ 21,838
Accounts receivable, net 5,929 6,137
Inventories 1,632 1,714
Prepaid expenses and other 3,152 1,930
--------- ---------
Total current assets 30,629 31,619
--------- ---------
Property and Equipment:
Land 3,168 3,168
Buildings, barge and improvements 139,128 138,948
Furniture, fixtures and equipment 39,374 37,902
Less: accumulated depreciation (36,979) (33,260)
--------- ---------
Net property and equipment 144,691 146,758
--------- ---------
Other Assets:
Goodwill, net 18,421 18,637
Other 5,163 4,719
--------- ---------
$ 198,904 $ 201,733
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $ 2,633 $ 2,784
Due to affiliates 11,120 12,376
Accrued expenses and other 14,442 13,269
--------- ---------
Total current liabilities 28,195 28,429
Long-term Debt 49,400 65,400
Commitments and Contingencies
Partners' Capital 121,309 107,904
--------- ---------
$ 198,904 $ 201,733
========= =========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
8
<PAGE> 9
ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Casino $ 57,189 $ 53,319
Food and beverage 5,751 5,108
Hotel 3,295 2,977
Retail and other 1,586 1,136
-------- --------
67,821 62,540
Promotional allowances (8,334) (6,890)
-------- --------
Net revenues 59,487 55,650
-------- --------
Expenses:
Casino 30,044 28,616
Food and beverage 790 1,381
Hotel 797 884
Retail and other 1,548 1,102
General and administrative 6,133 5,378
Depreciation and amortization 3,993 3,644
-------- --------
Total expenses 43,305 41,005
-------- --------
Operating profit Before Corporate Expenses 16,182 14,645
Corporate expenses 1,106 1,557
-------- --------
Operating Income 15,076 13,088
Other Income (Expense):
Interest expense (1,743) (2,762)
Interest income 77 141
Other, net (5) (4)
-------- --------
Net Income $ 13,405 $ 10,463
======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
9
<PAGE> 10
ROBINSON PROPERTY GROUP, L.P.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1999 1998
-------- --------
<S> <C> <C>
Cash provided by operating activities:
Net income $ 13,405 $ 10,463
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,993 3,644
Provision for doubtful accounts 367 2,081
Amortization of debt discounts,
deferred finance charges and other 238 234
Net change in assets and liabilities (276) (5,872)
-------- --------
Net cash provided by operating activities 17,727 10,550
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (1,652) (5,480)
Decrease in construction payables -- (8,030)
Increase in other assets (715) (442)
-------- --------
Net cash used in investing activities (2,367) (13,952)
-------- --------
Cash flows from financing activities:
Capital distributions -- (5,000)
Changes in due to/from affiliates (1,282) 2,436
Payment on long-term debt (16,000) --
-------- --------
Net cash used in financing activities (17,282) (2,564)
-------- --------
Net change in cash and cash equivalents (1,922) (5,966)
Cash and cash equivalents, beginning of period 21,838 23,159
-------- --------
Cash and cash equivalents, end of period $ 19,916 $ 17,193
======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
10
<PAGE> 11
ROBINSON PROPERTY GROUP, L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Introduction:
The accompanying unaudited Condensed Financial Statements of Robinson Property
Group, L.P. (the "Partnership") have been prepared in accordance with the
instructions to Form 10-Q, and therefore do not include all information and
disclosures for complete financial statements in conformity with generally
accepted accounting principles. The condensed balance sheet at December 31, 1998
was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. The results
for the periods indicated are unaudited, but reflect all adjustments (consisting
only of normal recurring adjustments) which management considers necessary for a
fair presentation of operating results. Results of operations for interim
periods are not necessarily indicative of a full year of operations.
2. Contingencies:
The Partnership, during the normal course of operating its business, becomes
engaged in various litigation and other legal disputes. In the opinion of the
Partnership's management, the ultimate disposition of such disputes will not
have a material impact on the Partnership's operations.
On September 2, 1998, Horseshoe Gaming, L.L.C. (the "Company"), the parent of
the general partner to the Partnership, entered into an Agreement and Plan of
Merger (the "Merger Agreement") to acquire the operating subsidiaries of Empress
Entertainment, Inc. ("Empress") for an estimated $609 million, including
assumption of a portion of Empress' existing debt of approximately $150 million.
Empress owns two riverboat gaming operations: one in Hammond, Indiana and one in
Joliet, Illinois. The Company intends to fund the acquisition through new
borrowings. The transactions contemplated by the Merger Agreement are subject to
the approval of the Mississippi Gaming Commission, the Louisiana Gaming
Commission, the Illinois Gaming Board and the Indiana Gaming Commission. There
can be no assurance that the Company will be successful in obtaining such
approvals or consummating the HGHC Notes Offering or other financing to complete
the Empress merger. In addition, the Merger Agreement, including the amendment
dated March 25, 1999, provides that each party has the right to terminate the
agreement under certain circumstances, which in some instances would allow
Empress to retain a $10 million down payment made by the Company towards the
purchase price as well as receive other consideration from the Company not to
exceed $3 million.
11
<PAGE> 12
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 19,694 $ 17,609
Accounts receivable, net 2,903 3,509
Inventories 805 1,834
Prepaid expenses and other 4,121 2,456
--------- ---------
Total current assets 27,523 25,408
--------- ---------
Property and Equipment:
Land 13,005 12,925
Buildings, boat and improvements 201,663 194,123
Furniture, fixtures and equipment 45,456 44,702
Less: accumulated depreciation (31,899) (27,696)
--------- ---------
228,225 224,054
Construction in progress 33 4,113
--------- ---------
Net property and equipment 228,258 228,167
--------- ---------
Other Assets:
Goodwill, net 17,516 17,487
Assets held for resale 12,000 12,000
Other 13,760 13,970
--------- ---------
$ 299,057 $ 297,032
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Current maturities of long-term debt $ 17,793 $ 18,793
Accounts payable 5,014 5,426
Due to affiliates 18,151 20,417
Accrued expenses and other 22,566 19,683
--------- ---------
Total current liabilities 63,524 64,319
Long-term Debt, less current maturities 214,702 214,702
Minority Interest (2,253) (1,964)
Commitments and Contingencies
Partners' Capital 23,084 19,975
--------- ---------
$ 299,057 $ 297,032
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
12
<PAGE> 13
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Casino $ 55,509 $ 53,521
Food and beverage 7,244 5,974
Hotel 5,467 5,306
Retail and other 1,549 955
-------- --------
69,769 65,756
Promotional allowances (9,064) (7,500)
-------- --------
Net revenues 60,705 58,256
-------- --------
Expenses:
Casino 30,607 31,932
Food and beverage 3,613 2,798
Hotel 1,773 2,000
Retail and other 967 482
General and administrative 7,646 8,127
Preopening -- 653
Depreciation and amortization 4,587 4,299
-------- --------
Total expenses 49,193 50,291
-------- --------
Operating Profit Before Corporate Expenses 11,512 7,965
Corporate expenses 1,106 1,557
-------- --------
Operating Income 10,406 6,408
Other Income (Expense):
Interest expense (7,205) (7,209)
Interest income 224 207
Other, net (5) (4)
Minority interest in income of subsidiary (312) 24
-------- --------
Net Income (Loss) $ 3,108 $ (574)
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
13
<PAGE> 14
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
Cash provided by operating activities:
Net income (loss) $ 3,108 $ (574)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 4,587 4,299
Provision for doubtful accounts 443 419
Amortization of debt discounts,
deferred finance costs and other 530 542
Minority interest in income (loss) of subsidiary 312 (24)
Net change in assets and liabilities 902 2,313
-------- --------
Net cash provided by operating activities 9,882 6,975
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (4,293) (19,965)
Proceeds from sale of property and equipment -- 194
Increase (decrease) in construction payables 763 (11,172)
Increase in other assets (975) (3,614)
-------- --------
Net cash used in investing activities (4,505) (34,557)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt -- 36,533
Payments on long-term debt (1,000) (8,425)
Increase (decrease) in due to affiliates (2,292) 5,017
-------- --------
Net cash provided by financing activities (3,292) 33,125
-------- --------
Net change in cash and cash equivalents 2,085 5,543
Cash and cash equivalents, beginning of period 17,609 16,143
-------- --------
Cash and cash equivalents, end of period $ 19,694 $ 21,686
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
14
<PAGE> 15
NEW GAMING CAPITAL PARTNERSHIP AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Introduction:
The accompanying unaudited Consolidated Condensed Financial Statements of New
Gaming Capital Partnership (the "Partnership") and its Subsidiary, have been
prepared in accordance with the instructions to Form 10-Q, and therefore do not
include all information and disclosures necessary for complete financial
statements in conformity with generally accepted accounting principles. The
consolidated condensed balance sheet at December 31, 1998 was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principles. The results for the periods indicated
are unaudited, but reflect all adjustments (consisting only of normal recurring
adjustments) which management considers necessary for a fair presentation of
operating results. Results of operations for interim periods are not necessarily
indicative of a full year of operations.
2. Contingencies:
The Partnership and its subsidiary, during the normal course of operating its
business, become engaged in various litigation and other legal disputes. In the
opinion of the Partnership's management, the ultimate disposition of such
disputes will not have a material impact on the Partnership's operations.
On September 2, 1998, Horseshoe Gaming, L.L.C. (the "Company"), the parent of
the general partner to the Partnership, entered into an Agreement and Plan of
Merger (the "Merger Agreement") to acquire the operating subsidiaries of Empress
Entertainment, Inc. ("Empress") for an estimated $609 million, including
assumption of a portion of Empress' existing debt of approximately $150 million.
Empress owns two riverboat gaming operations: one in Hammond, Indiana and one in
Joliet, Illinois. The Company intends to fund the acquisition through new
borrowings. The transactions contemplated by the Merger Agreement are subject to
the approval of the Mississippi Gaming Commission, the Louisiana Gaming
Commission, the Illinois Gaming Board and the Indiana Gaming Commission. There
can be no assurance that the Company will be successful in obtaining such
approvals or consummating the HGHC Notes Offering or other financing to complete
the Empress merger. In addition, the Merger Agreement, including the amendment
dated March 25, 1999, provides that each party has the right to terminate the
agreement under certain circumstances, which in some instances would allow
Empress to retain a $10 million down payment made by the Company towards the
purchase price as well as receive other consideration from the Company not to
exceed $3 million.
15
<PAGE> 16
PART I FINANCIAL INFORMATION
ITEM 2 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 consolidated
financial condition and results of operations of Horseshoe Gaming, L.L.C. (the
"Company") and its subsidiaries. The discussion should be read in conjunction
with the Company's Consolidated Condensed Financial Statements and notes
thereto.
This Quarterly Report on Form 10-Q contains certain "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
which generally can be identified by the use of such terms such as "may,"
"expect," "anticipate," "believe," "continue," or similar variations or the
negative thereof. These forward looking statements are subject to certain risks
and uncertainties, such as risks associated with substantial indebtedness, debt
service and liquidity; risks of competition in the Company's existing and future
markets; difficulties in completing the integration with Empress, if the Empress
merger is consummated; failure to obtain or retain licenses or regulatory
approvals; changes in gaming laws and regulations; and other factors discussed
in the Company's Annual Report on Form 10-K for the year ended December 31,
1998, which could cause actual results to differ materially.
RESULTS OF OPERATIONS
Horseshoe Tunica competes with eight other casinos in the competitive Tunica
County, Mississippi market. In December 1997, Horseshoe Tunica completed a
significant expansion of its facilities. Several of the other existing Tunica
County casinos have also substantially expanded or are in the process of
expanding their gaming facilities, including constructing additional hotel
rooms. While the Company expects that its competitors' expansions will affect
Horseshoe Tunica's revenues and operating income in the near term, management
believes these expansions also will increase the size and scope of the overall
Tunica County gaming market, mitigating over the long term, at least in part,
the potential adverse impact on operating levels. The impact on operating
margins from the overall increase in supply to this market is uncertain.
Horseshoe Bossier City is one of four riverboat casinos currently operating in
the Bossier City/Shreveport, Louisiana market. The Louisiana Gaming Control
Board recently granted approval 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, which is expected to open
for business in 2000. The Louisiana legislature has also passed a law
authorizing slot machines at the horse racing track in Shreveport, although
when, and if, slot operations will actually begin at the track is uncertain. In
January 1998, Horseshoe Bossier City completed a major expansion project. While
new competition may adversely affect Horseshoe Bossier City's revenues and
operating income in the near term, management believes the expansion of
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 market, mitigating over the long
term, at least in part, the potential adverse impact on operating levels. The
impact on operating margins from the overall increase in supply to this market
is uncertain.
Three months ended March 31, 1999 and 1998
Net revenues for the quarter ended March 31, 1999 were $120.2 million as
compared to $113.9 million for the quarter ended March 31, 1998. EBITDA (as
defined below) for the quarter ended March 31, 1999 was $35.7 million compared
to $29.3 million for the quarter ended March 31, 1998. The EBITDA margin
increased in the quarter ended March 31, 1999 to 29.7% of net revenues from
25.7% for the comparable 1998 period. The increase in the EBITDA margin is
primarily due to a full quarter of operations in the newly expanded facility at
the Horseshoe Bossier City during 1999, whereas the 1998 period included only
two months of operations in the newly expanded facility at the Horseshoe Bossier
City.
EBITDA is calculated by adding to operating income: depreciation and
amortization, preopening expenses, asset write-downs and deferred compensation.
The Company considers EBITDA to be a widely accepted financial indicator of a
company's ability to service debt, fund capital expenditures and expand its
business; however,
16
<PAGE> 17
EBITDA is not calculated in the same way by all companies and is neither a
measure required, nor represents cash flow from operations as defined, by
generally accepted accounting principles. EBITDA should not be considered by an
investor as an alternative to net income, as an indicator of operating
performance or as an alternative to cash flow as a measure of liquidity. The
calculation of EBITDA for purposes of the financial information presented herein
is calculated differently than for purposes of the covenants under the Company's
indentures.
Horseshoe Tunica
Horseshoe Tunica contributed net revenues and operating profit before corporate
expenses of $59.5 million and $16.2 million, respectively, for the quarter ended
March 31, 1999 and $55.7 million and $14.6 million, respectively, for the
quarter ended March 31, 1998. The increase in net revenues and operating profit
before corporate expenses is primarily due to an increase in slot volume.
Horseshoe Tunica's net revenues include casino revenues and non-casino revenues
of $57.2 million and $2.3 million, respectively, for the quarter ended March 31,
1999 and $53.3 million and $2.3 million, respectively, for the quarter ended
March 31, 1998. Casino revenue per day increased approximately 7.3% in the
quarter ended March 31, 1999 to $635,000 from $592,000 for the comparable 1998
period.
The increase of $1.4 million in promotional allowances for the quarter ended
March 31, 1999 compared to the prior year period is primarily due to an increase
in volume of complimentary food, beverage and hotel rooms.
Horseshoe Tunica's EBITDA before corporate expenses for the quarter ended March
31, 1999 was $20.2 million compared to $18.3 million for the quarter ended March
31, 1998. The EBITDA margin for the quarter ended March 31, 1999 was 33.9%
compared with 32.9% for the quarter ended March 31, 1998.
Horseshoe Bossier City
Horseshoe Bossier City contributed net revenues and operating profit before
corporate expenses of $60.7 million and $11.5 million, respectively, for the
quarter ended March 31, 1999 and $58.3 million and $8.0 million, respectively,
for the quarter ended March 31, 1998. The increase in net revenues and operating
profit before corporate expenses is primarily due to a full quarter of
operations in the newly expanded facility during 1999, whereas the 1998 period
included only two months of operations in the newly expanded facility. The 1998
period also includes additional promotional expenses related to the opening of
the newly expanded facility as well as increases in overall property operating
costs from the expanded facility.
Horseshoe Bossier City's net revenues include casino revenues and non-casino
revenues of $55.5 million and $5.2 million, respectively, for the quarter ended
March 31, 1999 and $53.5 million and $4.7 million, respectively, for the quarter
ended March 31, 1998. The increase in net revenues was primarily due to an
increase in slot volume that was partially offset by a reduction in win
percentage in table games. Casino revenue per day increased approximately 3.7%
in the quarter ended March 31, 1999 to $617,000 from $595,000 for the comparable
1998 period.
The increase of $1.6 million in promotional allowances for the quarter ended
March 31, 1999 compared to the prior year period is primarily due to an increase
in volume of food and beverage provided to customers and a higher volume of
complimentary hotel rooms which can be primarily attributed to a full quarter of
operations in the newly expanded facility during 1999.
Horseshoe Bossier City's EBITDA before corporate expenses and preopening expense
for the quarter ended March 31, 1999 was $16.1 million compared to $12.9 million
for the quarter ended March 31, 1998. The EBITDA margin for the quarter ended
March 31, 1999 was 26.5% of net revenues, compared with 22.1% for the quarter
ended March 31, 1998.
Other Factors Affecting Earnings
Corporate expenses decreased approximately $.9 million during 1999 primarily
caused by the reduction in the amount of non-cash deferred compensation expense.
LIQUIDITY AND CAPITAL RESOURCES
17
<PAGE> 18
Cash and cash equivalents totaled $47.4 million as of March 31, 1999. Included
in accrued expenses at March 31, 1999 is a tax distribution payable to the
owners of the Company amounting to approximately $5.6 million, which was paid in
April 1999. Management believes that the Company's cash and cash equivalents on
hand, cash from operations and available borrowing capacity will be adequate to
meet the Company's debt service obligations and maintenance capital expenditure
commitments for the next twelve months.
EMPRESS MERGER
On September 2, 1998, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") to acquire the operating subsidiaries of Empress
Entertainment, Inc. ("Empress") for an estimated $609 million, including
assumption of a portion of Empress' existing debt of approximately $150 million.
Empress owns two riverboat gaming operations: one in Hammond, Indiana and one in
Joliet, Illinois. The Company intends to fund the acquisition through new
borrowings, including a new credit facility with available borrowings of
approximately $375 million for which the Company has received a commitment and
the issuance and sale of $600 million principal amount of the HGHC Notes
referred to below. The transactions contemplated by the Merger Agreement are
subject to the approval of the Mississippi Gaming Commission, the Louisiana
Gaming Control Board, the Illinois Gaming Board and the Indiana Gaming
Commission. There can be no assurance that the Company will be successful in
obtaining such approvals or consummating the HGHC Notes Offering (as defined
below) or other financing to complete the Empress merger. In addition, the
Merger Agreement, including the amendment dated March 25, 1999, provides that
each party has the right to terminate the agreement under certain circumstances,
which in some instances would allow Empress to retain a $10 million down payment
made by the Company towards the purchase price as well as receive other
consideration from the Company not to exceed $3 million.
RECENT DEVELOPMENTS
On April 15, 1999, Horseshoe Gaming Holding Corp. ("HGHC") was formed by the
filing of a Certificate of Incorporation with the Delaware Secretary of State.
Certain members of the Company intend to contribute their membership interests
to HGHC such that, following such contribution, HGHC would own over 90% of the
aggregate ownership interests in the Company. Prior to the Empress merger, HGHC
intends to take all necessary action such that it will own 100% of the Company.
To finance the Empress merger, in April 1999, HGHC received a commitment for a
new $375 million senior credit facility and commenced an offer to sell $600
million of its senior subordinated notes (the "HGHC Notes") in a private
placement (the "HGHC Notes Offering"). The proceeds from the HGHC Notes Offering
and the new credit facility would also be used to repay debt of the Company and
pay related fees and expenses. The HGHC Notes will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements.
On April 20, 1999, the Company commenced an offer to purchase all of its 12 3/4%
senior notes due 2000 ("Senior Notes") and a solicitation of consents from
holders of Senior Notes to amend certain of the covenants and other provisions
in the indenture governing the Senior Notes and the related security documents.
As of March 31, 1999, $128.6 million of Senior Notes were outstanding.
On April 21, 1999, the Company exercised an option, subject to regulatory
approval, to purchase an 8.08% limited partnership interest in Horseshoe
Entertainment, L.P. (the remaining interest not held by New Gaming Capital
Partnership, L.P., a wholly owned subsidiary of the Company) for total
consideration of up to $30.7 million, which includes payments for a non-compete
covenant, consents and the release of claims. The consideration for the
repurchase consisted of cash, payables to the former limited partners, and
offsets against the negative capital account balances of the former limited
partners and notes receivable from the former limited partners.
OTHER ITEMS
On January 13, 1999, the Company repurchased outstanding warrants held by a
third party which entitled such third party to purchase approximately 6.99%
ownership in the Company from its largest shareholder, HGI, for an exercise
price of $510,000. Upon acquisition, the Company exercised the warrants and
retired the membership units acquired from HGI. The total cost of the warrants,
including fees, expense and the exercise price paid to HGI, was approximately
$34.4 million, which was recorded as a reduction in members' equity in the first
quarter of 1999.
18
<PAGE> 19
The Company has employment agreements with certain officers which contain
put/call options whereby, upon termination of employment, the Company must, at
the election of such officer, and may, at the Company's election, purchase such
officer's ownership interest in the Company for an amount equal to the fair
market value of such interest as determined by an independent appraisal or an
arbitration process. As of March 31, 1999, the aggregate fair market value of
all interests subject to such put/call options, representing approximately 9.3%
ownership of the Company, was $54.9 million based on an appraisal obtained by
the Company in November 1997. Such agreements provide that the purchase price
for the employee's ownership interest shall be paid in cash, either upon
transfer of the interest to the Company or in installments over a three-year or
five-year period, depending on the aggregate purchase price. Four former
officers of the Company holding ownership interests totaling approximately 6.1%
have exercised their put/call option; one employee, holding approximately 0.5%
has agreed not to exercise his put/call option until January 1, 2001; and one
additional former employee, holding ownership interest totaling approximately
0.7%, has a put/call option that has not yet been exercised by the Company or
such former employee. The Company is currently proceeding under the appraisal
process provided in the respective employment agreements with the four former
officers who have exercised their put option, and have not yet reached agreement
as to the value of their interests. The Company expects to fund such repurchase
obligations through working capital or additional borrowings.
The Company has a 1997 Unit Option Plan under which it may grant options in an
aggregate of up to 631,225 Units in the Company to officers, key employees and
consultants. The Company has granted to four employees Options to purchase
631,225 Units pursuant to the plan through Unit Option Agreements which contain
a put/call provision under the same terms as described above for the employment
put/calls. One former employee that has a Unit Option Agreement with the Company
has elected not to renew his employment agreement and has exercised his put.
During the first quarter of 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. There was no impact of such adoption on the Company's
consolidated financial statements, as total comprehensive income is the same as
net income for all periods presented.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a major system
failure or miscalculations. If the systems (gaming or non-gaming) do not
function, or fail to function properly as a result of the century change, the
Company would have to operate under alternative procedures (some manual) until a
proper resolution of the failure can be achieved. The Company has not completed
the assessment of the Year 2000 issues, but has initiated a company-wide program
to identify and address issues associated with the ability of the hardware and
software to properly recognize the Year 2000 to avoid interruption of operations
as a result of the century change on January 1, 2000. The Company has divided
the Year 2000 compliance program into three phases. As a part of the first phase
of the Year 2000 compliance program, the Company has conducted an internal
review of its computer systems to identify the systems that could be affected by
the Year 2000 problem, including both information technology systems (such as
software that processes financial and other information) and non-information
technology systems (such as fire protection and environmental control).
The Company is in the process of completing the second phase of the Year 2000
compliance program, which involves (1) the implementation of the existing
remediation plan to resolve the internal Year 2000 issues, and (2) the
identification of any potential year 2000 issues with its significant vendors
and suppliers. Material vendors and suppliers were sent questionnaires so that
their internal compliance could be outlined to the Company in a uniform and
consistent manner. The secondary review of these vendors by a committee is being
performed, and the more significant vendors will be extensively audited or be
required to provide more extensive evidence of internal compliance. The second
phase of the compliance program is expected to be completed by June 1, 1999.
The Company will soon commence with the third and final phase of the Year 2000
compliance program which involves the (1) extensive testing of all systems for
any remaining Year 2000 concerns, and (2) the extensive construction and review
of contingency plans by an internal Year 2000 task force comprised of both key
corporate and property executives and personnel. This task force will consider
every possible scenario of non-compliance, both internally and externally, and
ensure an alternate procedure (either manual or systematic) exists for the
contingency. This phase is expected to be completed by September 30, 1999.
19
<PAGE> 20
Two of the major internal hardware and software systems (financial accounting
software system and human resource system) utilized by the Company have been
identified to be not Year 2000 compliant. These systems will be required to be
upgraded to a current platform that is Year 2000 compliant. The Company is also
undertaking the installation of a Year 2000 compliant slot accounting software
product in Horseshoe Bossier City to replace the current system that is not Year
2000 compliant. The majority of the remaining internal hardware and software
systems are in the process of being converted to Year 2000 compliant equipment.
The Company presently believes that, with modifications to existing software and
converting to new software, the Year 2000 issue will not pose significant
operational problems for the internal computer systems as so modified and
converted. However, if such modifications and conversions are not completed on a
timely basis, the Year 2000 problem may have a material adverse impact on the
Company's financial condition and results of operations. In addition, in the
event that any significant suppliers and other parties with which the Company
has a material relationship do not successfully and timely achieve Year 2000
compliance, the Company's business or operations could be adversely affected.
As of April 20, 1999, the Company had spent approximately $376,000, and
estimates additional costs of approximately $300,000, in connection with the
Year 2000 compliance program. The Company plans to fund expenditures associated
with Year 2000 compliance from working capital.
PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1* Certificate of Formation of Horseshoe Gaming, L.L.C.
3.2* Articles of Incorporation of Horseshoe Gaming, Inc. (formerly New
Gaming Capital Corporation), as amended to date.
3.3* Bylaws of Horseshoe Gaming, Inc. (formerly New Gaming Capital
Corporation).
3.4* Certificate of Limited Partnership of Robinson Property Group Limited
Partnership, as amended to date.
3.5* Articles of Incorporation of Horseshoe GP, Inc., as amended to date.
3.6* Bylaws of Horseshoe GP, Inc.
4.1* Second Amended and Restated Limited Partnership Agreement of Robinson
Property Group Limited Partnership, as amended to date.
4.2* 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.
4.3* 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.
4.4* Bossier City Security Agreement and Assignment thereof.
4.5* 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.
4.6* 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.
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.7* Tunica County Security Agreement and Assignment thereof.
4.8* Intercompany Senior Secured Note due September 30, 2000, executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.9* Intercompany Senior Secured Note due September 30, 2000, executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.10* Form of Senior Note of Horseshoe Gaming, L.L.C. 12.75% Senior Notes
due 2000.
4.11* 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.
4.12* 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.
4.13* 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.
4.14* 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.
4.15* 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.
4.16* Bossier City Second Security Agreement and Assignment thereof.
4.17* 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.
4.18* 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.
4.19* Tunica County Second Security Agreement and Assignment thereof.
4.20** Limited Partnership Agreement of Horseshoe Entertainment, a Louisiana
limited partnership, dated April 20th, 1993.
4.21** Second and Amended and Restated Limited Partnership Agreement of New
Gaming Capital Partnership, a Nevada limited partnership, dated as of
October 1, 1995.
4.22** Limited Liability Company Agreement of Horseshoe Ventures, L.L.C., a
Delaware limited liability company, dated as of October 1, 1995.
4.23** Limited Liability Company Agreement of Horseshoe Gaming, L.L.C., as
amended to date.
4.24*** 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.
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.25+ Intercompany Senior Secured Note due September 30, 2000 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.26+ Intercompany Senior Secured Note due September 30, 2000 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.27 ++ 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
4.28++ Form of 9-3/8% Senior Subordinated Note due 2007 of Horseshoe Gaming,
L.L.C.
4.29++ 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.
4.30++ 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.
4.31++ Intercompany Senior Secured Note due June 15, 2007 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.32++ Intercompany Senior Secured Note due June 15, 2007 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.33+++ Intercompany Senior Secured Note due June 15, 2000 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.34+++ Intercompany Senior Secured Note due June 15, 2000 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.35+++ 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.
4.36+++ Form of Revolving Note between Horseshoe Gaming, L.L.C. and Lender
pursuant to the Amended and Restated Credit Facility Agreement.
4.37+++ 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
4.38+++ Security Agreement made as of November 12, 1997 by the Company in
favor of Canadian Imperial Bank of Commerce (the "Bank").
4.39+++ Guarantee and Security Agreement made by Horseshoe Gaming, Inc. as of
November 12, 1997 in favor of the Bank.
4.40+++ Guarantee and Security Agreement made by Horseshoe GP, Inc. as of
November 12, 1997 in favor of the Bank.
4.41+++ Amended and Restated Guarantee and Security Agreement made by Robinson
Property Group LP as of November 12, 1997 in favor of the Bank.
4.42+++ Guarantee and Security Agreement made by New Gaming Capital
Partnership as of November 12, 1997 in favor of the Bank.
4.43+++ Guarantee and Security Agreement made by Horseshoe Ventures as of
November 12, 1997 in favor of the Bank.
4.44+++ Amended and Restated Note Assignment made by the Company as of
November 12, 1997 in favor of the Bank 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.
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.45+++ Amended and Restated Pledge Agreement of the Company as of November
12, 1997 in favor of the Bank.
4.46+++ Amended and Restated Pledge Agreement of JBB Gaming Investments as of
November 12, 1997 in favor of the Bank.
4.47+++ 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.
10.30# Dealer Manager Agreement dated as of April 20, 1999 by and between
Horseshoe Gaming, L.L.C. and Donaldson, Lufkin and Jenrette Securities
Corporation.
10.31# Agreement dated as of April 21, 1999 by and among Horseshoe Gaming,
L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
Gaming Capital Partnership; Jack B. Binion; The Robin Group, Inc. and
August Robin.
10.32# Agreement dated as of April 21, 1999 by and among Horseshoe Gaming,
L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
Gaming Capital Partnership; Jack B. Binion; Wendell Piper; Cassandra
Piper; and Robert E. Piper, Jr.
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 Form 10-Q for the Quarter Ended June 30, 1996, filed
on August 13, 1996.
+ 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 Form 10-K for the Year Ended December 31, 1997,
filed on March 30, 1998.
# Filed herewith.
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements 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.
HORSESHOE GAMING, L.L.C.
a Delaware limited liability company
By: Horseshoe Gaming, Inc.,
a Nevada corporation
Its: Manager
Date: April 30, 1999 By: /s/ Kirk Saylor
-------------------------------------
Chief Financial Officer and Treasurer
of Horseshoe Gaming, Inc.
24
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1* Certificate of Formation of Horseshoe Gaming, L.L.C.
3.2* Articles of Incorporation of Horseshoe Gaming, Inc. (formerly New
Gaming Capital Corporation), as amended to date.
3.3* Bylaws of Horseshoe Gaming, Inc. (formerly New Gaming Capital
Corporation).
3.4* Certificate of Limited Partnership of Robinson Property Group Limited
Partnership, as amended to date.
3.5* Articles of Incorporation of Horseshoe GP, Inc., as amended to date.
3.6* Bylaws of Horseshoe GP, Inc.
4.1* Second Amended and Restated Limited Partnership Agreement of Robinson
Property Group Limited Partnership, as amended to date.
4.2* 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.
4.3* 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.
4.4* Bossier City Security Agreement and Assignment thereof.
4.5* 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.
4.6* 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.
4.7* Tunica County Security Agreement and Assignment thereof.
4.8* Intercompany Senior Secured Note due September 30, 2000, executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.9* Intercompany Senior Secured Note due September 30, 2000, executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.10* Form of Senior Note of Horseshoe Gaming, L.L.C. 12.75% Senior Notes
due 2000.
4.11* 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.
4.12* 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.
4.13* 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.
4.14* 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
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
12.75% Senior Notes due September 30, 2000 issued by Horseshoe Gaming,
L.L.C.
4.15* 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.
4.16* Bossier City Second Security Agreement and Assignment thereof.
4.17* 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.
4.18* 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.
4.19* Tunica County Second Security Agreement and Assignment thereof.
4.20** Limited Partnership Agreement of Horseshoe Entertainment, a Louisiana
limited partnership, dated April 20th, 1993.
4.21** Second and Amended and Restated Limited Partnership Agreement of New
Gaming Capital Partnership, a Nevada limited partnership, dated as of
October 1, 1995.
4.22** Limited Liability Company Agreement of Horseshoe Ventures, L.L.C., a
Delaware limited liability company, dated as of October 1, 1995.
4.23** Limited Liability Company Agreement of Horseshoe Gaming, L.L.C., as
amended to date.
4.24*** 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.
4.25+ Intercompany Senior Secured Note due September 30, 2000 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.26+ Intercompany Senior Secured Note due September 30, 2000 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.27++ 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
4.28++ Form of 9-3/8% Senior Subordinated Note due 2007 of Horseshoe Gaming,
L.L.C.
4.29++ 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.
4.30++ 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.
4.31++ Intercompany Senior Secured Note due June 15, 2007 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.32++ Intercompany Senior Secured Note due June 15, 2007 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.33+++ Intercompany Senior Secured Note due June 15, 2000 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.34+++ Intercompany Senior Secured Note due June 15, 2000 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.35+++ 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.
4.36+++ Form of Revolving Note between Horseshoe Gaming, L.L.C. and Lender
pursuant to the Amended and Restated Credit Facility Agreement.
4.37+++ 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
4.38+++ Security Agreement made as of November 12, 1997 by the Company in
favor of Canadian Imperial Bank of Commerce (the "Bank").
4.39 +++ Guarantee and Security Agreement made by Horseshoe Gaming, Inc. as
of November 12, 1997 in favor of the Bank.
4.40+++ Guarantee and Security Agreement made by Horseshoe GP, Inc. as of
November 12, 1997 in favor of the Bank.
4.41+++ Amended and Restated Guarantee and Security Agreement made by Robinson
Property Group LP as of November 12, 1997 in favor of the Bank.
4.42+++ Guarantee and Security Agreement made by New Gaming Capital
Partnership as of November 12, 1997 in favor of the Bank.
4.43+++ Guarantee and Security Agreement made by Horseshoe Ventures as of
November 12, 1997 in favor of the Bank.
4.44+++ Amended and Restated Note Assignment made by the Company as of
November 12, 1997 in favor of the Bank 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.
4.45+++ Amended and Restated Pledge Agreement of the Company as of November
12, 1997 in favor of the Bank.
4.46+++ Amended and Restated Pledge Agreement of JBB Gaming Investments as of
November 12, 1997 in favor of the Bank.
4.47+++ 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.
10.30# Dealer Manager Agreement dated as of April 20, 1999 by and between
Horseshoe Gaming, L.L.C. and Donaldson, Lufkin and Jenrette Securities
Corporation.
10.31# Agreement dated as of April 21, 1999 by and among Horseshoe Gaming,
L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
Gaming Capital Partnership; Jack B. Binion; The Robin Group, Inc. and
August Robin.
10.32# Agreement dated as of April 21, 1999 by and among Horseshoe Gaming,
L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP, and New
Gaming Capital Partnership; Jack B. Binion; Wendell Piper; Cassandra
Piper; and Robert E. Piper, Jr.
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 Form 10-Q for the Quarter Ended June 30, 1996, filed
on August 13, 1996.
+ 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 Form 10-K for the Year Ended December 31, 1997,
filed on March 30, 1998.
# Filed herewith.
<PAGE> 1
Exhibit 10.30
================================================================================
HORSESHOE GAMING, L.L.C.
AND
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
AS DEALER MANAGER AND FINANCIAL ADVISOR
----------------
DEALER MANAGER AGREEMENT
----------------
================================================================================
<PAGE> 2
Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 2
DEALER MANAGER AGREEMENT
April 20, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
This Dealer Manager Agreement (this "Agreement") is entered into as of
April 20, 1999 by and between Horseshoe Gaming, L.L.C., a Delaware limited
liability company (the "Company"), and you. The Company and you agree as
follows:
1. THE TENDER OFFER AND CONSENT SOLICITATION. The Company intends to
make a tender offer (the "Tender Offer") to purchase for cash any and all of the
Company's outstanding 12 3/4% Senior Notes due September 30, 2000 (the "Notes")
upon the terms and subject to the conditions thereto. As of April 19, 1999,
there were issued and outstanding $128,590,000 aggregate principal amount of
Notes.
Concurrently with the Tender Offer, the Company will solicit (the
"Consent Solicitation" and, together with the Tender Offer, the "Tender Offer
and Consent Solicitation") consents (the "Consents") of the holders (each a
"Holder" and collectively the "Holders") of the Notes to the proposed amendments
and waivers (the "Proposed Amendments and Waivers") to and under (i) the
Indenture, dated as of October 10, 1995, among the Company, the guarantor named
therein and U.S. Trust Company, N.A., as trustee (the "Trustee"), as amended to
date, pursuant to which the Notes were issued (the "Indenture") and the (ii)
related mortgages, pledge agreements, guarantees and security agreements,
including without limitation, the documents, instruments and agreements listed
in clauses (i) though (vii) in Section 13.1 of the Indenture (collectively, the
"Security Documents").
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 2
The Proposed Amendments and Waivers shall be effected by one or
more supplemental indentures (collectively the "Supplemental Indenture") in
respect of the Indenture and amendments to one or more of the Security Documents
(the "Security Document Amendments"). The Proposed Amendments and Waivers will
not become operative until the date that the Company accepts Notes validly
tendered for purchase. In addition, certain of the Proposed Amendments and
Waivers (the "Supermajority Amendments"), which eliminate certain events of
default and the provisions relating to guarantees of the Notes, will not become
operative unless Consents from Holders of 662/3% of the aggregate principal
amount of the Notes not owned by the Company or its affiliates are received.
2. OFFER DOCUMENTS. The Tender Offer and Consent Solicitation will
be made upon the terms and subject to the conditions set forth in the tender
offer and solicitation material (the "Offer Documents") described below:
(a) The Offer to Purchase and Consent Solicitation Statement
relating to the Tender Offer and Consent Solicitation and the documents
incorporated by reference therein (collectively, the "Offer to Purchase").
(b) The Consent and Letter of Transmittal to be used by
Holders to tender Notes and to consent to the Proposed Amendments and Waivers
pursuant to the Tender Offer and Consent Solicitation, and the related form of
proxy.
(c) The form of letter to brokers, dealers, commercial banks,
trust companies and other nominees, and the form of letter from brokers,
dealers, commercial banks, trust companies and other nominees to clients
relating to the Tender Offer and Consent Solicitation (the "Broker/Client
Letter").
(d) The Notice of Guaranteed Delivery and Consent relating to
the Tender Offer and Consent Solicitation (the "Notice of Guaranteed Delivery").
(e) Such other materials and information (including any
amendments or supplements to the above) as the Company may prepare or approve
for public dissemination in connection with the Tender Offer or the Consent
Solicitation; provided, however, that such material is delivered to you prior to
its public dissemination or provided to Holders in order to provide you with an
opportunity to review and comment thereon.
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<PAGE> 4
Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 3
You hereby agree, as Dealer Manager and Financial Advisor, that
you will not disseminate any written material for or in connection with the
Tender Offer or Consent Solicitation other than the Offer Documents.
3. ENGAGEMENT. The Company hereby appoints you as the exclusive
Dealer Manager and Financial Advisor in connection with the Tender Offer and
Financial Advisor in connection with the Consent Solicitation. The Company
authorizes you to act on its behalf as such in accordance with this Agreement
and the terms of the Offer Documents until the date on which the Tender Offer
has been consummated or terminated. The Offer Documents have been prepared or
approved by the Company, and you and any broker, dealer, commercial bank, trust
company or nominee (collectively, "Brokers") are authorized by the Company to
use the Offer Documents in connection with the solicitation of tenders of the
Notes in the Tender Offer and deliveries of Consents to the Proposed Amendments
and Waivers pursuant to the Consent Solicitation. You and the Company agree to
furnish no other written material to any Holder in connection with the Tender
Offer or Consent Solicitation, unless otherwise agreed upon. In soliciting
tenders and Consents, you, as Dealer Manager and Financial Advisor, shall act as
an independent contractor and shall not be deemed to act as agent of the Company
or of any Brokers, and the Company shall not be deemed to act as your agent. In
addition, in so soliciting, no Broker soliciting tenders and Consents shall be
deemed to act as the agent of the Company, and you shall not be deemed to act as
the agent of any Broker. The Company has obtained its own tax, accounting and
legal advisors and is not relying on you or your counsel for such matters.
4. SECURITYHOLDER LIST. The Company shall obtain and provide you, or
cause the despositary or the respective paying agent or the registrar of the
respective Notes to obtain and provide you, as soon as practicable after the
date hereof, with a copy of the most recent list of Holders available to the
Company from the Depository Trust Company and shall, from and after such date,
use its reasonable best efforts to, or to cause the depositary or the respective
paying agent or registrar to, obtain notification of (and notify you of) all
transfers of the Notes, such notification consisting of the name and address (if
available and permitted by applicable law) of the transferor and transferee of
any of the Notes and the date of such transfer. You agree to use such
information only in connection with the Tender Offer and Consent Solicitation
and will not furnish such information to any other person except in connection
with the Tender Offer and Consent Solicitation.
5. MAILING OF THE OFFER DOCUMENTS. At the commencement of the Tender
Offer and Consent Solicitation (the "Offer Date"), the Company shall cause
timely
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 4
to be delivered a copy of the relevant Offer Documents to each Holder whose name
appears on the most recent list of Holders. Thereafter, to the extent
practicable, until the expiration of the Tender Offer and Consent Solicitation,
the Company shall use its reasonable best efforts to cause a copy of such
material to be mailed to each person who becomes a Holder.
6. SOLICITATION OF TENDERS AND CONSENTS.
(a) You agree to use your reasonable best efforts, in
accordance with your customary practices, to solicit tenders of the Notes in the
Tender Offer and agree to act as Financial Advisor to the Company in connection
with the Consent Solicitation. In the event that you breach your obligations as
set forth in this Section 6(a), then the Company shall be entitled to terminate
your service, at any time within ten (10) days thereafter, by written notice
specifying the grounds for such termination. In addition, the Company shall be
entitled to terminate your service, without cause as provided in Section 8
hereof. Notwithstanding the foregoing, nothing set forth in this Agreement shall
require you to continue to render services hereunder with respect to the Tender
Offer or Consent Solicitation: (i) for the period during which any stop order,
restraining order or injunction shall remain in effect with respect to the
Tender Offer or Consent Solicitation or any other transaction contemplated by
the Offer Documents with respect to the Tender Offer or Consent Solicitation if
in your good faith judgment, based upon advice of counsel, it is inadvisable to
render services pursuant hereto with respect to the Tender Offer or Consent
Solicitation; or (ii) if continuing so to act could, in your judgment, based
upon the advice of counsel, violate any federal, state or local rule,
regulation, statute, law, order or decree applicable to the Tender Offer or
Consent Solicitation or any other transaction contemplated by the Offer
Documents. You shall have no liability hereunder to the Company for any act or
omission on the part of any Broker that solicits tenders of the Notes in the
Tender Offer and deliveries of Consents to the Proposed Amendments and Waivers
or for any act or omission on your part that is not finally judicially
determined to have arisen out of your willful misconduct or gross negligence.
(b) If: (i) the Company uses or permits the use of, or files
with the Securities and Exchange Commission (the "Commission") or any other
governmental or regulatory agency, authority or instrumentality, any Offer
Documents or the Supplemental Indenture or Security Document Amendments that (A)
have not been submitted to you on a timely basis for your comments or (B) have
been so submitted and with respect to which you object; (ii) any stop order,
restraining order or injunction shall have been issued or any investigation,
action, claim, suit or proceeding shall
4
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 5
have been commenced with respect to the Tender Offer or Consent Solicitation or
with respect to any of the transactions contemplated by the Offer Documents
before any foreign, federal, state or local authority, regulatory body,
administrative agency, court or other governmental body, including the
Commission, that in your judgment, based upon advice of counsel, will cause you
to violate any federal, state or local rule, regulation, statute, law, order or
decree applicable to the Tender Offer or Consent Solicitation or any other
transaction contemplated by the Offer Documents; or (iii) the Company shall be
in violation of any of its representations, warranties or agreements in a
material, except those representations and warranties that are qualified as to
materiality, respect hereunder, and such violation shall not promptly be cured,
then you, in each case, shall be entitled to withdraw as Dealer Manager and
Financial Advisor in connection with the Tender Offer and Consent Solicitation
without any liability or penalty to you or any other person indemnified by the
Company pursuant to Section 11 hereof as a result of such withdrawal and without
loss of any right to the payment of your fees (other than under Section 7(a),
except as provided by Section 8) and of your expenses accrued through the date
of withdrawal hereunder or any rights to indemnification pursuant to Section 11
hereof.
(c) The Company agrees to furnish to you, without charge, as
many copies as you may reasonably request of the Offer Documents, the
Supplemental Indenture and the Security Document Amendments for your use in
connection with the Tender Offer and Consent Solicitation. The Company consents
to the use of such documents by you and by all Brokers soliciting tenders of the
Notes in the Tender Offer and Consents to the Proposed Amendments and Waivers in
the Consent Solicitation.
(d) The Company shall arrange for U.S. Trust Company, N.A., as
the depositary (the "Depositary") to inform you and your counsel during each
business day during the Tender Offer and Consent Solicitation (to be followed on
a daily basis by written confirmation) of the principal amounts of each of the
Notes (and, except as prohibited by law, the names of the holders thereof): (i)
that have been tendered pursuant to the Tender Offer and have not been
withdrawn; and (ii) with respect to which a Consent has been delivered and not
revoked, in each case during the interval since its previous daily report to you
under this provision, and as to such other matters as you may reasonably
request.
(e) The Company shall use its reasonable best efforts to cause
the Depositary to cooperate with you in all respects reasonably requested.
5
<PAGE> 7
Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 6
7. COMPENSATION AND EXPENSES. In consideration of your obligations
hereunder, the character and sufficiency of which the Company hereby
acknowledges, the Company agrees to pay you, in cash, the following
non-refundable amounts:
(a) Upon the consummation of the Tender Offer, the Company
shall pay a fee equal to $250,000.
(b) In addition, and without regard to whether the Tender
Offer or Consent Solicitation are commenced or consummated or whether this
Agreement has expired or is terminated, the Company agrees to pay promptly, in
cash, all of the reasonable out-of-pocket expenses you incurred in connection
with the services rendered or to be rendered by you pursuant to this Agreement,
including all reasonable fees and expenses of your counsel.
(c) Whether or not any of the Notes are acquired pursuant to
the Tender Offer or any Consents are accepted pursuant to the Consent
Solicitation and whether or not this Agreement is terminated or expires, the
Company shall pay: (i) all costs related to the preparation, printing, filing,
mailing and publishing of the Offer Documents, the Supplemental Indenture, the
Security Document Amendments, and any other material prepared in connection with
the Tender Offer or any of the Consent Solicitation or any other transaction
contemplated by the Offer Documents; (ii) all costs of the execution and
delivery of the Supplemental Indenture and the Security Document Amendments;
(iii) all costs of furnishing such copies of the Offer Documents as may
reasonably be requested in connection with the Tender Offer or the Consent
Solicitation or other transactions contemplated by the Offer Documents; (iv) the
advertising expenses authorized by the Company relating to any of the Tender
Offer or any of the Consent Solicitation or other transactions contemplated by
the Offer Documents; (v) all fees payable to any Broker including, without
limitation, prompt reimbursement of the expenses incurred in forwarding the
Offer Documents to beneficial owners; (vi) all fees and expenses of the
Depositary and any other persons retained by the Company rendering services in
connection with the Tender Offer or the Consent Solicitation; and (vii) all
other expenses authorized by the Company incurred in connection with the Tender
Offer or the Consent Solicitation or any of the other transactions contemplated
by the Offer Documents.
(d) All payments to be made by the Company pursuant to this
Section 7 shall be made promptly after the expiration or termination of the
Tender Offer and Consent Solicitation; provided, however, that the reimbursement
of your
6
<PAGE> 8
Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 7
reasonable out-of-pocket expenses shall be due upon request as such expenses are
incurred.
8. TERMINATION. Subject to Section 23 hereof, (i) you may resign
pursuant to Section 6(b) and (ii) the Company may terminate your engagement
hereunder (A) pursuant to Section 6(a) or (B) if the Company decides not to
proceed with the Tender Offer and/or the Consent Solicitation. Your engagement
hereunder may be extended by written agreement of the parties hereto. If you
resign pursuant to Section 6(b) or the Company terminates your engagement
hereunder for any reason, you shall be entitled to receive from the Company all
of your expenses, if any, and amounts payable in respect of such expenses
incurred pursuant to Section 7 hereof up to and including the effective date of
such resignation or termination and the indemnity and contribution provisions
contained in Section 11 hereof and the representations, warranties and
agreements contained in Section 10 hereof, shall remain in full force and
effect; provided that if the Company terminates your engagement hereunder for
any reason and the Company or any affiliate of the Company, within 12 months of
the date of such termination, proceeds with any tender offer or consent
solicitation with respect to the Notes with respect to which you were not
invited by the Company to act as financial advisor and/or dealer manager, as the
case may be, you also shall be entitled to receive the fee set forth in Section
7(a) hereof as if such subsequent tender offer(s) and/or consent solicitation(s)
were the "Tender Offer and Consent Solicitation" for purposes of such Section
7(a).
9. ADDITIONAL OBLIGATIONS.
(a) The Company shall not amend or supplement any Offer
Document or prepare or approve any related material for use in connection with
the Tender Offer or Consent Solicitation, including, without limitation, the
Supplemental Indenture or the Security Document Amendments, without first having
submitted to you and your counsel a copy thereof within a reasonable period of
time prior to its intended use in order to provide you and your counsel an
opportunity to review and comment thereon, and the Company shall give reasonable
consideration to you and your counsel's comments, if any, with respect thereto,
and the Company further agrees that no such material shall be used to which you
or your counsel reasonably object.
(b) During the pendency of the Tender Offer and Consent
Solicitation, the Company will notify you promptly upon becoming aware of, and
(if requested by you) will confirm in writing: (i) the happening of any event
that could
7
<PAGE> 9
Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 8
reasonably be expected to make any statement of a material fact made in any
Offer Document untrue in any material respect or that could reasonably be
expected to require the making of any change in any Offer Document in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; (ii) the happening of any event, or the discovery of
any fact, that could reasonably be expected to affect the truth and correctness,
in any material respect, of any representation or warranty contained in this
Agreement if such representation or warranty were being made immediately after
the happening of such event or the discovery of such fact; (iii) the occurrence
of any event that could reasonably be expected to cause the Company to withdraw
or terminate the Tender Offer or Consent Solicitation or that could reasonably
be expected to permit the Company to exercise any right not to accept any of the
Notes tendered or Consents delivered thereunder; or (iv) any other information
reasonably available to the Company relating to the Tender Offer or Consent
Solicitation or any other transaction contemplated by the Offer Documents that
you may from time to time request.
(c) Neither you nor the Company will engage in any fraudulent,
deceptive or manipulative act or practice in connection with the Tender Offer,
the Consent Solicitation or any request or solicitation for tenders, or any
solicitation of Holders in respect of the Tender Offer.
10. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to you, and agrees, that:
(a) The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the state of its
organization and has all requisite power and authority to own, lease and operate
its properties and to conduct its business as currently being conducted, and is
duly registered and qualified to conduct its business and is in good standing,
in each jurisdiction or place where the nature of its business requires such
registration or qualification, except where the failure to be so qualified would
not have a material adverse effect on the assets, liabilities, results of
operations, management, condition (financial or other), prospects, properties,
business or net worth of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"). Each significant subsidiary (as defined in
Regulation S-X) of the Company is a corporation or partnership, as the case may
be, duly incorporated or formed, as applicable, validly existing and in good
standing under the laws of the state of its incorporation or formation, as
applicable, and has all requisite power and authority to own, lease and operate
its properties and to conduct its business as currently being conducted, and is
duly registered and qualified to con-
8
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 9
duct its business and is in good standing, in each jurisdiction or place where
the nature of its business requires such registration or qualification, except
where the failure to be so qualified would not have a Material Adverse Effect.
(b) The Company has full power and authority to enter into and
perform its obligations under this Agreement, the Supplemental Indenture, and
the Security Document Amendments.
(c) The Company has taken all corporate action necessary to
authorize the making and consummation of this Agreement, the Tender Offer and
the Consent Solicitation and the other transactions incidental thereto as
contemplated by the Offer Documents.
(d) In connection with the Tender Offer, the Consent
Solicitation and the other transactions contemplated by the Offer Documents, the
Company has complied, and will continue to comply at all times through the
consummation of the Tender Offer and Consent Solicitation, with the requirements
of the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder (collectively, the "Securities Act") and the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission promulgated thereunder (collectively, the "Exchange Act") and any
and all applicable laws, rules and regulations.
(e) No consent, approval, authorization or other order of, or
filing with, any foreign, federal, state or local authority, regulatory body,
administrative agency, court or other governmental body, including the
Commission and any gaming regulatory body, is legally required for the execution
of the Supplemental Indenture and the Security Document Amendments, or in
connection with the commencement or (with respect to clauses (i) and (ii) below)
consummation of the Tender Offer and the Consent Solicitation, other than (i)
where failure to obtain such consent, approval, authorization or other order or
filing would not have a Material Adverse Effect on the ability of the Company to
execute, deliver and perform its obligations with respect to the Supplemental
Indenture and the Security Document Amendments or (ii) those consents that will
have been obtained prior to the commencement or consummation, as the case may
be, of the Tender Offer and Consent Solicitation or (iii) to effect the
subordination of the liens securing the Notes as described in the Offer
Documents.
(f) None of the Offer Documents and no other report, filing,
document, release or communication disseminated by the Company, or provided to
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Securities Corporation
April 20, 1999
Page 10
you by the Company for dissemination, to any Holder or filed by or on behalf of
the Company in connection with the Tender Offer or the Consent Solicitation
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(g) This Agreement has been duly authorized and validly
executed and delivered by the Company, and assuming due authorization, execution
and delivery by you, constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms except to
the extent that the enforceability thereof may be limited by (a) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
now or hereafter in effect relating to creditors' rights and remedies generally;
(b) general principles of equity whether asserted in an action at law or in
equity; and (c) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such indemnification
or contribution is contrary to public policy.
(h) The Supplemental Indenture and the Security Document
Amendments will have been duly authorized by the Company on or prior to the
execution thereof (the "Execution Time") and, except with respect to the
Supermajority Amendments, may be entered into, upon the valid and binding
consent of the Holders of a majority of the aggregate principal amount of Notes
outstanding (excluding Notes owned by the Company and its affiliates) pursuant
to the provisions of the Indenture. The Supermajority Amendments may be entered
into upon the valid and binding consent of the Holders of at least 662/3% of the
aggregate principal amount of Notes outstanding (excluding Notes owned by the
Company or its affiliates) pursuant to the provisions of the Indenture. Upon
execution thereof, the Supplemental Indenture, the Security Document Amendments
and the subordination of the liens securing the Notes as described in the Offer
Documents, as well as the Indenture and the Notes (as so amended), will comply
with the Trust Indenture Act of 1939, as amended, and the rules and regulations
promulgated by the Commission thereunder (the "TIA"), and assuming due
authorization, execution and delivery by the trustee or collateral agent, as the
case may be, will be the legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, except to the extent that
the enforceability thereof may be limited by (a) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws now or
hereafter in effect relating to creditors' rights and remedies generally, (b)
general principles of equity whether asserted in an action at law or in equity
and (c) the unenforceability under
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Securities Corporation
April 20, 1999
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certain circumstances under law or court decisions of provisions providing for
the indemnification of or contribution to a party with respect to a liability
where such indemnification or contribution is contrary to public policy.
(i) Neither the Company nor any of its significant
subsidiaries is in violation of its organization documents and is not in default
under any bond, debenture, security or any other evidence of indebtedness or any
indenture, mortgage, deed of trust or any other agreement or instrument to which
it is a party or by which it is bound, or to which any of the property or assets
of the Company or such significant subsidiary is subject, other than such
defaults which would not (A) singly or in the aggregate, have a Material Adverse
Effect or (B) affect the validity of this Agreement or the other transactions
incidental thereto as contemplated by the Offer Documents.
(j) The execution, delivery and performance of this Agreement,
the Supplemental Indenture and the Security Document Amendments, the
consummation of the Tender Offer and the Consent Solicitation, and the other
transactions contemplated by the Offer Documents: (i) will not conflict with or
result in a breach of the respective organization documents of the Company or
any of its significant subsidiaries; (ii) will not conflict with or constitute a
breach of a material provision of, or a default (with the passage of time or
otherwise) under, or result in the imposition of a lien on any properties of the
Company or any of its significant subsidiaries or an acceleration of
indebtedness pursuant to any bond, debenture, security or any other evidence of
indebtedness or any indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company or any of its significant subsidiaries is a
party or by which the Company or any of its significant subsidiaries is bound,
or to which any of the property or assets of the Company or any of its
significant subsidiaries is subject, other than such breaches, defaults, liens,
accelerations of indebtedness or conflicts which would not (A) singly or in the
aggregate, have a Material Adverse Effect; or (B) affect the validity of this
Agreement or any of the transactions contemplated by the Offer Documents, and
(iii) assuming the representations and warranties of the holders in their
respective Consents and Letters of Transmittal are true, will not conflict with
or violate any foreign, federal, state or local rule, regulation, statute, law,
order or decree of any foreign, federal, state or local authority, regulatory
body, administrative agency, court or other governmental body, including the
Commission and any gaming regulatory body, applicable to the Company or any of
its significant subsidiaries or any of their properties or assets, except for
such conflicts or violations which would not, singly or in the aggregate, have a
Material Adverse Effect.
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(k) No stop order, restraining order or injunction has been
issued by, and no investigation, action, claim, suit or proceeding has been
initiated or, to the best knowledge of the Company, threatened by or before, any
foreign, federal, state or local authority, regulatory body, administrative
agency, court or other governmental body, including the Commission and any
gaming regulatory body, with respect to: (i) the making or the consummation of
the Tender Offer or Consent Solicitation; (ii) the execution, delivery or
performance by the Company of this Agreement, the Supplemental Indenture or the
Security Document Amendments; or (iii) any of the other transactions
contemplated by the Offer Documents.
(l) The Tender Offer and the Consent Solicitation conform,
and, upon their execution and delivery, the Supplemental Indenture and the
Security Document Amendments will conform, in all material respects to the
description thereof in the Offer to Purchase. The statements in the Offer to
Purchase, insofar as they constitute a summary of the documents and instruments
referred to therein, present fairly the substance thereof.
(m) The Offer Documents comply, or will comply, in all
material respects with the applicable requirements (if any) of the Indenture,
the Securities Act and the Exchange Act and when executed and delivered, the
Supplemental Indenture will comply in all material respects with the
requirements of the Indenture.
(n) Upon the expiration of the Tender Offer and Consent
Solicitation, you shall have received from the Company a supplement to this
Agreement setting forth customary additional representations and warranties to
reflect any alterations to the terms of the Tender Offer or the Consent
Solicitation that occur after the date hereof, if any, as may be mutually
agreed.
11. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you and
your affiliates, and each of the officers, directors, partners, employees,
representatives and agents thereof, and each person, if any, who controls you
(or any of your affiliates) within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act and each of their respective officers,
directors, partners, employees, representatives and agents (collectively, the
"Indemnified Parties") to the fullest extent lawful from and against any and all
losses, claims, damages, liabilities, judgments and expenses (including, without
limitation, and as incurred, reimbursement of all reasonable out-of-pocket costs
of investigating, preparing, pursuing or defending any claim
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or action, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, including the reasonable fees and expenses of
counsel to any Indemnified Party) directly or indirectly related to, or arising
out of, or in connection with, or caused by: (i) any untrue statement or alleged
untrue statement of a material fact contained in any Offer Document or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (ii) any withdrawal
or termination by the Company of, or failure by the Company to make or
consummate, the Tender Offer or the Consent Solicitation; or (iii) any breach by
the Company of any representation or warranty or failure to comply with any of
its agreements contained herein; or (iv) any actions taken or omitted to be
taken by any Indemnified Party pursuant to the terms of, or in connection with
services rendered pursuant to, this Agreement, provided, however, that, in the
case of this subsection (iv), the Company shall not be liable to any Indemnified
Party for any loss, expense, claim, damage or liability arising primarily out of
or based primarily upon the willful misconduct or gross negligence (as
determined by the final judgment of a court of competent jurisdiction, no longer
subject to appeal or review) of any Indemnified Party. The Company also agrees
to reimburse each Indemnified Party for any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and expenses of counsel) as
they are incurred in connection with enforcing such Indemnified Party's rights
under this Agreement (including, without limitation, this Section 11), but only
to the extent such Indemnified Party prevails in such enforcement action. The
foregoing indemnity shall be in addition to any liability that the Company might
otherwise have to you and such other Indemnified Parties.
(b) In case any action or proceeding shall be brought against
any Indemnified Party with respect to which indemnity under this Section 11 may
be sought against the Company, you shall promptly notify the Company in writing
and, the Company shall have the right to participate in or to assume the defense
thereof, including the employment of counsel reasonably satisfactory to you and
payment of all fees and expenses. Failure to so notify the Company shall not,
however, relieve the Company from any liability that it may have on account of
the indemnity under this Section 11 except to the extent, but only to the
extent, that the Company has been materially prejudiced by such failure, as
determined by a court of competent jurisdiction. Any Indemnified Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless: (i) the employment of such counsel
shall have been specifically authorized in writing by the Company; (ii) the
Company shall have failed to assume the defense and employ counsel reasonably
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Securities Corporation
April 20, 1999
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satisfactory to you within a reasonable period of time after notice thereof from
any person; or (iii) the named parties to any such action (including any
impleaded parties) include both an Indemnified Party and the Company and such
Indemnified Party shall have been advised by such counsel that there may be one
or more legal defenses available to such Indemnified Party that are different
from or additional to those available to the Company (in which case if you or
such Indemnified Party notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not have the
right to assume the defense of such action on behalf of the Indemnified Party)
it being understood, however, that the Company shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for any Indemnified Party (and all
Indemnified Parties substantially similarly situated), which firm shall be
designated in writing by you and that all such fees and expenses shall be
reimbursed as they are incurred. The Company shall not be liable for any
settlement of any such action effected without its written consent but if (i)
settled with the written consent of the Company or (ii) effected without its
written consent if the settlement is entered into more than twenty business days
after the Company shall have received a request from the Indemnified Party for
reimbursement for the reasonable fees and expenses of counsel and, prior to the
date of such settlement, the Company shall have failed to comply with such
reimbursement request, the Company agrees to indemnify and hold harmless any
Indemnified Party from and against any loss or liability by reason of such
settlement. The Company shall not, without the prior written consent of the
Indemnified Party, settle, compromise or consent to the entry of any judgment in
or otherwise seek to terminate any pending or threatened action, claim, suit,
investigation or other proceeding in respect of which any Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement, compromise or judgment includes
an unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such proceeding and does not include a statement
as to an admission of fault, culpability or failure to act, by or on behalf of
an Indemnified Party.
(c) If the indemnification provided for in this Section 11 is
finally determined by a court of competent jurisdiction to be unavailable to any
Indemnified Party in respect of any losses, claims, damages, liabilities or
judgments referred to therein, then the Company, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, expenses, claims, damages,
liabilities and judgments: (i) in such proportion as
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Securities Corporation
April 20, 1999
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is appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Indemnified Parties, on the other hand, from the services
rendered; or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Indemnified Parties in connection with the actions,
statements or omissions that resulted in such losses, expenses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Indemnified Parties shall be deemed to be in the same proportion as the
aggregate principal amount of the outstanding Notes bears to the fees received
by the Indemnified Parties hereunder. The relative fault of the Company and the
Indemnified Parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the Company
or the Indemnified Parties and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
You and the Company agree that it would not be just and equitable
if contribution pursuant to this Section 11(c) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
expenses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 11, the
Indemnified Parties shall not be required to contribute any amount in excess of
the amount of fees actually received by you pursuant to Section 7(a) of this
Agreement in connection with the Tender Offer and Consent Solicitation. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
12. CONDITIONS OF OBLIGATION. Your obligation to act as Dealer
Manager and Financial Advisor hereunder shall at all times be subject, in your
discretion, to the conditions that:
(a) The Company at all times during the Tender Offer and
Consent Solicitation shall have performed all of its obligations hereunder (or,
with respect to the obligations of the Company contained herein that are not
qualified as to materiality, shall have performed all of its obligations in all
material respects).
(b) All representations and warranties of the Company herein
are now, and at all times during the Tender Offer and Consent Solicitation will
be, true and correct (or, with respect to
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Securities Corporation
April 20, 1999
Page 16
the representations and warranties contained in Section 10 that are not
qualified as to materiality, are true and correct in all material respects).
(c) On the date the Notes are accepted for purchase pursuant
to the Tender Offer (the "Acceptance Date") you shall have received a
certificate from the Company, dated such date and signed by an executive officer
or senior vice president of the managing member of the Company, to the effect
that the representations and warranties of the Company contained in this
Agreement are true and correct in all material respects, except those
representations and warranties that are qualified as to materiality, which shall
be true and correct, as of the expiration date of the Tender Offer and such date
and that the Company has complied in all material respects, with all of the
agreements and satisfied in all material respects, all of the conditions on its
part to be performed or satisfied on or before each such date.
(d) On the Offer Date, you shall have received an opinion of
Swidler Berlin Shereff Friedman, LLP, counsel for the Company or, where
appropriate, from local counsel for the Company in the applicable jurisdictions,
dated such date and, in each case, reasonably satisfactory to Skadden, Arps,
Slate Meagher & Flom LLP, your counsel, substantially to the effect set forth on
Exhibit A hereto.
(e) On the Acceptance Date, you shall have received an opinion
of Swidler Berlin Shereff Friedman, LLP, counsel for the Company or, where
appropriate, from local counsel for the Company in the applicable jurisdictions,
dated such date and, in each case, reasonably satisfactory to Skadden, Arps,
Slate Meagher & Flom LLP, your counsel, substantially to the effect set forth on
Exhibit B hereto.
(f) As of the Execution Time, you shall have received copies
of the opinions of counsel (each of which shall contain or be accompanied by a
letter addressed to you to the effect that you may rely on such opinion to the
same extent as if it were originally addressed to you) and other documents that
are delivered to the Trustee under the Indenture in connection with the
Supplemental Indenture and the Security Document Amendments.
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Securities Corporation
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Page 17
(g) No stop order, restraining order or injunction shall have
been issued and no investigation, action, claim, suit or proceeding shall have
been commenced or threatened (and no significant development in any pending
proceedings, investigations or litigation shall have occurred) before any
foreign, federal, state or local authority, regulatory body, administrative
agency, court or other governmental body, including the Commission, with respect
to the Tender Offer or Consent Solicitation or any other transaction
contemplated in the Offer Documents in any jurisdiction that you reasonably
believe makes it inadvisable for you to continue to act hereunder.
(h) At all times during the pendency of the Tender Offer and
Consent Solicitation, the Company shall have furnished to you or your counsel,
as the case may be, such information, certificates and documents as you or your
counsel shall have reasonably requested.
All opinions, certificates, letters and other documents required
by this Section 12 will be in compliance with the provisions hereof only if they
are reasonably satisfactory in form and substance to you and to Skadden, Arps,
Slate, Meagher & Flom LLP, your counsel. The Company will furnish you with such
conformed copies of such opinions, certificates, letters and other documents as
you shall reasonably request.
13. ACCESS TO INFORMATION; CONFIDENTIALITY. In connection with your
activities hereunder, the Company agrees to furnish you with all information
concerning the Company that you reasonably deem appropriate and agrees to
provide you with reasonable access to the officers, directors, accountants,
counsel, consultants and other appropriate agents and representatives of the
Company. You shall be entitled to rely without investigation upon all
information that is available from public sources that originated from the
Company as well as other information supplied to you by or on behalf of the
Company or its advisors and shall not in any respect be responsible for the
accuracy or completeness of, or have any obligation to verify, the same or to
conduct any appraisal of any assets or liabilities. To the extent consistent
with legal requirements, all information given to you by the Company, unless
publicly available or otherwise available to you without restriction or breach
of any confidentiality agreement, shall be held by you in confidence and shall
not be disclosed to anyone other than your agents and advisors, subject to
confidentiality provisions, without the Company's prior approval or used for any
purpose other than those referred to in this Agreement.
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Page 18
14. REFERENCE TO THE DEALER MANAGER AND FINANCIAL ADVISOR. The
Company agrees that any reference to you or your affiliates in any Offer
Document, or any other release or communication to any party outside the
Company, is subject to your prior approval (subject to the Company's obligation
to comply with applicable laws and regulations). You hereby consent to any
reference to you in the Offer Documents specified in Sections 2(a) through 2(e).
If you resign prior to the dissemination of any Offer Document or any other
release or communication, no reference shall be made therein to you without your
prior written permission.
15. ADVERTISEMENTS. The Company agrees that you shall have the right
to place advertisements or announcements in financial and other newspapers and
journals at your own expense describing your services to the Company hereunder
subject to the reasonable approval of the Company, provided, however, that the
publication of such advertisements shall comply with applicable law.
16. THIRD PARTY BENEFICIARIES. This Agreement has been and is made
solely for the benefit of the Company, the Dealer Manager and Financial Advisor
and other Indemnified Parties referred to in Section 11 and their successors,
heirs, personal representatives and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The Company agrees and
acknowledge that the only information furnished or to be furnished by you or on
your behalf for inclusion in any Offer Document is the description of yourself
and your relationship (including services performed on behalf of the Company)
with the Company to be included in such Offer Document.
17. NO RIGHTS IN SHAREHOLDERS OR OTHERS. The Company recognizes that
you have been retained only by them, and that your engagement is not deemed to
be on behalf of and is not intended to confer rights upon any shareholder, owner
or partner of the Company or any other person not a party hereto as against you
or any of your affiliates or the respective directors, officers, agents,
employees or representatives of you or your affiliates. Unless otherwise
expressly agreed, no one other than the Company and its successors in interest
is authorized to rely upon your engagement hereunder or any statements, advice,
opinions or conduct by you.
18. CONSTRUCTION; CHOICE OF LAW. This Agreement incorporates the
entire understanding of the parties with respect to your acting as Dealer
Manager and Financial Advisor of the Tender Offer and Consent Solicitation, and
(except as otherwise provided herein) supersedes all previous agreements, and
shall be governed by
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Securities Corporation
April 20, 1999
Page 19
and construed in accordance with the laws of the State of New York including,
without limitation, Section 5-1401 of the New York General Obligations Law.
19. SEVERABILITY. Any determination that any provision of this
Agreement may be, or is, unenforceable shall not affect the enforceability of
the remainder of this Agreement.
20. HEADINGS. The section headings in this Agreement have been
inserted as a matter of convenience of reference and are not to be deemed to be
part of this Agreement.
21. MODIFICATION. This Agreement may not be modified or amended
except in writing, duly executed by the parties hereto.
22. FURTHER AGREEMENTS. This Agreement does not constitute any
agreement, express or implied, on the part of you or any commitment by you to
underwrite, purchase, place or cause the placement of any securities or
indebtedness or to advise the Company in connection with any sale of any of
their businesses or assets or in connection with any merger, consolidation or
similar transaction. Any such commitment by you shall be at your option and
would, in each case, be subject to, among other things, your satisfactory
completion of any additional due diligence that you deem to be appropriate and
the execution by you and the Company of a customary agreement acceptable to you
and your counsel. Any such agreement also would include, among other things,
provisions for further representations and warranties by the Company, provisions
for affirmative opinions of the outside counsel of the Company and additional
compensation and expense reimbursement arrangements for you and indemnification
and contribution agreements, in each case acceptable to you and your counsel.
23. SURVIVAL OF CERTAIN PROVISIONS. The indemnity and contribution
agreements contained in Section 11 of this Agreement, the representations,
warranties and agreements of the Company made pursuant to Section 10 of this
Agreement, this Section 23 and, subject to the provisions of Section 8 hereof,
the compensation and expense reimbursement provisions contained in Section 7 of
this Agreement, shall remain operative and in full force and effect regardless
of: (a) any investigation made by or on behalf of you or by or on behalf of any
other Indemnified Party; (b) consummation of the Tender Offer, the Consent
Solicitation or any other transaction contemplated by the Offer Documents; or
(c) any termination or expiration of this Agreement, and shall be binding upon
and shall inure to the benefit of, any successors,
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assigns, heirs and personal representatives of the Company, you, the other
Indemnified Parties and any such person.
24. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The Company
submits to the jurisdiction of the federal and state courts in the State of New
York for the purpose of any suit or proceeding arising out of or relating to
this Agreement or brought under federal or state securities laws. A final
judgment in any action or proceeding based on this Agreement shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other lawful manner.
25. WAIVER OF JURY TRIAL. Each party waives any right to trial by
jury in any foreign, federal, state or local investigation, action, claim, suit
or proceeding with respect to your engagement as Dealer Manager and Financial
Advisor or your role in connection therewith.
26. NOTICES. Except as otherwise expressly provided in this
Agreement, whenever notice is required by the provisions of this Agreement to be
given to the Company, such notice shall be in writing addressed to the Company
at its office as follows:
Horseshoe Gaming, L.L.C.
4024 S. Industrial Road
Las Vegas, NV 89103
Attention: Chief Financial Officer
Facsimile: (901) 820-2461
with a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue, 20th Floor
New York, NY 10022
Attention: Robert M. Friedman, Esq.
Facsimile: (212) 758-9526
Whenever notice is required to be given to you, such notice shall
be in writing addressed to you at your office as follows:
Donaldson, Lufkin & Jenrette
Securities Corporation
2121 Avenue of the Stars
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Securities Corporation
April 20, 1999
Page 21
Fox Plaza
Los Angeles, CA 90067
Attention: Jim D' Aquila
Facsimile: (310) 282-6178
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Attention: Nicholas P. Saggese, Esq.
Facsimile: (213) 687-5600
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27. COUNTERPARTS SIGNATURES. This agreement may be signed in various
counterparts, which, taken together, shall constitute one and the same
instrument. Please sign and return to us a duplicate of this Agreement,
whereupon it will become a binding document.
Very truly yours,
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming, Inc.,
Its Managing Member
By: ____________________________________
Name:
Title:
The undersigned hereby confirms that the
foregoing agreement, as of the date thereof,
correctly sets forth the agreement between
the parties.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: __________________________________
Name:
Title:
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April 20, 1999
Page 1
EXHIBIT A
1. The Company has the requisite limited liability company power and authority
to enter into and perform its obligations under this Agreement. This Agreement
has been duly authorized, executed and delivered by the Company.
2. The Company has taken all limited liability action necessary to authorize
the making and consummation of the Tender Offer and the Consent Solicitation and
the other transactions contemplated by the Offer Documents.
3. Except with respect to the indemnification and contribution provisions of
the Agreement as to which such counsel expresses no opinion, assuming due
execution and delivery of the Agreement by the Dealer Manager, the Agreement is
a legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms.
4. The Tender Offer and the Consent Solicitation are not required to be
registered pursuant to the Securities Act, or to be filed with the Commission
pursuant to Section 14 of the Exchange Act, and the Supplemental Indenture is
not required to be filed pursuant to the TIA. The terms and provisions of the
Tender Offer and Consent Solicitation comply in all material respects with Rule
14e-1 promulgated under the Exchange Act.
5. To such counsel's knowledge no consent, approval, authorization or other
order of, or filing with, any federal or New York state authority, regulatory
body, administrative agency, court or other governmental body is legally
required for the execution of the Supplemental Indenture and the Security
Document Amendments, or the commencement or consummation of the Tender Offer and
the Consent Solicitation, other than those consents that (i) have been obtained
prior to the commencement or (ii) the Company has advised us are reasonably
expected to be obtained prior to the consummation of the Tender Offer and
Consent Solicitation.
6. Assuming the Supplemental Indenture and the Security Document Amendments are
entered into upon the valid and binding consent of the Holders of a majority of
the aggregate principal amount of the Notes outstanding, excluding Notes owned
by the Company and its affiliates (except with respect to the Supermajority
Amendments, which require the consent of the Holders of 662/3% of the aggregate
principal amount of the Notes outstanding, excluding Notes owned by the Company
and its affiliates), pursuant to the provisions of the Indenture, and assuming
due execution
1
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 2
and delivery thereof by the Company and the Trustee or the Collateral Agent, as
the case may be, the Supplemental Indenture and the Security Document Amendments
will be the legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms and will not
conflict with or result in a breach of or a default (with the passage of time or
otherwise) under the Indenture, the Security Documents or the Notes.
7. The execution, delivery, and performance of this Agreement, the Supplemental
Indenture and the Security Document Amendments and the consummation of the
Tender Offer and the Consent Solicitation: (a) will not conflict with or result
in a breach of the respective organization documents of the Company, RPG, HE,
NGCP or HGP (collectively, the "Material Subsidiaries"); (b) will not conflict
with or constitute a breach of, or a default (with the passage of time or
otherwise) under, or result in the imposition of a lien on any properties of the
Company or any Material Subsidiary or an acceleration of indebtedness pursuant
to any bond, debenture, security or any other evidence of indebtedness (i) that
certain credit agreement, dated as of October 10, 1995, among the Company, RPG,
as guarantor, and certain financial institutions identified therein, as lenders
and (ii) that certain indenture, dated as of June 15, 1997, among the Company,
RPG, as guarantor, and U.S. Trust Company of Texas, N.A., as trustee, other than
such breaches, defaults, liens, accelerations of indebtedness or conflicts which
would not (x) singly or in the aggregate, have a Material Adverse Effect; or (y)
affect the validity of this Agreement or any of the transactions contemplated by
the Offer Documents; (c) will not conflict with or violate in any material
respect any federal or New York state statute, regulation, rule or law or any
provision of the Delaware General Corporation Law and the Delaware Limited
Liability Company Act; and (d) to such counsel's knowledge, will not conflict
with or violate any order or decree of any federal, New York state authority,
regulatory body, administrative agency, court or other governmental body,
applicable to the Company, any Material Subsidiary or any of their subsidiaries
or any of their properties or assets.
8. To such counsel's knowledge, no stop order, restraining order or injunction
has been issued by, and no investigation, action, claim, suit or proceeding has
been initiated or threatened by or before, any federal, New York state
authority, regulatory body, administrative agency, court or other governmental
body, with respect to: (a) the making or the consummation of the Tender Offer
and the Consent Solicitation; (b) the execution, delivery or performance by the
Company of the Agreement, the Supplemental Indenture, or the Security Document
Amendments.
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 3
9. The Statements made in the Offer to Purchase under the caption "Certain
Federal Income Tax Consequences" and in the Consent and Letter of Transmittal
under the caption "Taxpayer Identification Number and Backup Withholding"
insofar as such statements purport to constitute a summary of legal matters
referred to therein provide a fair summary of such legal matters.
In the course of preparing the Offering Documents, such counsel has
participated in conferences with officers and representatives of Company and its
manager, representatives the Company's independent public accountants and
representatives of the Dealer Manager during which successive drafts of the
Offer Documents were discussed and reviewed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offer Documents
(except as otherwise indicated above), on the basis of the foregoing, such
counsel shall advise us, subject to the qualification that, as to determinations
of materiality, such counsel has sought in the first instance and relied, where
such counsel concluded such reliance was justified, on the views of the
above-mentioned officers and representatives of the Company and its manager,
that no facts have come to such counsel's attention that lead it to believe the
Offer Documents as of the date thereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel
expresses no view with respect to the financial statements and schedules and
other financial or statistical data included or incorporated by reference in the
Offer Documents or omitted therefrom).
Counsel for the Company shall also provide such other reasonable and
customary opinions covering matters incidental to the Tender Offer or Consent
Solicitation or any other transaction contemplated by the Offer Documents as and
when we or our counsel may reasonably request to reflect alterations to the
terms of the Tender Offer or Consent Solicitation, if any.
3
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 1
EXHIBIT B
1. The Company has the requisite limited liability company power and authority
to enter into and perform its obligations under this Agreement. This Agreement
has been duly authorized, executed and delivered by the Company.
2. The Company has taken all limited liability action necessary to authorize
the making and consummation of the Tender Offer and the Consent Solicitation and
the other transactions contemplated by the Offer Documents.
3. Except with respect to the indemnification and contribution provisions of
the Agreement as to which such counsel expresses no opinion, assuming due
execution and delivery of the Agreement by the Dealer Manager, the Agreement is
a legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms.
4. The Tender Offer and the Consent Solicitation are not required to be
registered pursuant to the Securities Act, or to be filed with the Commission
pursuant to Section 14 of the Exchange Act, and the Supplemental Indenture is
not required to be filed pursuant to the TIA. The terms and provisions of the
Tender Offer and Consent Solicitation comply in all material respects with Rule
14e-1 promulgated under the Exchange Act.
5. To such counsel's knowledge no consent, approval, authorization or other
order of, or filing with, any federal or New York state authority, regulatory
body, administrative agency, court or other governmental body is legally
required for the execution of the Supplemental Indenture and the Security
Document Amendments, or the commencement or consummation of the Tender Offer and
the Consent Solicitation, other than those consents that (i) have been obtained
prior to the commencement or (ii) the Company has advised us are reasonably
expected to be obtained prior to the consummation of the Tender Offer and
Consent Solicitation.
6. The Supplemental Indenture and the Security Document Amendments are the
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms and do not conflict with or
result in a breach of or a default (with the passage of time or otherwise) under
the Indenture, the Security Documents or the Notes.
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 2
7. The execution, delivery, and performance of this Agreement, the Supplemental
Indenture and the Security Document Amendments and the consummation of the
Tender Offer and the Consent Solicitation: (a) do not conflict with or result in
a breach of the respective organization documents of the Company, RPG, HE, NGCP
or HGP (collectively, the "Material Subsidiaries"); (b) do not conflict with or
constitute a breach of, or a default (with the passage of time or otherwise)
under, or result in the imposition of a lien on any properties of the Company or
any Material Subsidiary or an acceleration of indebtedness pursuant to any bond,
debenture, security or any other evidence of indebtedness (i) that certain
credit agreement, dated as of October 10, 1995, among the Company, RPG, as
guarantor, and certain financial institutions identified therein, as lenders and
(ii) that certain indenture, dated as of June 15, 1997, among the Company, RPG,
as guarantor, and U.S. Trust Company of Texas, N.A., as trustee, other than such
breaches, defaults, liens, accelerations of indebtedness or conflicts which
would not (x) singly or in the aggregate, have a Material Adverse Effect; or (y)
affect the validity of this Agreement or any of the transactions contemplated by
the Offer Documents; (c) will not conflict with or violate in any material
respect any federal or New York state statute, regulation, rule or law or any
provision of the Delaware General Corporation Law and the Delaware Limited
Liability Company Act; and (d) to such counsel's knowledge, will not conflict
with or violate any order or decree of any federal, New York state authority,
regulatory body, administrative agency, court or other governmental body,
applicable to the Company, any Material Subsidiary or any of their subsidiaries
or any of their properties or assets.
8. To such counsel's knowledge, no stop order, restraining order or injunction
has been issued by, and no investigation, action, claim, suit or proceeding has
been initiated or threatened by or before, any federal, New York state
authority, regulatory body, administrative agency, court or other governmental
body, with respect to: (a) the making or the consummation of the Tender Offer
and the Consent Solicitation; (b) the execution, delivery or performance by the
Company of the Agreement, the Supplemental Indenture, or the Security Document
Amendments.
9. The Statements made in the Offer to Purchase under the caption "Certain
Federal Income Tax Consequences" and in the Consent and Letter of Transmittal
under the caption "Taxpayer Identification Number and Backup Withholding"
insofar as such statements purport to constitute a summary of legal matters
referred to therein provide a fair summary of such legal matters.
2
<PAGE> 29
Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 3
10. The Tender Offer and the Consent Solicitation conform in all material
respects to the description thereof in the Offer Documents.
11. The Supplemental Indenture and the Security Documents Amendments comply in
all material respects with the requirements of the Indenture and the applicable
Security Documents.
In the course of preparing the Offering Documents, such counsel has
participated in conferences with officers and representatives of Company and its
manager, representitives the Company's independent public accountants and
representatives of the Dealer Manager during which successive drafts of the
Offer Documents were discussed and reviewed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offer Documents
(except as otherwise indicated above), on the basis of the foregoing, such
counsel shall advise us, subject to the qualification that, as to determinations
of materiality, such counsel has sought in the first instance and relied, where
such counsel concluded such reliance was justified, on the views of the
above-mentioned officers and representatives of the Company and its manager,
that no facts have come to such counsel's attention that lead it to believe the
Offer Documents as of the date thereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel
expresses no view with respect to the financial statements and schedules and
other financial or statistical data included or incorporated by reference in the
Offer Documents or omitted therefrom).
Counsel for the Company shall also provide such other reasonable and
customary opinions covering matters incidental to the Tender Offer or Consent
Solicitation or any other transaction contemplated by the Offer Documents as and
when we or our counsel may reasonably request to reflect alterations to the
terms of the Tender Offer or Consent Solicitation, if any.
3
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Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 4
- ------------------ COMPARISON OF HEADERS ------------------
- -HEADER 1-
Donaldson, Lufkin & Jenrette
Securities Corporation
April 20, 1999
Page 1
- ------------------ COMPARISON OF FOOTERS ------------------
- -FOOTER 1-
153237.09-Los AngelesS2A
4
<PAGE> 1
Exhibit 10.31
AGREEMENT
This Agreement (the "Agreement") is entered into this 21 day of April,
1999, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming, Inc., Horseshoe
Entertainment, L.P., and New Gaming Capital Partnership (Horseshoe Gaming
L.L.C., Horseshoe Entertainment, L.P., Horseshoe Gaming, Inc., New Gaming
Capital Partnership and all of their affiliates and subsidiary companies are
sometime collectively referred to herein as the "Horseshoe Companies"); Jack B.
Binion ("Binion"); The Robin Group, Inc. ("Group") and August Robin ("Duke").
RECITALS
WHEREAS, Horseshoe Entertainment, L.P. owns and operates a gaming and
hotel facility and related operations in Bossier City, Louisiana;
WHEREAS, Robinson Property Group, L.P. owns and operates a gaming and
hotel facility in Tunica, Mississippi (the "Tunica Facility");
WHEREAS, New Gaming Capital Partnership, Wendell Piper, Cassandra Piper
and Duke, among others, are partners in Horseshoe Entertainment, L.P.;
WHEREAS, Horseshoe Gaming, L.L.C., the parent company of New Gaming
Capital Partnership, is in the process of pursuing additional gaming
opportunities and is currently a party to an agreement to acquire additional
casinos and hotel facilities in Hammond, Indiana and Joliet, Illinois (the
"Additional Operations");
WHEREAS, Horseshoe Gaming, L.L.C. is in the process of a debt offering
pursuant to Rule 144A of the Securities Act of 1933, as amended (the "144A Debt
Offering"); and
WHEREAS, Group asserts an option to purchase a portion of the profits
and/or losses from the Tunica Facility.
TERMS AND CONDITIONS
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Effective Date; Contingencies. All of the obligations of any party
pursuant to this Agreement shall be effective and enforceable only upon the
execution of this Agreement by all of the parties hereto and the execution by
Wendell Piper, Cassandra Piper and Robert Piper of agreements similar in nature
to this Agreement. The date upon which all of the agreements
<PAGE> 2
contemplated in this paragraph are fully executed shall be the "Effective Date"
of the Agreement. Neither the transactions contemplated by this Agreement nor
any transactions similar in nature involving the Horseshoe Companies and Wendell
Piper, Cassandra Piper And Robert E. Piper Jr. shall be consummated unless both
such transactions are consummated.
2. Outstanding Loans. Duke acknowledges that as of March 31, 1999, he owes
Horseshoe Companies $4,950,000 (the "Debt") and that he owes Binion
$2,759,539.73. The amount due Binion shall be forgiven in exchange for Duke's
interest or right to acquire any interest in the profits and losses of the
Tunica Facility including any claim to a capital account balance in the Robinson
Property Group L.P. or any claim to retained earnings of the Robinson Property
Group, L.P. The Debt shall be paid to the Horseshoe Companies through the
forgiveness of a portion of the Debt as provided in the paragraphs of this
Agreement containing covenants not to compete, and the sum of $550,000 which
Duke shall pay to Horseshoe Entertainment L.P. on or before April 15, 2003. All
outstanding promissory notes representing the Debt shall be canceled and Duke
shall execute a new promissory note in the amount of $4,950,000 (the
"Replacement Note"). The Replacement Note shall reflect the terms of this
Agreement and interest shall accrue at a rate of 7% per annum only after the
sums become due and payable pursuant to the terms of the Replacement Note. The
K-1 for 1999 for Duke shall incorporate and reflect an adjustment increasing
Duke's income by the sum of $222,775, plus any distribution made during 1999,
plus all other amounts attributable to Duke as income as required by the
Partnership Agreement of Horseshoe Entertainment L.P.
3. Grant of Option and Consideration for Grant. In accordance with and
subject to the terms and conditions of this Agreement, Duke and Group hereby
grant to each of the Horseshoe Companies an option (the "Option") to purchase
subject to all necessary regulatory approval, all of his or its ownership,
capital, or equity interests including but not limited to partnership interest,
stock or option to acquire any capital or equity interest, in the Tunica
Facility, Robinson Property Group, L.P., Horseshoe Entertainment, L.P. and
Horseshoe Companies (all such interests being the "Interests"). This Option is
being granted to Horseshoe Companies in exchange for the aggregate sum of
$2,000,000 payable to Duke and Group, which $2,000,000 is non refundable if
Horseshoe Companies fails to exercise the Option. Horseshoe Companies shall pay
the Option Price in two installments. The first installment of $1,000,000 shall
be paid on the Effective Date of this Agreement and the second installment of
$1,000,000 shall be paid on or before December 15, 1999.
4. Exercise Period. The Option shall expire on December 15, 1999. In the
event Horseshoe Entertainment, L.P. decides to exercise the Option, Horseshoe
Entertainment, L.P. shall transmit, prior to the expiration of the Option, to
Duke an indication of Horseshoe Entertainment, L.P.'s intent to exercise the
Option. Upon transmittal of such notice, the Option shall be deemed to have been
exercised without any further action being necessary.
5. Exercise Price. The exercise price to be paid by Horseshoe
Entertainment, L.P. to Duke and Group shall be the aggregate sum of $6,000,000
and shall be paid in installments in the
2
<PAGE> 3
following manner: (i) $2,080,000 to be paid on December 15, 2000, and (ii)
$3,920,000 to be paid on December 15, 2001.
6. Participation in Sale By Binion. If, within five years of the date of
this Agreement, the Binion Family Interests collectively sells in excess of a
50% interest in Horseshoe Gaming, LLC, for a purchase price consisting of cash,
debt or publicly traded securities or any combination thereof having a value of
in excess of $5,350,000 per 1% interest sold, then Duke shall receive a cash sum
equal to 2 1/4% of the value of the sale in excess of $5,350,000 per 1% interest
sold (such cash sum equal to 2 1/4% being the "Participation Payment"). For the
purposes of this paragraph, the value of the sale shall be equal to (i) the cash
purchase price, plus (ii) 80% of the value of the publicly traded securities as
determined by the last sales price of such securities at the close of the market
upon which such securities are traded, on the date the Binion Family Interests
receives such securities, plus (iii) 80% of the present value of the debt. For
the purposes of this paragraph, the Binion Family Interests shall mean, Binion
or any entities owned or controlled by Binion, or any member of his family or
any trust for the benefit of any member of his family. In the event that Duke is
entitled to the Participation Payment, all sums due from Duke to Horseshoe
Companies shall be due and payable immediately to the extent of the
Participation Payment.
7. Payment of Release and Waiver. In exchange for the release and waiver by
Duke described in Paragraph 8, Horseshoe Companies shall deliver, upon the
Effective Date of this Agreement, to Duke the title, free of any liens to the
Horseshoe Entertainment L.P. car in his possession, and on December 15, 1999,
the amount of $500,000.
8. Release and Waiver. Except for Group, Duke hereby represents and
warrants that he does not now have nor has he ever held any ownership interest
in, or position with any other entity of any kind or nature whatsoever, having
any claim against Horseshoe Companies or Binion or any of their or his current
or former agents, employees, partners, officers, servants, directors, attorneys,
affiliates, successors and assigns. Except for the obligation created or
reaffirmed by virtue of this Agreement, Duke and Group hereby release, discharge
and waive any and all claims, causes of action, and demands of any kind or
nature whatsoever that now exist, whether known or unknown, which he may have
against the Horseshoe Companies or Binion or any of their or his current or
former agents, employees, partners, officers, servants, directors, attorneys,
affiliates, successors and assigns. Except for the obligation created or
reaffirmed by virtue of this Agreement, Horseshoe Companies and Binion hereby
release, discharge and waive any and all claims, causes of action, and demands
of any kind or nature whatsoever that now exist, whether known or unknown, which
each may have against Duke or Group or any of his or its current or former
agents, employees, partners, servants, attorneys, successors and assigns.
9. Consent to Additional Operations, Pledges or Encumbrances. In
consideration for the sum of $325,000 to be due and payable to Duke on December
15, 1999, Duke hereby consents to any pledge now or at anytime in the future by
the Horseshoe Companies of its direct and indirect
3
<PAGE> 4
equity interest in Horseshoe Entertainment, L.P. and Robinson Property Group
L.P., or the granting of a security interest, mortgage, pledge, lien and
encumbrance of any kind upon the assets of Horseshoe Entertainment, L.P. and
Robinson Property Group L.P. and any other assets of the Horseshoe Companies and
any entity acquired by any of the Horseshoe Companies. Duke specifically waives
any objection or claim arising as a result of, or in any way related to the
efforts of Binion or the Horseshoe Companies to purchase or finance additional
gaming or related operation including but not limited to gaming and related
operations in Hammond, Indiana or Joliet, Illinois.
10. Amendment to Partnership Agreement. Duke hereby agrees to execute
amendments to the Limited Partnership Agreement of Horseshoe Entertainment,
L.P., allowing Horseshoe Entertainment L.P. to pledge, and/or encumber its
assets or guarantee the debt of any of the Horseshoe Companies, such amendment
shall include but shall not be limited to the deletion, from the Limited
Partnership Agreement of Horseshoe Entertainment, L.P. of paragraphs 7.1 and 7.2
in their entirety. Duke hereby designates, authorizes and empowers Binion as his
attorney-in-fact to execute on behalf of Duke the amendment to the Limited
Partnership Agreement of Horseshoe Entertainment, L.P. deleting paragraphs 7.1
and 7.2 from the Limited Partnership Agreement of Horseshoe Entertainment, L.P.
and making all such additional amendments to said Limited Partnership Agreement
as are necessary to effect the spirit and intent of this Agreement.
11. Representations and Warranties of Duke and Group. As a material
inducement to Horseshoe Companies and Binion to enter into this Agreement, Duke
and Group represent and warrant to Horseshoe Companies and Binion that Duke and
Group have good and marketable title to the Interests, and that the Interests
are free and clear of all adverse claims, liens and encumbrances of any kind,
buy-sell agreements, cross-purchase agreements, shareholder agreements or
restrictions or rights of any kind.
12. Covenant Not To Compete. Upon the exercise by the Horseshoe Companies of
the Option, as consideration for Horseshoe Companies obligations under this
Agreement and for the sum of $3,000,000 to be due and payable on December 15,
2000, and the forgiveness of a portion of the Debt equal to $2,000,000, Duke
agrees that for a period of two (2) years after the Effective Date of this
Agreement (the "Restricted Period"), he shall not, within the Parishes of Caddo,
Bossier, Webster, DeSoto, Red River, and Sabine, and/or within one hundred and
fifty (150) miles of any facility owned by or where Horseshoe Companies or any
of their affiliates or subsidiaries is engaged in business, be employed by,
provide consulting to or in any way assist any other person or entity during the
Restricted Period, (a) directly or indirectly engage in, be employed or provide
any kind of consulting services or assistance to any entity or person engaged in
any activity or business that is substantially similar to or competitive with
that of the Horseshoe Companies or any of their affiliates or subsidiaries; or
(b) directly or indirectly engage in, own any interest in, manage, operate,
join, control, lend money or other assistance to, or participate in or be
connected with, as an officer, director, employee, partner, shareholder,
consultant, manager, agent, or otherwise, any individual, corporation,
partnership, firm, other company, business organization, or entity that is
engaged in the same or substantially similar
4
<PAGE> 5
business as that engaged in by the Horseshoe Companies or any affiliates or
subsidiaries. Upon the request of Horseshoe Companies, Duke shall execute a
separate covenant not to compete. Nothing contained herein shall prevent Duke
from participating in gaming operations in the Parishes of Orleans, St. Bernard,
Jefferson, St. John the Baptist, St. James, Washington, St. Tammany, and
Tangipahoa and the City of New Orleans.
13. Second Covenant Not to Compete. If Horseshoe Companies exercises the
Option, then within 90 days before the expiration of the Restricted Period, Duke
shall have, at his sole discretion, the option, upon the delivery of written
notice to the Horseshoe Companies prior to the expiration of the Restricted
Period, to extend the Restricted Period for an additional two years in
accordance with the terms and conditions described above. In consideration for
Duke exercising his option to extend the Restricted Period, Duke shall receive
$1,325,000 on December 15, 2001 plus the forgiveness of a portion of the Debt
equal to $2,400,000 of the Debt.
14. Reasonableness of Covenants Not to Compete. Duke acknowledges that the
restrictions, including the Restricted Period and geographical area, specified
above, are fair and reasonable in all respects. Notwithstanding anything to the
contrary, in the event that these restrictions are found to be overly broad or
unreasonable, Duke and the Horseshoe Companies and Binion agree that such
restrictions shall be severable and enforceable on such modified terms as may be
deemed reasonable and enforceable by court of competent jurisdiction.
15. Finder's Fee. If Horseshoe Companies exercises the Option, then on
December 15, 1999, Horseshoe Entertainment L.P. shall pay to Duke the sum of
$400,000 as a finder's fee in connection with the acquisition and disposition of
the Chalmotte property, the acquisition of the King of the Red, the
renegotiation of the marine services contract and the development of video poker
opportunities.
16. Signing Bonus. As a signing bonus, upon the Effective Date Horseshoe
Entertainment, L.P. shall pay to Duke $50,000.
17. Interest Rate. Upon a sum coming due and payable pursuant to the terms
of this agreement, interest shall accrue on the principal balance outstanding
from the date upon which said amount becomes due and payable at a rate of 7% per
annum, until such sum is paid.
18. Notices. Any notice or other communication required to be given
hereunder shall be in writing and shall be deemed sufficiently given if
delivered personally or sent by registered or certified mail, postage pre-paid,
in which case such notice shall be deemed to have been served five (5) days
after the mailing thereof, to the address below:
5
<PAGE> 6
Horseshoe Gaming, L.L.C.
Attn: Jack Binion
4024 Industrial Road
Las Vegas, NV 89103
August Robin
3 Poydras St., Suite 3C
New Orleans, LA 70130
19. No Assignment. Except as otherwise provided herein, neither this
Agreement nor any interest hereunder shall be assignable except upon the death
of Duke, or for legitimate and reasonable estate planning purposes and upon
obtaining all necessary regulatory approval, if any. All the allegations and
duties of any kind or nature whatsoever of any of the parties hereto shall be
binding upon their respective successors and assigns.
20. Governing Law. This Agreement and all transactions contemplated hereby
shall be construed, governed and enforced in accordance with the laws of the
State of Louisiana and shall be treated in all respects as a State of Louisiana
contract without regard to laws related to the conflicts of laws.
21. Confidentiality. Duke, Horseshoe Companies and Binion agree to use their
best efforts to keep confidential all information provided to them under the
terms and conditions of this Agreement and which is not in the public domain. No
party to this Agreement shall make any public announcement of any action
provided for or contemplated by this Agreement unless the form and substance of
the announcement is mutually agreed upon by all parties, which agreement shall
not be unreasonably withheld or delayed. Nothing contained in this paragraph
shall prohibit any public disclosure or disclosure to any regulatory agency of
any kind or nature whatsoever having jurisdiction over any of the parties hereto
as required by law.
22. Further Assurances. The parties to this Agreement will each use their
respective best efforts to execute and deliver any additional documents and
instruments, and to do all things necessary, proper, or advisable under the
provision of this Agreement and under any applicable law to make effective any
action contemplated by this Agreement. In addition, Duke shall cooperate with
any proceeding, investigation, licensing process or inquiry of any kind
whatsoever undertaken by any government and/or regulatory body involving any of
the Parties to this Agreement. Such cooperation would include, but not be
limited to, providing testimony, answering questions, appearing before,
providing any documentation and responding to any reasonable request of any such
governmental and/or regulatory body. In light of this Agreement, Duke shall
withdraw any pending request made to any regulatory or governmental agency for
approval to increase his ownership interest in any of the Horseshoe Companies.
All reasonable expenses incurred in connection with such cooperation shall be
the responsibility of the Horseshoe Companies. Duke shall be entitled to receive
copies of all reports for the Horseshoe Companies filed with the Securities and
Exchange Commission and copies of all quarterly and
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<PAGE> 7
annual financial statements for Horseshoe Gaming, LLC and Horseshoe
Entertainment, L.P. Within thirty (30) days of acceptance of a bona fide offer
to purchase in excess of 50% of the ownership of Horseshoe Gaming, LLC,
Horseshoe Gaming, LLC shall provide Duke with a copy of such bona fide offer,
except as prohibited by any confidentiality agreement imposed or required by the
offeree.
23. No Waiver. No waiver or delay by either party in exercising its right,
power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege hereunder.
24. Modification. This Agreement may not be amended, modified or altered
except by written instrument duly executed by all of the parties hereto.
25. Arbitration. All disputes between the parties under this Agreement shall
be submitted to binding arbitration in Louisiana, in accordance with the rules
of the American Arbitration Association (the "Association"). In the event either
party seeks arbitration, the party seeking arbitration shall provide written
notice to the other parties immediately upon seeking such arbitration. The
procedure for arbitration shall be in accordance with the Association's then
existing rules, except that each party may select one arbitrator, and the two
selected arbitrators shall choose a third arbitrator. If either party fails to
select an arbitrator within forty-five (45) days after arbitration is sought, or
the two arbitrators fail to select a third arbitrator within thirty days (30)
after arbitration is sought, the Association shall make the selection. The award
rendered by the arbitrators shall be final and binding on the parties and may be
entered in any court having jurisdiction thereof.
26. Severability. If a Court of competent jurisdiction makes a final
determination that any provision of this Agreement (or any portion thereof) is
invalid, illegal, or unenforceable for any reason whatsoever and all rights to
appeal determination have been exhausted, or the period of time during which the
appeal or determination may be perfected has expired, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired.
27. Entire Agreement. This Agreement contains the entire Agreement of the
parties thereto with respect to the subject matter hereof and shall be deemed to
supercede all prior or contemporaneous agreements, representations, and
understandings, whether written or oral concerning the subject matter of this
Agreement. This Agreement states any and all payments, debts and obligations of
the Horseshoe Companies owed to Duke and there are no other remaining
obligations. Except as otherwise provided herein, all terms and provisions of
the Partnership Agreement of Horseshoe Entertainment L.P. in effect as of the
execution hereof, shall remain in full force and effect.
[Signatures on next page]
7
<PAGE> 8
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
HORSESHOE GAMING, L.L.C. HORSESHOE ENTERTAINMENT, L.P.
By: Horseshoe Gaming, Inc., By: New Gaming Capital Partnership, LP,
its Manager its General Partner
By: S/S By: Horseshoe GP, Inc., its General
- -------------------------------- Partner
By: S/S
------------------------------------
Jack B. Binion
President
HORSESHOE GAMING, INC. NEW GAMING CAPITAL PARTNERSHIP
By: Horseshoe GP, Inc., its General
Partner
By: S/S By: S/S
---------------------------- ------------------------------------
Jack B. Binion Jack B. Binion
Chief Executive Officer and President
Chairman of the Board
S/S S/S
- -------------------------------- ----------------------------------------
Jack B.Binion August Robin
THE ROBIN GROUP, INC.
By: S/S
----------------------------
August Robin, its President
8
<PAGE> 9
The undersigned being all of the partners of Horseshoe Entertainment,
L.P. hereby acknowledge and consent that to the extent the terms of this
Agreement are in any way inconsistent with the Horseshoe Entertainment, L.P.
Partnership Agreement as currently in effect, this Agreement shall constitute an
amendment to the Horseshoe Entertainment, L.P.
Partnership Agreement.
NEW GAMING CAPITAL PARTNERSHIP
By: Horseshoe GP, Inc., its General
Partner
By: S/S
----------------------------------------
Jack B. Binion
President
S/S
----------------------------------------
Wendell Piper
S/S
----------------------------------------
Cassandra Piper
S/S
----------------------------------------
August Robin
9
<PAGE> 1
Exhibit 10.32
AGREEMENT
This Agreement (the "Agreement") is entered into this 21 day of April,
1999, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming, Inc., Horseshoe
Entertainment, L.P., and New Gaming Capital Partnership (Horseshoe Gaming
L.L.C., Horseshoe Entertainment, L.P., Horseshoe Gaming, Inc., New Gaming
Capital Partnership and all of their affiliates and subsidiary companies are
sometime collectively referred to herein as the "Horseshoe Companies"); Jack B.
Binion ("Binion"); Wendell Piper; Cassandra Piper; and Robert E. Piper, Jr.
(Cassandra Piper, Wendell Piper and Robert E. Piper, Jr. are sometimes referred
to collectively herein as the "Pipers").
RECITALS
WHEREAS, Horseshoe Entertainment, L.P. owns and operates a gaming and
hotel facility and related operations in Bossier City, Louisiana;
WHEREAS, Robinson Property Group, L.P. owns and operates a gaming and
hotel facility in Tunica, Mississippi (the "Tunica Facility");
WHEREAS, New Gaming Capital Partnership, Wendell Piper, Cassandra Piper
and August Robin, among others, are partners in Horseshoe Entertainment, L.P.;
WHEREAS, Horseshoe Gaming, L.L.C., the parent company of New Gaming
Capital Partnership, is in the process of pursuing additional gaming
opportunities and is currently a party to an agreement to acquire additional
casinos and hotel facilities in Hammond, Indiana and Joliet, Illinois (the
"Additional Operations");
WHEREAS, Horseshoe Gaming, L.L.C. is in the process of a debt offering
pursuant to Rule 144A of the Securities Act of 1933, as amended (the "144A Debt
Offering"); and
WHEREAS, Robert E. Piper, Jr. asserts that he is the owner of an option
to purchase a percentage of the profits and/or losses from the Tunica Facility
(the "Tunica Option").
TERMS AND CONDITIONS
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
<PAGE> 2
1. Effective Date; Contingencies. All of the obligations of any party
pursuant to this Agreement shall be effective and enforceable only upon the
execution of this Agreement by all of the parties hereto and the execution by
August Robin of an agreement similar in nature to this Agreement. The date upon
which all of the agreements contemplated in this paragraph are fully executed
shall be the "Effective Date" of the Agreement. Neither the transactions
contemplated by this Agreement nor any transactions similar in nature involving
the Horseshoe Companies and August Robin shall be consummated unless both such
transactions are consummated.
2. Outstanding Loans. The Pipers acknowledge that as of March 31, 1999,
they collectively owe Horseshoe Companies $3,419,600 (the "Debt"). The Debt
shall be paid to the Horseshoe Companies as provided in the paragraphs of this
Agreement containing covenants not to compete. All outstanding promissory notes
representing the Debt shall be canceled and the Pipers shall execute a new
promissory note in the amount of $3,419,600 (the "Replacement Note"). The
Replacement Note shall reflect the terms of this Agreement and interest shall
accrue at a rate of 7% per annum only after the sums become due and payable
pursuant to the terms of the Replacement Note. The K-1s for 1999 for Cassandra
Piper and Wendell Piper shall incorporate and reflect an adjustment increasing
their income by the sum of $377,238, plus any distribution made during 1999,
plus all other amounts attributable to Cassandra Piper and Wendell Piper as
income as required by the Partnership Agreement of Horseshoe Entertainment L.P
3. Amounts Stated in the Aggregate. In each instance in this Agreement
where a sum or sums payable to Cassandra Piper and Wendell Piper is identified,
that sum or those sums represent the aggregate amount payable to both Cassandra
Piper and Wendell Piper. Such aggregate amounts shall be allocated to each of
them individually in accordance with their respective partnership interests.
4. Grant of Option and Consideration for Grant. Wendell Piper and Cassandra
Piper hereby grant to each of the Horseshoe Companies an option (the "Option")
to purchase subject to all necessary regulatory approval, all of their
ownership, capital, or equity interests including but not limited to partnership
interest, stock or option to acquire any capital or equity interest, in the
Tunica Facility, Robinson Property Group, L.P., Horseshoe Entertainment, L.P.
and Horseshoe Companies (all such interests being the "Interests"). This Option
is being granted to Horseshoe Companies in exchange for the aggregate amount of
$2,000,000, to be paid to Wendell and Cassandra Piper which $2,000,000 is non
refundable if Horseshoe Companies fails to exercise the Option. Horseshoe
Companies shall pay the Option Price in two installments. The first installment
of $1,000,000 shall be paid upon the Effective Date of this Agreement and the
second installment of $1,000,000 shall be paid on or before January 15, 2000.
5. Exercise Period. The Option shall expire on December 15, 1999. In the
event Horseshoe Entertainment, L.P. decides to exercise the Option, Horseshoe
Entertainment, L.P. shall transmit, prior to the expiration of the Option, to
Robert E. Piper, Jr. an indication of Horseshoe
2
<PAGE> 3
Entertainment, L.P.'s intent to exercise the Option. Upon transmittal of such
notice, the Option shall be deemed to have been exercised without any further
action being necessary.
6. Exercise Price. The exercise price to be paid by Horseshoe
Entertainment, L.P. to Wendell Piper and Cassandra Piper shall be the aggregate
sum of $6,000,000 and shall be paid in installments in the following manner: (i)
$2,080,000 to be paid on December 15, 2000, and (ii) $3,920,000 to be paid on
December 15, 2001.
7. Participation in Sale By Binion. If, within five years of the date of
this Agreement, the Binion Family Interests collectively sells in excess of a
50% interest in Horseshoe Gaming, LLC, for a purchase price consisting of cash,
debt or publicly traded securities or any combination thereof having a value of
in excess of $5,350,000 per 1% interest sold, then Wendell Piper and Cassandra
Piper shall receive in the aggregate, a cash sum equal to 2 1/4% of the value of
the sale in excess of $5,350,000 per one percent (1%) interest sold (such cash
sum equal to 2 1/4% being the "Participation Payment"). For the purposes of this
paragraph, the value of the sale shall be equal to (i) the cash purchase price,
plus (ii) 80% of the value of the publicly traded securities as determined by
the last sales price of such securities at the close of the market upon which
such securities are traded, on the date the Binion Family Interests receives
such securities, plus (iii) 80% of the present value of the debt. For the
purposes of this paragraph, the Binion Family Interests shall mean, Binion or
any entities owned or controlled by Binion, or any member of his family or any
trust for the benefit of any member of his family. In the event that Cassandra
Piper and Wendell Piper are entitled to the Participation Payment, all sums due
from the Pipers to Horseshoe Companies shall be due and payable immediately to
the extent of the Participation Payment.
8. Payment of Release and Waiver. In exchange for the release and waiver by
the Pipers described in Paragraph 9, Horseshoe Companies shall deliver the
aggregate amount of $500,000 to the Pipers on January 15, 2000.
9. Release and Waiver. Each of the Pipers hereby represents and warrants
that he or she does not now have nor has he or she ever held any ownership
interest in, or position with any other entity of any kind or nature whatsoever,
having any claim against Horseshoe Companies or Binion or any of their or his
current or former agents, employees, partners, officers, servants, directors,
attorneys, affiliates, successors and assigns. Except for the obligation created
or reaffirmed by virtue of this Agreement, each of the Pipers hereby releases,
discharges and waives any and all claims, causes of action, and demands of any
kind or nature whatsoever that now exist, whether known or unknown, which he may
have against the Horseshoe Companies or Binion or any of their or his current or
former agents, employees, partners, officers, servants, directors, attorneys,
affiliates, successors and assigns. Except for the obligation created or
reaffirmed by virtue of this Agreement, the Horseshoe Companies and Binion
hereby release, discharge and waive any and all claims, causes of action, and
demands of any kind or nature whatsoever that now exist, whether known or
unknown, which each may have against the Pipers
3
<PAGE> 4
collectively or individually or any of their current or former agents,
employees, partners, servants, attorneys, successors and assigns.
10. Consent to Additional Operations, Pledges or Encumbrances. In
consideration for the aggregate sum of $325,000 to be due and payable to Wendell
Piper and Cassandra Piper on January 15, 2000, Wendell Piper and Cassandra Piper
hereby consents to any pledge now or at anytime in the future by the Horseshoe
Companies of its direct and indirect equity interest in Horseshoe Entertainment,
L.P. and Robinson Property Group L.P., or the granting of a security interest,
mortgage, pledge, lien and encumbrance of any kind upon the assets of Horseshoe
Entertainment, L.P. and Robinson Property Group L.P. and any other assets of the
Horseshoe Companies and any entity acquired by any of the Horseshoe Companies.
The Pipers specifically waive any objection or claim arising as a result of, or
in any way related to the efforts of Binion or the Horseshoe Companies to
purchase or finance additional gaming or related operation including but not
limited to gaming and related operations in Hammond, Indiana or Joliet,
Illinois.
11. Amendment to Partnership Agreement. Wendell Piper and Cassandra Piper
hereby agrees to execute amendments to the Limited Partnership Agreement of
Horseshoe Entertainment, L.P., allowing Horseshoe Entertainment L.P. to pledge,
and/or encumber its assets or guarantee the debt of any of the Horseshoe
Companies, such amendment shall include but shall not be limited to the
deletion, from the Limited Partnership Agreement of Horseshoe Entertainment,
L.P. of paragraphs 7.1 and 7.2 in their entirety. Wendell Piper and Cassandra
Piper hereby designate, authorize and empower Binion as their attorney-in-fact
to execute on behalf of each of them, the amendment to the Limited Partnership
Agreement of Horseshoe Entertainment, L.P. deleting paragraphs 7.1 and 7.2 from
the Limited Partnership Agreement of Horseshoe Entertainment, L.P. and making
all such additional amendments to said Limited Partnership Agreement as are
necessary to effect the spirit and intent of this Agreement.
12. Representations and Warranties of The Pipers. As a material inducement
to Horseshoe Companies and Binion to enter into this Agreement, the Pipers
represent and warrant to Horseshoe Companies and Binion that the Pipers have
good and marketable title to the Interests and the Tunica Option, and that the
Interests and Tunica Option are free and clear of all adverse claims, liens and
encumbrances of any kind, buy-sell agreements, cross-purchase agreements,
shareholder agreements or restrictions or rights of any kind.
13. Covenant Not To Compete. Upon the exercise by the Horseshoe Companies of
the Option, as consideration for Horseshoe Companies obligations under this
Agreement and for the aggregate sum of $3,500,000 to be due and payable on
January 15, 2001, and the forgiveness of a portion of the Debt equal to
$1,500,000, the Piper agree that for a period of two (2) years after the
Effective Date of this Agreement (the "Restricted Period"), each of the Pipers
shall not, without the express written consent of Binion, within the Parishes of
Caddo, Bossier, Webster, DeSoto, Red River, and Sabine, and/or within one
hundred and fifty (150) miles of any facility owned by or where Horseshoe
Companies or any of their affiliates or subsidiaries is engaged in
4
<PAGE> 5
business, be employed by, provide consulting to or in any way assist any other
person or entity during the Restricted Period, (a) directly or indirectly engage
in, be employed or provide any kind of consulting services or assistance to any
entity or person engaged in any activity or business that is substantially
similar to or competitive with that of the Horseshoe Companies or any of their
affiliates or subsidiaries; or (b) directly or indirectly engage in, own any
interest in, manage, operate, join, control, lend money or other assistance to,
or participate in or be connected with, as an officer, director, employee,
partner, shareholder, consultant, manager, agent, or otherwise, any individual,
corporation, partnership, firm, other company, business organization, or entity
that is engaged in the same or substantially similar business as that engaged in
by the Horseshoe Companies or any affiliates or subsidiaries. Upon the request
of Horseshoe Companies, each of the Pipers shall execute a separate covenant not
to compete. Nothing contained herein shall prevent any of the Pipers from
participating in gaming operations in the Parishes of Orleans, St. Bernard,
Jefferson, St. John the Baptist, St. James, Washington, St. Tammany, and
Tangipahoa and the City of New Orleans.
14. Second Covenant Not to Compete. If Horseshoe Companies exercises the
Option, then within 90 days before the expiration of the Restricted Period, the
Pipers collectively shall have, at their sole discretion, the option, upon the
delivery of written notice to the Horseshoe Companies prior to the expiration of
the Restricted Period, to extend the Restricted Period for an additional two
years in accordance with the terms and conditions described above. The option to
extend the Restricted Period must be exercised by all the Pipers and cannot be
exercised by less than all of the Pipers. In consideration for the Pipers
exercising the option to extend the Restricted Period, the Pipers shall receive
(i) the aggregate sum of $1,820,000 on January 15, 2002, plus the forgiveness of
a portion of the Debt equal to $1,361,000, and (ii) the aggregate sum of
$488,000 on January 15, 2003 plus the forgiveness of the balance of the Debt
equal to $550,000.
15. Reasonableness of Covenants Not to Compete. The Pipers acknowledge that
the restrictions, including the Restricted Period and geographical area,
specified above, are fair and reasonable in all respects. Notwithstanding
anything to the contrary, in the event that these restrictions are found to be
overly broad or unreasonable, the Pipers and the Horseshoe Companies and Binion
agree that such restrictions shall be severable and enforceable on such modified
terms as may be deemed reasonable and enforceable by court of competent
jurisdiction.
16. Signing Bonus. As a signing bonus and in consideration for a release of
any claim to any Interest and or any claim to or associated with the Tunica
Option, or interest or right to acquire any interest in the profits and losses
of the Tunica Facility including any claim to a capital account balance in the
Robinson Property Group L.P. or any claim to retained earnings of the Robinson
Property Group, upon the Effective Date Horseshoe Entertainment, L.P. shall pay
to Robert E. Piper, Jr. $50,000.
5
<PAGE> 6
17. Interest Rate. Upon a sum coming due and payable pursuant to the terms
of this agreement, interest shall accrue on the principal balance outstanding
from the date upon which said amount becomes due and payable at a rate of 7% per
annum, until such sum is paid.
18. Notices. Any notice or other communication required to be given
hereunder shall be in writing and shall be deemed sufficiently given if
delivered personally or sent by registered or certified mail, postage pre-paid,
in which case such notice shall be deemed to have been served five (5) days
after the mailing thereof, to the address below:
Horseshoe Gaming, L.L.C.
Attn: Jack Binion
4024 Industrial Road
Las Vegas, NV 89103
Cassandra Piper
Wendell Piper
Robert E. Piper, Jr.
19. No Assignment. Except as otherwise provided herein, neither this
Agreement nor any interest hereunder shall be assignable by the Pipers except
upon the death of Wendell Piper, Robert E. Piper Jr. or Cassandra Piper, or for
legitimate and reasonable estate planning purposes and upon obtaining all
necessary regulatory approval, if any. All of the obligations and duties of any
kind in nature whatsoever of any of the parties hereto shall be binding upon
their successors and assigns.
20. Governing Law. This Agreement and all transactions contemplated hereby
shall be construed, governed and enforced in accordance with the laws of the
State of Louisiana and shall be treated in all respects as a State of Louisiana
contract without regard to laws related to the conflicts of laws.
21. Confidentiality. The parties to this Agreement shall use their best
efforts to keep confidential all information provided to them under the terms
and conditions of this Agreement and which is not in the public domain. No party
to this Agreement shall make any public announcement of any action provided for
or contemplated by this Agreement unless the form and substance of the
announcement is mutually agreed upon by all parties, which agreement shall not
be unreasonably withheld or delayed. Nothing contained in this paragraph shall
prohibit any public disclosure or disclosure to any regulatory agency of any
kind or nature whatsoever having jurisdiction over any of the parties hereto as
required by law.
22. Further Assurances. The parties to this Agreement will each use their
respective best efforts to execute and deliver any additional documents and
instruments, and to do all things
6
<PAGE> 7
necessary, proper, or advisable under the provision of this Agreement and under
any applicable law to make effective any action contemplated by this Agreement.
In addition, the Pipers shall cooperate with any proceeding, investigation,
licensing process, or inquiry of any kind whatsoever undertaken by any
government and/or regulatory body involving any of the Parties to this
Agreement. Such cooperation would include, but not be limited to, providing
testimony, answering questions, appearing before, providing any documentation
and responding to any reasonable request of any such governmental and/or
regulatory body. In light of this Agreement, each of the Pipers shall withdraw
any pending request made to any regulatory or governmental agency for approval
to increase their ownership interest in any of the Horseshoe Companies. All
reasonable expenses incurred in connection with such cooperation shall be the
responsibility of the Horseshoe Companies. Robert E. Piper, Jr. shall be
entitled to receive copies of all reports for the Horseshoe Companies filed with
the Securities and Exchange Commission and copies of all quarterly and annual
financial statements for Horseshoe Gaming, LLC and Horseshoe Entertainment, L.P.
Within thirty (30) days of acceptance of a bona fide offer to purchase in excess
of 50% of the ownership of Horseshoe Gaming, LLC, Horseshoe Gaming, LLC shall
provide Robert E. Piper, Jr. with a copy of such bona fide offer, except as
prohibited by any confidentiality agreement imposed or required by the offeree.
23. No Waiver. No waiver or delay by either party in exercising its right,
power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege hereunder.
24. Modification. This Agreement may not be amended, modified or altered
except by written instrument duly executed by all of the parties hereto.
25. Arbitration. All disputes between the parties under this Agreement shall
be submitted to binding arbitration in Louisiana, in accordance with the rules
of the American Arbitration Association (the "Association"). In the event either
party seeks arbitration, the party seeking arbitration shall provide written
notice to the other parties immediately upon seeking such arbitration. The
procedure for arbitration shall be in accordance with the Association's then
existing rules, except that each party may select one arbitrator, and the two
selected arbitrators shall choose a third arbitrator. If either party fails to
select an arbitrator within forty-five (45) days after arbitration is sought, or
the two arbitrators fail to select a third arbitrator within thirty days (30)
after arbitration is sought, the Association shall make the selection. The award
rendered by the arbitrators shall be final and binding on the parties and may be
entered in any court having jurisdiction thereof.
26. Severability. If a Court of competent jurisdiction makes a final
determination that any provision of this Agreement (or any portion thereof) is
invalid, illegal, or unenforceable for any reason whatsoever and all rights to
appeal determination have been exhausted, or the period of time during which the
appeal or determination may be perfected has expired, the validity, legality and
enforce ability of the remaining provisions of this Agreement shall not in any
way be affected or impaired.
7
<PAGE> 8
27. Entire Agreement. This Agreement contains the entire Agreement of the
parties thereto with respect to the subject matter hereof and shall be deemed to
supercede all prior or contemporaneous agreements, representations, and
understandings, whether written or oral concerning the subject matter of this
Agreement. This Agreement states any and all payments, debts and obligations of
the Horseshoe Companies owed to any of the Pipers and there are no other
remaining obligations. Except as otherwise provided herein, all terms and
provisions of the partnership agreement of Horseshoe Entertainment L.P. in
effect as of the execution hereof, shall remain in full force and effect.
[Signatures on next page]
8
<PAGE> 9
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
HORSESHOE GAMING, L.L.C. HORSESHOE ENTERTAINMENT, L.P.
By: Horseshoe Gaming, Inc., By: New Gaming Capital Partnership, LP,
------------------------------ its General Partner
its Manager
By: S/S By: Horseshoe GP, Inc., its General
Partner
By: S/S
-----------------------------------
Jack B. Binion
President
HORSESHOE GAMING, INC. NEW GAMING CAPITAL PARTNERSHIP
By: Horseshoe GP, Inc., its General
Partner
By: S/S By: S/S
------------------------------ -----------------------------------
Jack B. Binion Jack B. Binion
Chief Executive Officer and President
Chairman of the Board
S/S S/S
- ---------------------------------- ---------------------------------------
Jack B. Binion August Robin
S/S
---------------------------------------
Wendell Piper
S/S
---------------------------------------
Cassandra Piper
S/S
---------------------------------------
Robert E. Piper, Jr.
9
<PAGE> 10
The undersigned being all of the partners of Horseshoe Entertainment,
L.P. hereby acknowledge and consent that to the extent the terms of this
Agreement are in any way inconsistent with the Horseshoe Entertainment, L.P.
Partnership Agreement as currently in effect, this Agreement shall constitute an
amendment to the Horseshoe Entertainment, L.P.
Partnership Agreement.
NEW GAMING CAPITAL PARTNERSHIP
By: Horseshoe GP, Inc., its General
Partner
By: S/S
-----------------------------------
Jack B. Binion
President
S/S
---------------------------------------
Wendell Piper
S/S
---------------------------------------
Cassandra Piper
S/S
---------------------------------------
Robert E. Piper, Jr.
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 38,606
<SECURITIES> 8,831
<RECEIVABLES> 8,839<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 2,437
<CURRENT-ASSETS> 67,612
<PP&E> 442,729
<DEPRECIATION> 69,305
<TOTAL-ASSETS> 525,990
<CURRENT-LIABILITIES> 53,579
<BONDS> 372,678
0
0
<COMMON> 0
<OTHER-SE> 47,045
<TOTAL-LIABILITY-AND-EQUITY> 525,990
<SALES> 3,834<F2>
<TOTAL-REVENUES> 120,192
<CGS> 4,839
<TOTAL-COSTS> 70,139
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,260
<INCOME-PRETAX> 16,569
<INCOME-TAX> 0
<INCOME-CONTINUING> 16,569
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,569
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Notes and accounts receiveble-trade are reported net of allowances for
doubtful accounts in the Statement of Financial Position.
<F2> Net sales are reported net of promotional allowances applicable to tangible
items.
</FN>
</TABLE>
